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91

AFRICAN DEVELOPM ENT BANK

REPUBLIC OF CONGO

PROJECT COM PLETION REPORT

REHABILITATION OF DRINKING W ATER SUPPLY

INSTALLATIONS IN BM ZZAVILLE

DEPARTM ENT OF INFM STRUCTURE AND INDUSTRY

SOUTH REGION M ARCH 1995


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*

TABLE OF CONTENTS

BASIC INFORM ATION

1.

Pages

i-v

1

1

1

1

2

INTRODUCTION

1.1 Geographic Setting

1.2 Bank Group's Commitment in the Sector

1.3 Project Background

1.4 Sources of Infonnation

SECTOM L OBJECTIVE AND PROJECT AlM

PROJECT DESIGN

3. 1 Origin of Project

3.2 Preparation, Evaluation, Negotiation and Approval

PROJECT IM PLEM ENTATION

4. 1 Entry into Force of the Loan and Start-up

of Project

4.2 M odifications

4.3 Implementation Schedule

4.4 Procurem ent of Goods and Services

4.5 Costs and Disbursements

OPERATIONAL PERFORM ANCE

5. 1 The Contract

5. 1 Role of the Project

5.3 Other Factors

INSTITUTIONAL PERFORM ANCE

6. 1 Legal and lnstitutional Framework

6.2 Organization and M anagement

6.3 Personnel and Training

6.4 Accounting and Auditing

6.5 Tariffs

6.6 Billing and Collection

6.7 Perfonnance of Consultants, Entrepreneurs

and Suppliers

6.

6

6

7

7

8

12

13

13

14

14

14

15

16

16

17

18


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FINANCIAL PERFORM ANCE

7. 1 Operational Analysis

7.2 Analysis of Financial Structure

7.3 Financial Rate of Return

7.4 Financial Conditions and Clauses

19

19

20

20

21

22

22

22

23

24

8. ECON9MIC AND SOCIAL PERFORMANCES

8.1 Econom ic Perform ances

8.2 Social Incidences

9. SUSTAINABILITY

10. PERFORM ANCE OF THE BANK AND TI'1E BORROW ER

10. 1 General and Specific Performance

10.2 W orking Relations

CONCLUSIONS AND LESSONS

24

25

26

26

26

11.1 Conclusions

11.2 Lessons Learned from the Project

MAPIS)

ANNEXES

This report has beén written by Messrs HOUSSEIN Y.A (Hydraulics Engineer) and Keba 'BA

(Consultant. Financial Analyst) following their mission to CONGO in February 1995. Al1

enquiries should be addressed to Mr. S.C DESAI, S1SI.2 Ext.4120


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r

EOUIVALENTS. ACRONYM S AND ABBREVIATIONS

CURRENCIES

(1st Quarter 1995)

Currrncy unit

UA 1

UA 1

UA 1

CFA.Franc

'

CFA .F 780.436

US$ 1.45985

FF 7.80436

On evaluation

(3rd Quarter 1982)

UA 1

UA 1

UA 1

W EIGHTS AND M EASURES

ha

km

I/d/inh

lm

m/h

m 3/h

m 3/d

m3/s

m m

hectare

kilometre

litres per day per inhabitant

linear metre

metre prr hour

cubic metre per hour

cubic metre per day

cubic metre per second

m illimetre

CFA.F 372.945

US$ 1.00601

'FF 7.4589

ABBREVIATIONS

Aid and Cooperation Fund

African Developm ent Bank

Competitive Bidding

Caisse Française de Développement

Drinking W ater Supply

Drinking Water Sgpjly and Sanitation

European Development Fund

German Technical Cobperation Agency

International Fund for Agricul'ural Development

ACF

ADB

CB

CFD

DW S

DW SS

EDF

GTZ

IFAD


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k

IRRI

JIC)V

fD

j

PC:

TD 1

ENPN

N EF

i

i

= Internal Rate of Rettlrn

Japanese lnternational Cooperation Agency

=

M edium Voltage

Not Determined

=

Project Completion Report

Tender Document

=

Société. Nationale de Distribution d'Eatt

= Uàited. Nations Children's Fuhb

' Fiscal Year

1st January - 31 December


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LB T 0F ANNEXES

NO Description N O of pages

Map of Congo / project qrea

lmplementation Schedule

Comparative table of costs

Loan granting conditions

Comparative status of SNDE'S income statement

Surnm ary of SNDE'S balance sheets

3

4

5

6

Assumptions of financial projections

Calculation table of IFRR

Calculation table of IERR

8

9 1


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=>

BASIC PROJECT INFORM ATION

1.

2.

COUNTRY

PROJECT

Republiq of Congo

Rehabilitation of drinking water supply installations

in Brazzaville

CS/CN/SP/83/010

Govermnent of Congo

3.

4.

5.

LOAN NO

BORROW ER

EXECUTING AGENCY Société Nationale de Distribution d'Fmu (SNDE)

A. LOAN

Amount (in UA million)

Interest rate

Period of reimbursement

Grace period

Date negotiated

Date approved

Date signed

Entry into force

B. PROJECT INFORMATION

1.

2.

3.

4.

5.

6.

7.

8.

EVALUATION

26.59

CURRENT

23.84

9.50%

20 years

3 years

18/11/82

21/12/82

07/01/83

M ay 1983

EVALUATION

39.52

CURRENT

31.010.

2.

Total cost (in UA million)

Financing plan (in UA million)

ADB

Govt.

Total

F.E L.C Total

26.59 - 26.59 '

12.93 12.93

26.59 12.93 39.52

F .E

23.84

23.84

L.C Total

-

23.84

7. 17 7. 17

7 . 17 31.01


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3.

4

5.

6.

j

2.

3.

4.

5.

6.

7.

8.

9.

ii

EVALUATION CURRENT

Effective date of 1st disb. 13/04/83

Effectkve date of last disb. 31/12/94

1tart

up of project

implelj ntation activities April 1983 7/07/83

Completion of project

impleml entation activi

ties April 1985 07/90

C. PERFORM ANCE INDICATORS

EVALUATION CURRENT

Bâlànce % 10%

Dèlay lin relation to schedule

-

Dela' in rel. to entry into force 3 month:

-

Delaly in rel. ttj completion date 60 months

-

Delal in rel. to last disbursement 34 months

Numbpr of extensions of deadline

at lajt disbursement two (2)

Status o'f project execution Compléted

List of verifiable indicators

nd stlges of completion

(% of envisaged stages): Evaluation Current

Production (m3/d) 90,000 61,000

-

Subscribers 17,038 50,000

lnstitutional perfbrmance Inadequate

Petfôxance of firms satisfactory

Ierforrizance of Consultants Inadequate

EVALUATION CURRENT

IFRR (%) 20.48 7.54

lERR (%) nd 18

48

D . M ISSIONS

I DATE Noof pers. > G

-

Iden 'ification nd nb nd

l d ndreparation nd n

1 ion 09/1982 2 Eng

.

+ Fin. an. 4valyat

- M onitoring nd nd nd

supelvision 04/1984 Eng. 2

12/1986 Eng. + Fin. an. 4

04/1987 ' Eng. + Fin. an. 4

02/1995 Eng. + Fin. an. 4

< N 'U


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' ' - 1ll -

. DISBURSEM ENT

(in UA million)

-

Total disbursed

-

Balance

-

Amount reallocated

-

Amount cancelled

-

Annual disbursement

(in UA million)

23.836

2.754

2.693 (PARESO)

0.061

1983 1984 1985 1986 1987 1988 1989 1990 1994 Total

4.46 8.71 6.76 3.03 0.38 0.31 0.09 0.04 0.06 23.84

2.45 2.77 - 0.69 - 0.64 0.62 - 7. 17

6.91 11.48 6.76 3.72 0.38 0.95 0.71 0.04 0.06 31.01

ADB

Gvt.

Tot.

