Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2271 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT PAPER ON A PROPOSED ADDITIONAL LOAN AND RESTRUCTURING IN THE AMOUNT OF US$125 MILLION TO THE ARGENTINE REPUBLIC FOR THE PLAN BELGRANO WATER SUPPLY AND SANITATION SERVICES DEVELOPMENT PROJECT March 3, 2017 WATER GLOBAL PRACTICE LATIN AMERICA AND THE CARIBBEAN 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. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of The World Bank
FOR OFFICIAL USE ONLY
Report No: PAD2271
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROJECT PAPER
ON A
PROPOSED ADDITIONAL LOAN AND RESTRUCTURING
IN THE AMOUNT OF US$125 MILLION
TO THE ARGENTINE REPUBLIC
FOR THE
PLAN BELGRANO WATER SUPPLY AND SANITATION SERVICES DEVELOPMENT PROJECT
March 3, 2017
WATER GLOBAL PRACTICE
LATIN AMERICA AND THE CARIBBEAN
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.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective February 27, 2017)
Currency Unit = Argentine Peso (ARS)
ARS 1.00 = USD 0.06
USD1.00 = ARS 15.47
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AdF Aguas de Formosa AdN Agua del Norte SA AF Additional Financing AySA Agua y Saneamientos Argentinos S.A. CAF Development Bank of Latin America (Corporación Andina de Fomento) CBA Cost benefit analysis CES Citizen Engagement System CPS Country Partnership Strategy EA Environmental Assessment EMP Environmental Management Plan ESAex ESIA
Expedited Environmental and Social Assessments Environmental and Social Impact Assessment
ESMF Environmental and Social Management Framework ETAS Environmental and Social Technical Specifications (Especificaciones Técnicas
Ambientales y Sociales) FM Financial Management GoA Government of Argentina GRS Grievance Redress Service IADB Inter-American Development Bank (Banco Interamericano de Desarrollo) ICA Instituto de Comunidades Aborígenes IDACH Instituto de Aborigen Chaqueño INAI Instituto Nacional de Asuntos Indígenas INDEC Instituto Nacional de Estadística y Censos IPF Investment Project Financing IPP Indigenous Peoples Plan IPPF Indigenous Peoples Planning Framework ISR Implementation Status and Results Report IVA Independent Verification Agent M&E Monitoring and Evaluation
MIPWH Ministry of Interior, Public Works, and Housing (Ministerio del Interior, Obras Públicas y Vivienda)
MRP Management and Results Plan (Plan de Gestión y Resultados - PGR) NBI Unmet Basic Needs (Necesidades Básicas Insatisfechas) NDWS National Directorate of Water and Sanitation (Dirección Nacional de Agua
Potable y Saneamiento, DNAPyS) NRW Non-Revenue Water NWSP National Water and Sanitation Plan O&M Operation and Maintenance OM Operations Manual PPSD Project Procurement Strategy for Development PTA Participation, Transfer, and Maintenance of Works Agreement RAP Resettlement Action Plan RPF Resettlement Policy Framework SAMEEP Water and Sanitation Services Provincial Company (Servicio de Agua y
Mantenimiento Empresa del Estado Provincial - Chaco) SAMSA Misiones’ Water Services (Servicios de Aguas de Misiones S.A) SAT Water Services Provider of Tucuman (Sociedad de Aguas de Tucumán) SDG Sustainable Development Goal SEPAPYS Water and Sanitation Services Provincial Company of Tucumán (Servicio
Provincial de Agua Potable y Saneamiento - Tucumán) SESA Strategic Environmental and Social Assessments SIS Sector Information System SSRH Undersecretariat of Water Resources (Subsecretaría de Recursos Hídricos) UCPyPFE Coordination Unit for Programs and Projects with External Financing (Unidad
Coordinadora de Programas y Proyectos con Financiamiento Externo y Unidad, Ejecutora de Programas Hídricos)
WSS Water Supply and Sanitation WWTP Wastewater Treatment Plant
Regional Vice President: Jorge Familiar Country Director: Jesko S. Hentschel
Senior Global Practice Director: Guang Zhe Chen
Practice Manager: Rita E. Cestti
Task Team Leaders: Christophe Prevost, Gustavo Saltiel
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ARGENTINA
PLAN BELGRANO WATER SUPPLY AND SANITATION SERVICES DEVELOPMENT PROJECT
CONTENTS
Project Paper Data Sheet ii
Project Paper
I. Introduction 1
II. Background and Rationale for the AF 2
III. Proposed Changes 11
IV. Appraisal Summary 20
V. World Bank Grievance Redress 22
ANNEX 1. Revised Results Framework and Monitoring Indicators 24
Project Financing Data - Additional Financing (Argentina Plan Belgrano Water Supply and Sanitation Services Development Project ( P162712) (in USD Million)
[X] Loan [ ] Grant [ ] IDA Grant
[ ] Credit [ ] Guarantee [ ] Other
Total Project Cost: 150.00 Total Bank Financing: 125.00
Pablo Francisco Safeguards Specialist Environmental Specialist Environment GEN04
v
Herrera
Jose C. Janeiro Sr. Finance Officer Finance Officer Finance WFALA
Victor Vazquez Alvarez
Team Member Senior Water and Sanitation Specialist
Water Supply and Sanitation
GWA04
Extended Team
Name Title Location
Guillermo Mingolla Water and Sanitation Utilities Specialist Argentina
Horacio Seillant Senior Economist Argentina
Locations
Country First Administrative Division Location Planned Actual Comments
Argentina Misiones Province Misiones Province X X
Argentina Formosa Province Formosa Province X X
Argentina Corrientes Province Corrientes Province X X
Argentina Tucumán Province Tucumán Province X X
Argentina Santiago del Estero Province Santiago del Estero Province
X X
Argentina Salta Province Salta Province X X
Argentina La Rioja Province La Rioja Province X New province
Argentina Jujuy Province Jujuy Province X X
Argentina Chaco Province Chaco Province X X
Argentina Catamarca Province
Catamarca Province X X
Institutional Data
Parent (AR Second Norte Grande Water Infrastructure-P125151)
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Practice Area (Lead)
Water
Contributing Practice Areas
Additional Financing Argentina Plan Belgrano Water Supply and Sanitation Services Development Project (P162712 )
Practice Area (Lead)
Water
Contributing Practice Areas
Consultants (Will be disclosed in the Monthly Operational Summary)
Consultants Required? Consultants will be required.
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ARGENTINA PLAN BELGRANO WATER SUPPLY AND SANITATION SERVICES DEVELOPMENT PROJECT I. Introduction
1. This Project Paper seeks the approval of the Executive Directors to: (i) provide an additional loan in the amount of US$125 million to the Argentine Republic for the Second Norte Grande Water Infrastructure Project (P125151), and (ii) to change the original Project Development Objective.
2. The proposed Additional Financing (AF) would help finance the costs associated with scaling-up the activities of the Second Norte Grande Water Infrastructure Project to increase its development effectiveness, by: (i) improving the Project coverage through financing additional activities, similar to those that have been implemented successfully, particularly in provinces that were under represented under the original loan; (ii) expanding its geographical scope to the La Rioja Province, one of the poorest provinces of Argentina; and (iii) increasing the focus on the sustainability of investments.
3. Overall, the Project would maintain the same design, approach, and implementation arrangements as under the original loan and no major changes are proposed for the scaled up activities. There are no new safeguard or fiduciary issues raised by the AF, which would use an updated version of the original Environmental and Social Management Framework. Risks originally identified for the Project continue to remain relevant but the overall risk is reduced to Substantial, from High at the time of approval of the original loan, on account of the implementation experience to date and the effectiveness of the mitigation measures.
4. The proposed modification of the Project Development Objective (PDO) would allow for the expansion of the Project implementation area to include La Rioja Province, so that the Project would cover the ten provinces1 of the Government’s flagship Plan Belgrano2.