% 22.2 37 22 12 1.2 3 2.3 0.1 0.2 100

F. ENTREPRENEURS / SUPPLIERS

Civil encineerinc (lot 1) and enuipment (lot 2)

Name

Responsibility

Contract signing date

Contract expiry date

Am ount of basic contract

Amount of contract amendmtstz)

Total amount of contract

Supply and Iaying of supply nipes and

primary distrtibution network tbatch 3)

Name

Responsibility



Am ount of basic contract

Amount of ctract amendtst4)

Total amount of contract

Société Générale d'Entreprise-congo (SGE)

-

France

lot 1; lot 2 hydraulic and electro-ptimp

equipment subcontraeted to DEGREM ONT

8/03/83

8/09/84 (lot 1); 8/03/85 (lot 2)

CFA .F 4, 130,989,900

CFA .F 1,731,437,944

CFA .F 5,862,427,844

SPIE-CAPAG - France

lot 3

24/03/83

24/03/85

CFA.F 3,333,517,500

CFA.F 1,632,921,175

CFA.F 4,966,438,675


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Secondary distribution network + connections (batch 4)

Name SAVCONGO - France

Responsibility lot 4-1 PVC Pipes and accessories

Iontrad signing date 23/06/85

1

ontract expiry date -

Duratibn of contract 1 year

Amoun/ of basic contract CFA.F 125,171,339

Amount of ctract amendts CFA

.F .177, 143,600

Total aiount of contract CFA.F 502,314,939

Name PONT A M OUSSON - France

Responsibility lot 4-3 connection equipment; lot 4-2, water

l metres

Contrac' signing date 30/06/85

Iontract expiry date

1 of contract CFA

.

F 679,227,346mount

Name S.C.K .N France

Responjibility Iot 4-4, rolling stock

Contract signing date 30/05/85

lontract expiry date

lur

ation Of contract 1 year

Amountlof contract CFA.F 154,741,000

Name I.M .C. - France

Responjibility lOt 4-5, tools



Iuration of contract 1 yenr

Amountl of contract CFA.F 57,871,115

èöxst

tvax,r.

Name SAUR-AFRIQUE - France

Responjibility Supervision and inspection of works



-

Iuration of contract 2 years

Amoun? of basic contract CFA.F 465,369,200

l of ctract amendmt CFA.F 47,750,000mount

' bunt of contract c#A

.F 513,119,200otal am


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Nnm e

Responsibility



Duration of contract

Amount of contract

SGI - Switzerland

Tariffs study

08/1988

08/1989

8 months

CFA.F 49,200,000


13/49

N M


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' INTRODUCTION

Geographic Setting

Situated astride the Equator, the Republic of Congo covers an area of 342,000 square

kilometres. It is bordered on the north by the Central African Republic and the Republic of

Cameroon, on the south by Zaire and the Atlantic Ocean over a distance of some 200 km , and

on the east by the Obangui and Congo rivers which separate it from Zaire, and lastly on the west

by Gabon. The population of Congo was estimated at 1.9 million inhabitants in 1987 with an

annual growth rate of 2.7% . The towns of Brazzaville, political and adm inistrative capital and,

Pointe Noire, economic centre and port town, alone have 40% of the total population.

Bank Group's Comm itment in the Sector

The Brazzaville drinking water supply reinforcement project whose loan amounts to UA

26.59 m illion is the Bank Group's second comm itment in the sector. The ADB had previously

financed, in 1972, to the tune of UA 1.2 million the extension works of the Brazzaville DW S

system from the Djoué plant built in 1954. Two other projects financed by ADB (rehabilitation

of Brazzaville DW S installations am ounting to UA 16.76 m illion and Brazzaville rain water

sewage the loan of which amounts to UA 32.97 million were not ilpplemented and were

reallocated in 1994 as part of a plan to pay Congo's arrears. The total am ount of the Bank's

operations in the sector in Congo is UA 27.79 million, representing 15% of the country's

portfolio. Apart from ADB, the other m ain external support organs are the German Technical

Cooperation Agency (GTZ). Japanese International Cooperation Agency (JICA), International

Fund for Agricultural Development (IFAD), European Development Fund (EDF) and UNICEF.

These organs mainly take part in DW SS programmes in the rural areas.

Proiect Background

1.3. 1 At the time of evaluating the present project, the Brazzaville DW S system had a

production capacity of 36,000 m3/d following the extension Of the former installations of the

Djoué water treatment plant financed by the ''Fonds d'Action et de Coopération (FACI'' and

ADB. However, this increase was still inadequate in the face of the town's water requirem ents

estimated at 63,048 m3/d, i.e. a shortfall of 27,048 m3/d and a water coverage of 40% . Major

quarters of the town (M'fi1ou, Talangai, Mpissa and ''Cité des 17'') with a population of nearly

81,000 inhabitants were totally cut off from the corporation's DW S system .

water.3.2 Following the proclam ation by the United Nations Of the international and

sanitation decade in 1981, the Congolese Governm ent drew up a development programm e for

this sector. This programme was included in the first five-year development plan (1982-1986)

whose investments envisaged for the sector aimed, as a m atter of priority, at improving DW S

in the urban centres and Brazzaville in particular. In 1981 the Congolese government financed

a study of the Brazzaville DW S master plan up to the year 2000 including detailed technical

studies of a first phase aimed at meeting water needs by 1990. The Plan was finalized in

October 1981 and its results enabled the Government to submit a request to ADB for financing

this project.


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2

1.3.3 The project was evaluated in 1982 and implemented between 1983 and 1986 under the

respondibility of its executing agency, the ''Société Nationale de Distribution d'Eau (SNDEIi'.

1.4 Sources of Information

This Project Completion Report (PCR) was based on information obtained from the

. .

project evuluation report, archives of ADB q.npytthe executing agency as well as the outcome of

dilcusslons held during project site visits with variouis officials of SNDE departments.


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; 3

ECTOM L OBJECTIVX AND PROJECT AIM

2. 1 W ithin the context of the international water and sanitation decade, the Congolese

Government set itself the following sectoral objectives;

i) Drirlkinc Water Supply

In urban areas, raise the drinking water supply rate of 40% in 1982 to 90% in

1986 to reach 100% in 1990;

ln rural areas, raise the drinking water supply rate of 6% in 1982 to 50% in

1990.

ii) Sanitation

The objectives aimed at a substantial improvement in the level of sanitation

services in urban centres and providing them in rural areas.

2.2 ln response to the above-mentioned sectoral objectives, the Brazzaville DW S

reinforcement project aimed at enhancing the water supp.ly capacity of the town by building new

roduction, transportation, storage and distribution facilities from the Djirl river. The

lmplementation of the project was partly to help satisfy water needs up to the year 1990 and

cover at least 99% of the estimated needs as soon as it became operational in 1985.

Furthermore, the project aimed at erlhancing SNDE'S capacity in operating and maintaining the

DW S installations with the procurement of operating vèhicles and training of persormel to run

the treatment plant. taastly, the conduct of a tariffs study within the context of the project wöuld

help to detennine tariff levels that would ensure the viability of the project and that of SNDE.

2.3 In the early 1980's, the development of the DWSS sector formed jart of the first five-

year development plan (1982-1986) whose operations were designed under a master plgn of the

Brazzaville DWS over a twenty (20) year period (1980-2000). At the beginning of the planning

period, the situation of the sector was as follows:

Urban

Rural

DW S

40%

6%

Sanitation

2.4 Under the five-year plan, the aim was to attain in 1990 a drinking water supply coverage

of 100% in urban areas and 50% in rural areas, and provide adequate sanitation for the

populations.


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4

2.5 Based qn the estimates of an average growth consumption per inhabitant from 83 l/d/inh.

in 1980 to 106 l/d/inh. by the year 2000, the water production and distribution plan adopted

consisted in the construction of a new intake structure on the Djiri river with a rate of flow of

about 40 m3/s at all times. The plan was based on the construction in two stages of the Djiri

water treatm e t plant.

2.6 Wxith rggard to sanitation and drainage of rain waters in particular, a master plan and

feasibility study was conducted in 1986 and hetpçd to define a programme of works in three

phases over a jls-year period. The first phase which takes into account the most urgent works

(sâtlitation in 'ost densely populated quarters, protection of major heavy infrastructures, halting

of the most se ious erosion phenomena in the urbanized sectors) was the subject of an ADB loan

in 1989. This could not be started as a result of the slow attitude of the authorities to make the

loafl enter into force, to launch the various tender documents and also of the fact that the countly

was under sanction following payment arrears. In 1994, this loan was reallocated as part of a

,lan to pay Cmngo s arrears.

l

.

7 The myin components of the Brazzaville DWS strengthening project, as defined and

evàluated by ADB, are the following:

A . Construction of a water intake

structure of 4,500 m 3/h ;

B. Building of a treatment plant with a capacity of 2,250 m 3/h during the first phase;

Construction of a 10,000 m3 treated water storage tank and reequipm ent of two

previous ones;

D. Building of 14 houses for the personnel;

E. lm plementation of road works comprising a bitumized section Qf 2.3 km and a

track of 6 .36 km ;

F. Laying of supply and primary distribution pipes of a total length of 41.8 km ;

G. Building of a secondary distribution network of 200 km and 25,000 individual

connections;

H . Supply and installation of hydraulic equipment and electro-pumps;

1. Supply and installation of electrical equipment;

J. Supply of operating vehicles

K. Training of personnel;

L. Engineering-consultancy services for works supervision and inspection'

M . Conduct of a tariffs study.

.. r1 .'.ik a..'.'@r; ., b :kkk

...


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5

PROJECT DESIGN

3. 1 Oricin of Proiect

The Brazzaville DWS reinforcement project was identified within the context of a master

plan sm dy on the Brazzaville DW S system conducted in 1982. The Plan included a feasibility

smdy which helped to select the most appropriate site for harnessing the water and construction

of a water treatment plant. The detailed feasibility study on the first phase of the Plan helped

in the preparation of tender documents Of structures to be built. On the basis of the results of

the Plan's study, the Congolese Government subm itted an application for financing works for

the first phase of the Plan.

Preparation. Evaluation, Negotiation and Approval

3.2.1 The project preparation consisted in the implementation of the master plan and detailed

prelim inary studies as well as the drafting of tender documents by a consultancy finn recruited

by the government. The project was evaluated in September 1982 and approved by the Board

of Directors in December 1982. The ADB loan agreement for an amount of UA 26.59 million

was signed in January 1983.

3.2.2 In view of the critical situation of Brazzaville's DW S system , the various phases of the

smdy, i.e. the Plan, feasibility study and detailed preliminary plan of the first phase and drafting

of the relevant tender documents were undertaken within a very short period (less than 7 months)

to enable works to be started quickly. This situation did not make it possible to carry out,

among others, a detailed study of the main physico-chemical aspects of the Djiri river in an

adequate hydrologic cycle (at least one year). The Bank did not participate in the preparation

process. AIl these factors explain the m odifications and contract amendments which occurred

during the project works (para. 4.2). However, during evaluation, the Bank recommended a

tariffs study to ensure SNDE a sound management and thus supplement the study of the master

Plan which dwelt mainly on the technical aspects.


19/49

-

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; ,j

A . ' '

QJ .:

.

,

. g

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.

.

.

,' ''i 4. PROJECT IM PLEM ENTATION, OPERATION AND COSTS .?

.

' t .

.

I

.

'

il'

,. 4. 1 Entry into force of the loan and start-up of pro

-

iect ';

.

.

t .k j j).). .

.

j

.

yr 7 1 4. 1. 1 The lo 'p agreement was signed on 7 January 1 983 and enteied into force in May 1983, )

.'

.

i.e. less than 5 months after it had been signed. Th shbrt period. between tke signi ng of the . '

.

.

l -

.

loân and its entry into force is mainly due to the fact thàt, ahart from the general condkitions, the ',

'

'

'' dent condlitions only included the Bortower'd comtjj itntent letters as well as the prbsegtation

r

( #. PIXCCt

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v

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,

of SNDE'S debt recovery plan. The conditiohs of entry into force are provided as anlex 4. No =.

.

I

.

.

.

v

$. delay waj therefore attributed to the fulfilment of condittioùs of entry into force. :

.)

' I '

;: 4 1 2 W ork started in July 1983 i

.

e. a slight delay of three months in relation to the schedule. '.1j,

'

:

. ,,

j :j, .

k : y. j j , , ,; , This slight delaly can be attributed to the fact that at the time of prolect evaluatibn in S'eptember

j:l ' ' I

.

:

; ' 1982, the seleotion process of firms for works and the engineering consultant had already been à-

1 M '' '1t3.: finâlized. The quick start-up of works is explained b#'the critical situation of the Btazzaville /,

j ' '

,

:

DW S system . (

;

,

'

.

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)('.. ' 7'7

;.:, (( ,,kjj.

tq 4.2 M odifications .

-

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j ., 4.2. 1 During prolect implementation, the most significant modifications concerned the ;

jy( e twy

.

following aspeets: .i.,

..c ç j . . ..'ç'ay ' .,

, :ç

i) the 15 km long 20 kv MV line envisaged for the electrification of the installations t

: .r 1

.

. i ' ; . l

; k

,

Was modified. Indeed, the vottaje Waj tàised to 30 kV' ih. view of the elee.ri-clty ;':

; r . supplv fèr installations of the 5#atei' treàtment plant à' well ad. thi Mi , .

'

-

'

- ,

'

.

.

-

I a'' a''--' ; z'' ' h '

'

.

Academy situated about 1.5 km from the glte of thé 'plànt. The cojt of wotk on ';.

,,

.

:, ,,

jhe Brazzaville-Military Academy section was fully born: by the Conjolege pady .:.'

:.

.

; ,

which also carried out the adjudication process. The extension of the 30 kv line '

J j

,v : to the treatment plant was financed by ADB; 'ï

.

: .

4

j . .; -'

r .'.' l '

..

ii) 'dditional works and equipment due to poor preparation of the tender documents ?

'

?? ' . l :''

. ', and those imposed by actual site conditions and difficulties in implementing the

.

.

kg . j -tk:

.

) ' terms of the various contracts. The additional works and equipment represented

.

l .4.t

k. 1 1 . 5 % Of the total cost of the project. ;'.,n

y .. j , t. .tk ,

4 2 2 W ità regard to the implementation schedule, these modifications caused an extension by o-:

, * * .;.

15 months of ihe initial programme envisaged for civil engineering works with the induced '':'

I ktj) tjw .ffects on works inspection and supervision

.

In any case, these modifications coupled w

..

l @

7 attendant slow administrative procedures (signipg of contract ame dments) explain the extension '

l f ks supervision

.

J

@

,

x by 39 months of the serivices of the bureau in charge o wor ,

g j . k-,.,' ); t.: - .

'

4 2 3 M oreover, the change made in the financing and implementation of electritication works '''?

( . .

.' had a siguifican't impact on the operation of the treatmen't plant

The frequent power cuts at the .4'

l :j ).

Brazzaville eleetric plant, the simation at the subscriber s end and the fact that the national

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20/49

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electricity corporation (SNE) was not involved in the inspection of these works are the cause of

current difficulties observed in the plant's power supply. Hence, the poor connection of

lightning arresters disrupts, in case of storm, electricity supply to the plant (rather many blow-

outs of transformers at a rate of 4 to 5 a year always during stormy weather).

4.3 lm plementation Schedule

4.3.1 W ork actually started on 7 July 1983 and there was provisional acceptance of civil

enqineering works, hydraulic equipment and electro-pumps on 6/09/85 and that of works on the

Iaylng of pipes of the prim ary network on 11/05/85. The acceptance of a section of the pipe

laying works of the secondary network took place in August 1988. To date, connection works

have not been com pleted as a result of the cancellation of the relevant contract for non payment

by the government of bills issued by the corporation. Besides, part of the connection equipment

had disappeared for lack of adequate storage. Lastly, the final report on the tariffs study ending

the project activities was only sublnitted in July 1990.

4.3.2 Compared with estim ates of the appraisal report, therefore, there was a delay of nearly

60 months due particularly to the completion of the tariffs study. The delay is 44 months if one

considers the completion of works on the laying of pipes of the secondary network.

4.3.3 According to SNDE officials, quarterly reports were prepared during the project

implementation period. However, neither the m ission could be provided with a copy nor could

one be found in the Bank's archives. The same goes for the final report on completion of

works. M oreover, this problem was not pointed out in the reports of the Bank's supervision

m issions. On the other hand, reports of site meetings were made available to the mission and

served as sources of information in the preparation of the present PCR.

4.4 Procurement of Goodsand Services

4.4. 1 The project was implemented on several contracts. The various components as described

in the appraisal repol't, with the exception of the training (K), inspectiolz/supervision works (L)

and tariff study (M) components, were regrouped in lots as follows:

lu7t 1: Civil engineering works include components A, B, C, D, E, 1.

Lot 2: Supply and laying of hydraulic and electro-pump equipment, com ponent H .

Lot 3: Supply and laying of main supply pipes and primary distribution network, component H .

Lot 4: Supply of equipment for secondary distribution network, components G,J. This lot,

subdivided into 5 sub-lots, was the subject of the following separate and individual

contracts: i) sub-lot 4-1, pvc mains; ii) sub-lot 4-2, connection materials; iii) sub-lot 4-3,

metres' iv) sub-lot 4-4, operating vehicles' v) sub-lot 4-5, tools. Pipe laying works of

the secondary network, the subject of component G, were to be carried out by SNDE on

force account according to estimates of the appraisal report. However, in view of


21/49

8

technical and financial diffiçulties, SNDE wao ungble to im plement them and they

' h ubject of a mutually agreed contract with a French finn with the approvalecamq t e s

of the Bank.

l

.

4.2 The procurement of goods and services for civil engineering works and major equipmetlt

.

was done throuch international competitive biddinc (ICB). At this stace. in view of the

- - - - - -'-' '

, .

.

emergency situation mentioned by the Congolese authorities (para 3.2.2), the Bank à evalbation

done on tlhe basis of results of firm's tenders

The evaluatibn mission tim ited itself toas

lonformity of tender launching operations and award of contracts in accordancehecking the c

l

with Bank guidelines.

4.4.3 Lots 1, 2 and 3 were awarded on the basis of advance procurement procedures. Lot 1

and 2 were allocated to a French firm which sub-contracted 1ot 2 to another French firm while

1 d French firm

.

ot 3 went to a thir

l

.

4.4 Engineerin/ consultancy services on works supervision and insp. ection (component L) *-' '''

'

financed by th ' Government formed the subject of a contract awarded under a mutual agreement

.

had previously conducted the master plan, feasibility and detailedo a French fi 1u. The Iatte

l dies and prepared the tender documeats. The contract on petsonnel trainingreliminary sty

(component K) was allocated to a firm which sub-contracted lot 2. Lastly, a Swiss firm was

warded the clntract on tariffs study.

l

.

5 Costs and Disbursements

lroiect costs .

I

.

5. 1 The acqual project costs were quoted in UA worked Out from amounts quoted in CFA for

purposes of co'parison. The final total project cpst was calculated on .the basis of the exchange

rates in force i(n September 1986. At that time, the dollar was equivalent to CFA.F 380.62327

and the rate of UA in terms of the doll@r Fas 1.0846% Cplpparçll with the êF, the UA was

ivalent to 7.60465 i.e. 412.824 in relation to the .CFA. 'fhe tabie below shows thequ

comparison of cost estimates, contract and actual costs or the project at the end of works.

-

1. ua-rll..zn 4::.


22/49

' #

K.q

.

9

Table 3. 1

Comparative Table of Costs

(in UA million)

Eval. Contract

10.23 10.46

Contract

Amendm ent

3.71

Actual

Civil eng. Hyd equip/elect.

(components A,B,C,D,E,I,H)

Primary supply pipes (F)

Secondary distrib. network (G)

Operating vehicles (J)

Training of personnel (K)

14.17

9.07

8.39

0.34

8.06

2.57

0.37

0.12

1. 12

0.12

0. 16

Works superv. and inspection (L) 0.32

Tariffs study (M)

3.94

0.42 2.99

0.37

0. 12

1.24

0.12

0. 12

0. 19

10.82

39.52

Contingencies

Total 22.80 8.19 31.01

NB. Contract costs as well as actual costs include risks and contingencies.

4.5.2 A study of the table shows that the actual project costs are On the whole lower than those

estimated on evaluation. This difference is mainly due to an Overestimation of costs of works

and supplies as a result of poor preparation of the project. Furthermore, it is noted that the

actual costs are much higher than the costs of contracts. This is due to the Iarge number of

contract amendm ents negotiated for additional works and supplies.

B. Disbursements

ADB and Government contributions to the financing of the project are shown in table 3.2 .5 .3

below:


23/49

10

Tabls 3.2

Financing Plan

(in U'A million) .

Sources On Evaluation At the end of W orks

F.E. L.C. Total F.E. L.C. Total

ADB 26.59 - 26.59 23.84 - .23.84

Gokt. 12.93 12.93 7.17 7. 17

lbtal 26.59 12.93 39.52 23.84 7.17 31.01

t 1 4 An analysis of the above table shows that, coppared to the final cost of the project,

'

'

-

è timates made on evuluation. Indeed,bB s participation was higher in relative value to tk es

although lowel in absolute value than the loan amounf, ADB'S contribution reptesçnted 76.'87 %

of the projecl cost as against 67.28% envisaged on evaluation. At the same time, the

Goverrlment's contribution declined by nearly 9.6% cömpared with the estimates made tm

evaluation. Jhese differences in the case of ADB are due to the poor quality of the tender

ocuments w 'ich brought about a Iarge number of amendment to contracts, for a total amouht

1

of UA 8.7 million representing nearly 28% of the overall cost of the contracts.

Table 3.3

Estimated Schedule of Expenditures per Source of Financing

(in UA million)

Source 1983 1984 1985 Total

ADB 14.96 10.51 1. 12 26.59

Govt. 3.63 7.67 1.63 12.93

Total 18.59 18.18 2.75 39.52

Table 3.4

L

Actual Schedule of Exnendtttlrts pef Source of Financing

.

'

(in UA million)

1983 1984 1985 1986 1987 1988 1989 1990 1994 Total

ADB 4.46 8.71 6.76 3.03 0.38 0.31 0.09 0.04 0.06 23.84

Gvt. 2.45 2.77 0.69 0.64 0.62 7. 17

Tot. 6.91 11.48 6.76 3.72 0.38 0.95 0.71 0.04 0.06 31.01

% 22.2 37 22 12 1.2 3 2.3 .0.1 0.2 100

*


24/49

4.5.5 Tables 3.3 and 3.4 above show the estimated and actual schedule of expenditures per

source of financing.

4.5.6 The analysis of these tables shows that the Bank's disbursements initially planned over

a three-year period did spread over 9 years (excluding the 3 years when the country was under

sanction). However, over the first four years during which physical works had practically been

completed, disbursements already represented 93% of the project costs. The indicated

expendimres from 1987 to 1990 represent especially payment for additional works already

carried out between 1983 and 1986 and for which amendm ents to contract had been signed.

1994 expendimres represent outstanding payments as a result of sanctions against the country

between 1990 and 1994.

4.5.7 Disbursements made by the Bank represented 89.6% of estimates made at the time of

evaluation (UA 23.84 million against UA 26.59 million) while those of the Government were

only 55% of the estimates. In the case of the Bank, this gap is explained by the fact that the

costs on evaluation were overestimated given the poor project preparation with the result that,

in spite of the numerous contract amendments, the loan yielded a balance. The low level of

government disbursements is especially due to fiancial difficulties which did not enable it to

honour its commitments (a shortfall of 10,000 connections).


25/49

12

5. OPERATIONAL PERFORM ANCE

5. 1 The Contract

ljor objective of the Brazzaville Dws strengthening yroject was to improve the.1. 1 ne m

water supply ckpacity through the establishment of new water productlon, trailsportation, storage

d distributionl facilities from the Djiri river. The proj çct therefore made it possible, amongn

her things, to build a water intake structure of 4

,

500 m 3/hour, a tteatment plant of 2,250t

m3/hour and a storage tank of 10,000 m 3.

5.1.2 On evaluation, it was envisaged that the plant would attaln its full capaçity as soon as it

became oyeratibnal, i.e. 54,000 m3/day. With the already existing plant, the d'aily production

of water In Brazzaville was around 90,000 m 3, i.e. 32,400,000 m3/year. Howeyer, annual

I

production was lower than that envisaged on evaluation as shown in the table below:

Table 4. 1

Comparative Status of Actual and Estimated Ammal

W ater Productioh in B'razzaville

(in '000 m3)

Estimated Produced D iff.

1286 32,400 17,530 -46%

1987 32,400 21,370 -34%

1988 32,400 21,000 -35%

1989 32,400 25,550 -35%

1990 32,400 22,020 -21%

1991 32.400 22,000 -32%

1992 32,400 24,811 -23%

1993 32,400 25,362 -21%

5.1.3 This poor jerfonnance can be explained by two factors. First of all, the assumptions that

the Djoue and Dliri plants would attain their fMll capacity were rather optimistic under the

technical condqtions of operation. Then, the structures built under this project have major

defects which 're both due to the design, implementation and operation of the installations.

Indeed, the Djjl i plapt had major operatlng difficulties caused by: i) sand deposit at the water

intake point; ii) deficiencies of the electric jower supply system; iii) lack of sewerage for rain

ters around lhe 10,000 m3 reservoir and lv) inadequate stock of spare parts for maintenancea

of the facilities). AIl these defects mentioned by the monitoring and audit missions carried out

n 1992 stem from the short period within which the project was evaluated and financed.

iorated very fast for Iack of m aintenanee.oreover

, the vehicles procured under the project deter


26/49

13

5.2 Role of the Proiect

5.2. 1 The Brazzaville DWS reinforcement project is the first component of the emergency

phase, the outcome of the study of the M aster Plan ''horizon 2000'' financed by the Congolese

government. lts implementation was to help reduce the water production shortfall estim ated at

83, 160 m3/day in 1990. The daily production of the new plant (54,000 m3/day) was therefore

to bring the shortfall down to 29, 160 m3/day.

5.2.2 Alongside the increase in water production, the project enabled the comlection of a large

part of the population to the network. The number of subscribers in Brazzaville therefore rose

from 26,700 in 1986 to 50,000 in 1994, i.e. an increase of 87% (there have been 15,000

connections under the present project).

5.2.3 Lastly, this project is the first phase of a DWS development strategy in Brazzaville. The

implementation of the secönd phase and rehabilitation of the former network will enable the

people to have easy access to drinking water.

5.3 Other Factors

5.3.1 The project's contribution in tenns of training of SNDE personnel was appreciable.

Indeed, two engineers and three senior technicians have had a two-m onth training with the firm

that supplied hydraulic equipment. Besides, 13 pump operators have had a nine-month training

locally. The mission observed, however, that none of the executives sent on training currently

works at the Djiri plant. W hat is more, the staff do not seem to be quite satisfied with their

training course, apparently due to the fact that it was rather simple and not quite adapted to the

operating conditions at the Djiri plant. In any case, this situation poses the problem of judicious

choice, on the one hand of the training courses provided the Staff of the project implementation

organs and, on the other the workers who benefit from them .

5.3.2 The management of such a project by SNDE'S technical units has been quite a valuable

experience for future operations of the donors in this sector. lt is, however, regrettable that w ith

the numerous changes in which the firm 's staff have been involved, none of the officials who

participated in the project is currently at post in the Technical Division.


27/49

14

6. INSTITUTIONAL PERFORM ANCE

Legal and Institutional Framework

6.1.1 SNDE'S legal framework has undergone grofounà changes since the project's evaluation

in 1982. lndeed, by decree 83/668 of 30/08/1983, SN DE was made a Pilot State Entreprise

1 o

managed under terms and conditions defined by legislation N 54/83 of 6 July 1983.

l

.

t .2 Under this legislation, a qerformance contract was concluded between the State and the

pilot Entrèprisg, among other thlngs, on the injtiul 'material infrastrucmre to be placed at the

disposal of SN E, definition of an investmeht programme necessary for the entreprise, its price

policy and al1 other specific clauses on the activity of the entreprise. This legislation clearly

outlines the prerogatives of the supervising M inistry wh ich should exercise a permanent power

of policy and 'nspection over the entreprise. M oreover, this legislation provides for the setting

up of a Board of Directors as well as its composition and powers.

6. 1.3 Also, by decree 84/401 of 23/04/84 voted by the Council of Ministers, SNDE'S Articles

of Incorporation were armroved. difinine its orzanization and functioning. Although the

'

* * ' ''''' '-'''

.

objective of thq company has remained unchanged, the new Articles of Incorporation henceforth

provide SNDE with an authorized capital fully held by the State and define the financial and

Iccounting provisions applicable to the entreprise

.

.2 Organization and M anagement

6.2.1 In lieu and place of the Steering Committee which existed at the time of proj ect

evaluation, SN E is henceforth administered by a lz-member Board of D irectors appointed for

a three-year tenh of office by decision of the supérvising M iniistry. Presided over by the

Ianaging Director of SNDE

,

this Board is inkèsted wirth the most extensive powers to act on

behalf of and jfor the account of the firm withtn the framework of the legislation in force.

oreover? in view of the new socio-politicâl context, b'f the three organs of 'the dderm inaht

tèllogy which existed in 1982, only the jromoiion' atld social lectlrity committee ls xtill

bjèràtilmél.

6.2.2 The S PE Head Office is run by a Managing Director appointed by decree voted by the

Council of M ihisters on the proposal of the supervising M inistry. This D irector is ass:isted in

Iis duties by cqntral Directors appointed by decree voted by the Cabinet Council on the proposal

of the supervising M inistry after consultation with the Managing Director. Departmental Head's

l

'

i Director's proposal. There appointed by decision of the supervising M ini#tl'y o.n the M anag ng

.

M inistry therefore hps great intluence in the establishment of management organs.

l

.

2.3 SNDE'S organization has improved substantially since the project's evaluation. Apart '

from the general management office, the organization chart comprises six (6) central divisions

(instead of foyr (4) in 1982) and four regional directorates (instead of two at the time of

evaluation). Two new units (Data Processing and Supplies) have been set up and directly

.

.z.. ,=.ex % ,.:x- . g

.z.- :.œ. ...=x. -.


28/49

'D

attached to the general m anagement office.

annex 6.

6.2.4 lnitially, the restructuring of the organization chart was to help reduce structural and

personnel expenses while at the same time providing the M anaging Director with the necessary

support structures to carry out his tasks. It should, however, be noted that the present

organization is ineffective in that the prerogatives and duties of the various units are not always

clearly defined. For example, the Cornmercial Department is, in reality, only responsible for

commercial studies. It is neither involved in billing nor debt collection operations entrusted to

regional offices. This situation poses a problem of competence between this departm ent and that

of research and planning. M oreover, several departm ents do not have the human and m aterial

resources to enable them fully play their role in the entreprise.

15

SNDE'S current organization chart is provided as

6.3 Persolmel and Traininc

6.3.1 As of 31 January 1995, SNDE'S staff numbered 669 employees as against 678 at the tim e

of project evaluation, i.e. a decline of only 1% . However, it should be stated that the staff

strength evolved in a saw-toothed manner. In fact, up to 1993 the number of pennanent

employees declined steadily from 678 perm anent employees to 571 as of 31/12/93, i.e. a

decrease of 26% . During this same period, SNDE resorted to temporary staff paradoxically

assigned to pennanent duties. In 1994, therefore, the regional labour inspectorate insisted that

the 127 workers then engaged temporarily be rçcruited.

6.3.2 The table below gives a comparative status of staff distribution per category at the tim e

of evaluation and drafting of the completion report.

Evaluation

59

192

427

678

Executives

Foremen

W orkers

Total

87

249

333

669

The current staff structure of the firm shows overstaffing of the executives and foremen

category. Indeed, SNDE has 1 executive to 2.8 foremen, 1 executive to 3.8 workers and 1

foreman to 1.3 workers. This trend is especially related to a recruitment policy not in line with

any objective criterion, reclassitication of certain employees after non vocational training courses

(ideological and trade union affiliated) and an automatic promotion system which does not in any

way encourage the spirit of competition.

6.3.3 After the project evaluation, SNDE established a training centre built through financing

from the Germ an cooperation. Up till 1992, this centre had trained nearly 450 SNDE employeej

in the production units and secondary centres. The trainng courses were provided by a Gennan


29/49

16

company. However, with the suspension of external assistance, this centre no longer receives

financing and has therefore suspended its activities. To date, the entreprisé has no training

policy reflected by the drawing up of a training scheme in response to its needs. Oj.e of the

reasons for thls shortcom ing is that it has no executive staff capable of drawing up a training

program me.

6.4 Accounting and Auditing

6.4. 1 There is a teal bottleneck in the management of SNDE'S accounts. In organizational

lcture of the accounts department seems to be ojerational with the accounts unitserms, the stru

I

of the regional offices and a centralization at the head Ofhce. However, this function is

l

. ,haracterized by: i) inadequate control and monitoring. of operations within the accounts units

of the regional offices; ii) inadequate internal control Of procedures; iii) a manual accounting- -

.ystem that requires several manipulations and reveals a poor application of Iaid down

1 dures

.

Moreover, the data processing system currently being designed has noccouhting proje

lirlk between the headquarters and regional offices.

'

1

6.4.2 The an'lytical accounting system mentioned in the appraisal report does not currently

exist at SNDEI It started with the financing of the ADB 11 project, but was interrupted with the

departure of t 'e technical assistant recruited for that purpose because of the sanctions againgt

Congo.

6.4.3 The accounts are still certified by the State audit service in accordance with the firm's

' lt of anomalies detected a

'

t several accounting posts, the atlditor hasylaws. Howeyer, as a resu

never been able to certify the regularity and sincerity of SNDE'S financial statements. The

I h Board of Directors forinancial docu ents of the fil'm have not even been subm itted to t e

approval since 1991 .

6.5 Tariffs

l

.

5.1 The water tariff structure has remained similar to the one that prevailed at the time of

l (j to prices whichvaluation

,

characterized by the existence of three tranches that correspon

i There was

,

however, an improvement in 1984 with thencrease with tpe level of consumption.

scrapping of t 'e 20% rebate until then applied to a water volume over 300 m3. SNDE'S tariff

system is therefore very simple and facilitates billing.

l

.

5.2 There have been four increases in water tariffs since 1982 of which, the last, 20%

lble in the second quarter of 1994 after the devaluation of the CFA Franc

.

Theecame applica

' from CFA

.

F 81 in 1982 to CFA.F 131 in 199 5, i.e. anverage tariff qf m3 of water went up

increase of 63 '. Until 1987, the tariff increase was only 34.3% whereas, according to the loan

l

conditions. it should have been 50% minimum. ln terms Of US dollars, the average rate of m3

.

.- l

of water rose from 23 cents in 1982 to 26 cents in 1995, i.e. an increase of 13% over the

pefiod.


30/49


31/49

18

6.7 Perform ance of Consultants. Entrepreneurs and Suppliers

Consultant

6.7.1 In all respects, the services of the engineering consultancy firm were very poor. The

Iirm

,

a branch of a water supply company, is not recognized in the study and design of DW S

ivities. Therefore, the lack of reliàble data on the Djiri river did not enable theroject act

1

consultant to design an adequate raw water catchment structure. The sand deposit at the intake

I

structure as rell as a1l other structures (decanters, filters) noted right from the first operation

' ld be solved, among other solutions, by stabilizing the steep banks of the riverf the plant, cou

and constructing a primary decantation channel with an evacuation system of the deposited sand.

Ihe consultant could not find any solutions to the specitk technical difficulties that cropped up

during works implementation (electrical and secondary network). It is the same with problems

regarding the procurement of goods and services where the consultant's contribution was nil.

Entrepreneurs and Suppliers

I

6.7.2 The firm awarded the contracts for civil engineering works, supply of hydraulic

I

equipment and electro-mechanical pumps was noted for average quality work in view of the poor

l ion problem s at the factory

,

the poorngineering consusltancy services. Rain water evacuat

quality of the access track to the 10,000 m3 reservoir, and Ieakages noted at the reservoir built

under the project which never went into operation were not solved by this firm.


32/49

19

FINANCIAL PERFORM ANCE

7. 1 Operational Analvsis

7. 1. 1 This analysis was made I'rom the table provided as annex 5 which gives a comparative

status of estimated operating accounts prepared at the time of

qyaluation and those on SNDE'S

financial status for the period 1986-1993. However, we hakç. reservations on the financial

documents as of 31/12/92 and 31/12/93 which are only provisional.

7. 1.2 SNDE'S operational earnings were quite below the estimates m ade at the time of

evaluation and based on the optimum production of the plant built under the project (32.4 million

m3 per year) and annual sales of 27.54 million m3. Over the period under review, SNDE'S

mrnover grew by 32% from CFA.F 2,958 million in 1986 to CFA.F 3,907 million in 1993 for

an estimated annual amount of CF A.F 4,817 million. The rise in the turnover is m ainly due to

the tariff increases between 1986 and 1993 (34%). Indeed, in terms of quantities of water,

SNDE'S annual sales were practically sim ilar over the entire period whereas its production rose

from 17.5 million m3 in 1986 to 25.3 million n43 in 1993, i.e. an increase of 44% . Thus,

neither the production levels nor those of sales envisaged on evaluation were achieved as a result

of technical and institutional shortcomings. Technically, problems connected with the design,

implementation and operation of the project's structures caused several breakdowns at the plant

which had several interrtlptions in its functioning with tlle result that the optim um capacity was

never attained . Besides, in view of the state of the network, technical losses keep On rising.

Institutionally, the absence o17 any com mercial strategy has Ied, on the one hand to an almost

systematic lump sum billing which does not reflect actual consumption and, on the other, a rise

in fraudulent connections. Consequently, the increase in the number of subscribers (80,000 in

1993 as against 45,240 in 1986) was not reflected by an increase in water sales.

7. 1.3 At the same time, operating expenses increased by 78% from CFA.F 4,302 million in

1986 to CFA.F 7,648 million in 1993 and are quite above the estimates made on evaluation

(+98% in 1993). This rise is mainly attributed to personnel expenses the level of which. quite

above forecasts, account fbr nearly 60% of the turnover. M oreover, depreciation and stocks

rose by 98% between 1986 and l 993 given that account was taken of fixed assets of the

secondary centres in 1989 and trend of bad debts.

7. 1.4 In any case, contrary to estilnates made on evaluation, SNDE'S results show a structural

deficit and cumulative Iosses reached CI7A.F 17,976 million in 1993, i.e. 143% of the

authorized capital. The operating ratio is higher than 1 over the entire period. Apart from

technical problems, SNDE operation has suffered from: i) a low Ievel tariff unable to ensure the

comoration's viability' ii) an incoherent recnlitment policy especially guided by political

considerations; and iii) total lack c)f control Over financial and commercial aspçcts.


33/49

20

7.2 Analvsis of Financial Structure

l

.

2.1 The appraisal report contains no estimated analysis of SNDE'S financial structure. The

a

.nâlysis beloj was made from the table in annex 6 presenting a summary of balance sheets for

the period 1986-1993.

,.2.2 The fi s net situation sharply d

eteriplvted as a result of the cumulated lossçs. It

declined from CFA.F 8,236 million in 1986 to CFA.F -5,392 million in 1993 with the result

that SNDE is currently totally insolvent. Therefore, the debt ratio eventually reached 25 in

1991, the last year the firm had a net positive situation.

7.2.3 Howeyr, the sharp rise in medium and long term debts (MLTD) helped to ensure a

balanced structure over the entire period except the year 1991. Field investigations did not help

tb explain the rise in M LTD between 1992 and 1993.

7.2.4 ln any case, SNDE is currently in a critical financial situation which jeopardizes water

supply in Congo. Rehabilitating the firm callsxat thr same time for the injection of financial

re:burèej and redefinition of a new institutipnail, and statutol'y i-ramework. This is why the State

à-ij Itllilâtéd â privatization process of SNDE which will help to ensttr: the viability of the new

éhtlty tb be sjt up through: i) the redefinition of an .pp p ropriate framework; ii) the restofation

of thè fhéjor financial balances' and iii) the application.,of real market prices. To thig end, a - - -

,onsultant will be recruited in December 1995 to pave tthe way fQr the finn s privatization and

j .

'

ensure the transitional management of the sector until the resumption of activities by the private

6 ltant

,

to be financed by the W orld Ban:,, witll work in close collaboration withector. The yonsu

the privatizajion committee set up to implement the programme of state withdrawal and

restructuring bf the public entreprises sector.

t.3 Financial Rate of Return

7.3. 1 The assumptions for calculating IFRR on conlpletion of the projecy are provided as annex

ditional production of water in Brazzavitle without. Aseribing to the project the entire ad

taking accoult of the current operating conditions of SNDE gives the project an IRR of 7.54% .

lonsidering the actual operating conditions of this seotor

,

characterized by a level of overall

' ' IRR is 0

.

47% . The table for calculating IFRR is providedosses of at least 50% , the project s

as armex 8.

7.3.2 These rates are quite below the estimates made on evaluation, where according to the

assumptions, the IFRR would be 9.21 %, 13.80% or 20.48%. The rate of 0.47% perfectly

reflect the Yality and is explained by the project's poor technical and.financial performances.

In view of the average weighted cost of capital of abput 7.2 % , the project is not financially

viable.

;.

. ,: . .a . .k, x.


34/49

2 1

7.4 Financial Conditions and Clauses

7.4.1 On evaluation, the financial conditions of the loan provided on the one hand, for tariff

increases of at least 50% over a five-year period as well as the application of the conclusions

of the tariffs study in default of a State subsidy and, on the other, the submission of a plan to

recover SNDE'S debts from its subscribers including the State and its departm ents.

7.4.2 These conditions were perfectly appropriate and their strict application would have saved

SNDE from finding itself in a cessation of payment situation. They were, however, not applied

by the Borrower. The first reason stems from the fact that in their formulation, the conditions

did not have any binding nature. In fact, since the conditions of entry into force of the loan

were limited to the subm ission Of commitment plans and letters, it would have been necessary

to provide in the other conditions for deadlines before the end of works to put pressure on the

Government. M oreover, the delay in the start-up of the tariffs study rendered its conclusions

for the socio-political reasons inapplicable.

7.4.3 Furthermore, by insisting on the drawing up of a plan to recover SNDE'S debts, the

evaluation mission tried to find a solution to one of the company's major problems. lt would

have therefore been necessary to set up a debt recovery unit capable of implementing this plan.


35/49

22

. ECONOM IC AND SOCIAL PERFORM ANCES

I

8. 1 Economic Performances

8.1.1 The teo nical conditions of drawing up, implementation and operation of the project's

,tructures as well as SNDE s socio-econom ic environmpnt have strongly lim ited thq results

expected from the project. Indeed, although access to water has been facilitated for a larger

proportion of the population of Brazzaville, the DW S situation is still preoccupying and

characterized by quite long untimely interruptions in water supply. Several quarters receive

1 1 Jr 2 hours per day, generally late at nigàt.ater on y

8. 1.2 Moreover, the industries targeted at the time of evaluation (breweries, soft driA s...l

resort to wells for their drinking water supply and therefore fully escape SNDE. The project's

impact on the development of economic activity is therefore very little.

8. 1.3 Given jhat most of the project's indirect benefits were not quantifiable, the evalùation

' ' ic rate of return (ERR). However, under SNDE'Sission did nqt calculate the project s econom

current operating conditions, and considering the 1143 of water as an economic tariff, the m ission

1 ' ERR at 18

.

48% . The table for calculating IERR is provided as annex 9.ssessed the project s

8.2 Social lncidences

8.2. 1 In health terms, SNDE'S totally insolvent situation renders very difficult the supply of

1

chem ical products for treating water. The water consum ed by the population of Brazzaville is

therefore not jfully guaranteed, since it is not adequately treated. Consequently, the project's

mpact on reducing water-borne diseases is very low.

l ' i

plementation has helped to provide training tbr ab

.

out twenty:2.2 However, the project s

hNDE employees and contributed to improve the living conditions of SNDE staff through t e

construction lf twelve houses at the site of the plant.

*


36/49


37/49

.0....

24

10. PERFORMANCE OF THE BANK AND THE BORROW ER

General and Specific Performance

The Bank

10. 1. 1 Generally, the Bank's contributitm was just average both in the project design and

implementatio .

10.1.2 As regards the project design, the Bank did not escape the rush on the part of the

Congolekè party. If it is admitted that the sittlation of tlje DW S sub-sector in 1982 called for

a fépid interv'ntion, the Bank could have taken time é1,l the same to detect the inadequaciews of

ï by following laid down proceduies in p roj eet financing

.

Therefore, a prè-prejecthe basiç study

J tion mission would have perhaps avttided some of the problems currentlyvaluation pr para

facing the Djilri plant

10.1.3 Moreover, still for the sake of paéidity, th conditions stipulated for granting the

loan had no jinding nature, being limited to 'fôittï . aj e àl Mitments and presentâtion of recovery

' i è eases eiwisaged were not fully carriednb reimbursrment plans. Consequently, the tarjff ili r

otlt and the SNDE debt recovery plan was not implzmented.

10. 1.4 On project imjlementation, no mcommendation was made by the evaluation

mission for adenuate t'inancial manacement of the proiect throuch the keeoing of separate

* -'' '*' - *'-' ;ccounts whose audit would have been financed under the project

SNDE s poor financial

time of evaluation called for greater caution. Lastly, the Bank neither dem andedituation at t e

:or received quarterly reports from the executing agency and the consùltant responsible for

supervigion a;s indicated in the Ioan agreement. The fact that the Bank did not finance works

inùpection a 'd supervision caused it preiudice and it did not even receive the final project *'

.

èdmpletloh report.

r

k '

.

id i à The two technical supervision missions cartied out in 1984 and 1986 turned out *

to be inadeuuate. lndeed. in view of the narttcvlar condtilticms of implementation, it would have

'

*' 1 ' *' ,een necessary to monitor the project's activiiies ort à mûre regular basis

Furthennore, given

1he Government's contribution to this ftoject (32.7%), there should have beenhe volume of t

fipancial supervision missions.

10.1.6 However, within the context of this project, the Bank carried out in November

1992 an audit m ission which helped to identify all the problem s related to the implementation

t

of this projec

10.1.7 In the absence of a completion report written by the Borrower, the above views

were obtained on the spot by the mission. For the Congolese parçy, the project suffered, on the

he Bank's procedures regarding the s'igning of the contract amendments and, onne hand fr m t

' ions did npt take account of the status of implementationhe other, from the fact that the sanct


38/49

25

of certain com ponents. Adm itting that there were delays in payments for additional works done

by firms, the mission observed that in any case these works should have been the subject of

contract amendments approved beforehand by the Bank. M oreover, the Borrower raised the fact

that because of the sanctions, the balance of the loan could not be used to carry out the plant's

technical audit, to repair the electricity supply system and carry out drainage works on the

platform of the water storage tank.

Borrower

10.1.8 The Borrower's performance is hardly any better. Apart from the general

conditions of entry into force of the loans, the Borrower did not honour any of the com mitments

made regarding the payment of its debts and those of its departments to SNDE, and particularly

regarding the increase in water tariffs.

10. 1.9 Furthenmore, in view of its financial difficulties, the Borrower was unable to fully

pay up its share of the project's financing. W ork on the laying of the secondary network was

therefore suspended and its relations with the consultant in charge of supervision and inspection

of works were strained in the final year of project implemehtation. Besides, in spite of the

urgent nature of the works, the Borrower could have spared itself many inconveniences by

avoiding to have the works carried out without the prior agreement of the Bank.

10.2 W orkinc Relations

W orking relations between the Barlk, the Borrower and the executing agency were

very poor. None of the partners fully played its role. There was no regular exchange of

information, observations or suggestions on the various aspects of the project implementation

with the result that certain problems did not come to Iight nor could solutions be found to them

(government counterpart, technical defects of structures.. .). In any case, the specific conditions

under which the project was implemented should have called for much closer working relations

in the interest of the project.


39/49

26

11. CON USIONS AND LESSONS

11.1 Conclusions

11. 1. 1 The Brazzaville DWS strengthening projejt was designed and implemented under

technical and fiancial conditiöns which seriously compromised its success. Indeed, for 'the sake

1f rapidity

,

lt was implemented with many shortcomings in the feasibility and detailed

I

preliminqry studies, and preparation Of the tender documents. The initial contractj therefore had

.

.

lp

t,

ie àiflended for supplefnentary works. Technically, the stmctures bu'llt have sekeral

i'Zll-V'iilèt ànd cannot achieve their operational tatgets set on evaluation

Finariclallyi the

kdertiifl ent did not attain the envisaged level of its financing with the result thàt the laying Uf

1he secondary network could not be carried out

.

M oreover, in spite of the many contract

amendments mainly financed by the Bank, the ADB loan had a balance representing over 10%

of the loan am ount.

11.1.2 ln terms of financial results, the projeçt's objectives have not been achieved.

Apart fmm technical oroblems, this is due, on the one hand to the fact that the financial

.

k

'

'

''

,onditiohs lald down were not fulfilled by the Borrôwer, and on the other, to SNDE s

1 l this firm is totatly banknlpt and

,

therefore, incapable ofnstitutional environment. Current y,

maintaining the structures placed at its disposal. Consequently, the privatization process initiated

by the Gover lnent is absolutely necessary for the rehabilitation of the firm and its production

facilities.

11.2 Lessons Learned from the Proiect

The Borrower

11.2. 1 The Borrower's financial situation has seriou@ly affected the project. Indeed, it

would be necessary to ensure that comm itments m ade for the financing of local counterpart are

I

actually budgeted for or if possible made available before the start of project works. Moreover,

it is importknt that adequate allocations are made in annual budgets to ùöver not only the

maintenance of vehicles but also spare parts for the facilities built.

The Bank

11.2.2 The project implementation has mainly suffered from inadequate preparation. In

our view, it is important to stress that a strict compliance with project financing procedures

would have helped to avoid many problems in its im plementation. In the future, the Bank

should avoid financing projects without conducting its own preparatory studies.

11.2.3 The Bank's poor supervision has also affected this project. In fact, regular

supervision missions (1 to 2 per year) would have made it possible not only to ensure

compliance rith the financial conditions but also to detect timely certain technical anomalies.

The Bank s 'ould therefore monitor ongoing projects regularly.


40/49

. 27

11.2.4 The mitigated results of the training course abroad financed under the project are,

to a large extent, due to the fact that the course beneficiaries did not have adequate basic

training. On its part, the Bank did nOt carefully examine the curriculum vitae submitted by the

executing agency. Consequently, the Bank should in the future see to it that there is a perfect

correlation between courses proposed and the basic training of prospective beneficiaries.

Furthennore, the Bank should take measures so that as much as possible, beneficiaries of

training courses are maintained at their post for a number of years. This 'would help to ensure

s/00th implementation of projects and training of other staff.

11.2.5 It is important to ensure compliance with Bank procedures on loan administration.

There were serious shortcomings in both the monitoring of com pliance with other loan

agreement conditions and financial implementation of the project as well as in the technical

supervision of this project. In this regard, the implementation Of recommendations made by the

internal audit service especially in the preparation of a log book for the dispatch and receipt of

various documents, registers and technical or financial reports would help bring about a better

adim inistration of loans granted by the Bank.

11.2.6 Another lesson Iearned from this project concerns measures to be taken by the

Bank to get the Borrower pay up its share of the financing of projects. Furthermore, provisions

could be included in loan agreements to demand from the Borrower a commitment to cover the

maintenance costs of equipment procured under projects as well as spare parts needed for built

structures.

11.2.7 Lastly, the public utilities sector in Africa is still managed by operating companies

with many institutional, accounting and financial shortcomings. Therefore, in view of the

importance of its interventions, the Bank should take the necessary measures to draw up a policy

on the privatization of such companies. In the case of the present project, the study initiated by

the W orld Bank will propose a form of privatization as well as a management structure of the

water sector. ln its position as major donor in the sector, the Bank should take an active part

in aIl phases of this study.

b:congo.pcr


41/49

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43/49

@

ANNEX 3

REPU

BLIC OF CONGO

COMPLETION RtPORT

REHABILITATION 0F BRAZZAVILLE

DRINKING HATER SUPPLY PROJECT

%

Costs on evaluation

(ln UA million)

Component

-

C1v11 eng., Hdr. equip./elect. 6,27

(Components A, B, C, D, E, 1, 8)

-

Supp14 pjqes (F) (Primary) . 6,23

-

Dlstrlbutlon network (G)(:ec'dan)6.62

-

operating vehlcles (J) 0

.

34

-

Training of personnel (K) 0

,

13

-Horks superv. & lnspection (L)' r-

Tarlffs study (M) o 19'

.

Rlsks & contlngencles 6 8j

a

v *

F a L .C . Total

1 0 , 23

9,07

8 ,39

0,34

0. 16

0.32

0.19

10.82

39.52

2.84

1 .77

0.03

0 32

4.01

12.93otal 26.59

Current costs of nrol'ect

(1n UA million)

Comnonent F k E . L r C . Totale

-

civip eng., Hdr. equip./elect. 12.09

(Components A, B, C, D, E, 1, 8)

-

sqpplt piqes (F) (Prlmary) 0.:0

-

ulstrlbutlon netWork (G)(Second.)2.65

-

operating vehlcles (J) 0.37

-

Tralning of personnel (K) 0.12

-

Horks superv. & lnspection (L) 0.10

-

Tariffs study (H) 0.12

Total 23.836

(*) lncledlng risks + contingellcùes

2.08

0.68

0.34

1 . 1 4

14.17

12.00

2-99

0.37

0, 1 2

1,24

0. 12

31.01.174


44/49

à. .x ..). L.i . '

h .

B.

=.m w

ANNEX 4

REPUBLIC OF CONGO

PRoJEcT

co/pLiTIl:iN.uR,E,oRT

REHABILITATION OF DRINKINd' WATER SUPPLY

ju kt zkvjj

-j.nNSTALLATION IN B

Loan Grantiàg

CoAdli/ions

) ' '

Conbitions Precedent to First Disbursefnent

lrior to first disbursement

,

the Borrower shall:

1. undertake to make annual budget allocations to meet its share of the projdct costs

:

in accordance with the financing plan;

2. undertake in writing to find additional fttnds in the event of the 'project's currènt

cost overruns;

3. uhdertake in writing not to use thç prpcyeds of the loan to pay various djutikq ànd

'

ired for the tmpletentation of the prbjçct;axes on goods and services reqp.

4. undertake to on-lend the loan to SNDE on the same conditions as the ADB loàn;

. cause SNDE to submit a recovery plan of its arrears from subsctibers and

measures envisaged to ensure the recovçry of the sai.d arrears over a fivé.-year

period from the date of the ajreement;

6: submit a plan fOr the payment of its d#bts and those of its departments to SNDE

for the said debts to be wiped off over a five-yeat period from the date of the

agreement.

Other Conditions

I

The Borrower shall also:

authorize a m inimum increase in tariff of m3 of water by 50% over a five-year

period from 1st January 1983 upless it prefers to grant an eqdivalent subjidy tb

SND E.

2. take account in any case f0r future increases in tariffg and grantg, of the

conclusions of the tariffs study to be conducted.

. .,1. :..u1 . . î,âd. ... .


45/49

9

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Date post:	07-Jul-2018
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