5. The Project Paper also reflects the following changes to the Project: (i) a change in the Project’s title (formerly Second Norte Grande Water Infrastructure Project) to “Plan Belgrano Water Supply and Sanitation Services Development Project” to align it with the Plan Belgrano; (ii) limited changes of implementation arrangements to introduce a possible transfer of responsibilities for low-risk procurement activities to provincial water supply and sanitation (WSS) service providers; (iii) a reallocation of the original loan proceeds among disbursement categories and an increase in the percentage of Bank financing; (iv) an update of the Results Framework and monitoring indicators; and (v) an extension of the original loan closing date from April 30, 2017 to April 30, 2020, to coincide with the closing date of the additional loan, to allow all ongoing and planned works and activities to be completed and to fully achieve the PDO.
6. In terms of outcomes, with the proposed AF, the Project would directly benefit about 450,000 people with access to improved WSS services, compared to about 282,500 people under the original loan, which represent 30 percent of the population of the Plan Belgrano provinces currently without access to adequate water and sanitation services. The Project would also improve the operational and financial
1 The proposed AF will expand the Project Area to include La Rioja Province, in addition to the nine provinces of Catamarca,
Chaco, Corrientes, Formosa, Jujuy, Misiones, Salta, Santiago del Estero, and Tucumán. The 10 provinces are the intervention area of the Plan Belgrano. The Project area originally was limited to the nine provinces.
2 The Plan Belgrano seeks to adress historical development lag in the Northern provinces.
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performance of WSS service providers in the 10 targeted provinces, with at least five service providers expected to achieve 90 percent coverage of Operation and Maintenance (O&M) costs by the end of the Project implementation period.
II. Background and Rationale for the AF
Country and Sector Issues
7. Despite recent progress, Argentina is far from achieving universal access to WSS services. Between 1991 and 2015, access to water supply services increased from 77.3 percent to 84.4 percent and access to sanitation services from 34.3 percent to 54.2 percent. Inadequate access to WSS services in Argentina is associated with 16 million to 19 million cases of diarrheal disease annually.3
8. Lack of access to WSS services most severely affects the poor. Not counting the residents of the City of Buenos Aires, only 73 percent of the urban population with unmet basic needs (NBI for its acronym in Spanish – Necesidades Básicas Insatisfechas) has access to piped water, compared to 85 percent of the urban population without NBI. In the case of sanitation, the differences are stronger, as only 31 percent of the urban population with NBI has access to sanitation, compared to 53 percent for the population without NBI.4
9. Regional disparities are prevalent in access to WSS services. Most of the population with NBI that lacks access to WSS services is concentrated in the country’s northern provinces of Catamarca, Chaco, Corrientes, Formosa, Jujuy, La Rioja, Misiones, Salta, Santiago del Estero, and Tucumán. Although important efforts have been made to increase access to WSS services in these provinces over the past few years through a series of programs supported by the World Bank and regional development banks,5 more remains to be done to further reduce the access gap and increase the sustainability of water and wastewater services in these areas6 (for further information refer to Annex 3).
10. In 2016, the new Administration launched the Plan Belgrano to address long-standing inequalities, reduce extreme poverty, and increase access to basic services in the north of Argentina. The Plan Belgrano focuses on a series of initiatives, including: implementing comprehensive interventions in poor areas to reduce infant mortality, malnutrition, and other human development issues; increasing access to education; reducing conflict and violence; investing in critical infrastructure; and promoting regionalization of economic activity throughout the north of the country.
11. At the same time, the new Administration launched the National Water and Sanitation Plan (NWSP) and created the National Directorate of Water and Sanitation (NDWS)7. The NDWS is tasked with: (i) defining policies and plans for the WSS sector at the national level; (ii) providing guidance and technical assistance to provincial governments and service providers; (iii) assisting provincial regulators in 3 World Bank. Argentina Country Environmental Analysis.2016, Annex C. 4 World Bank estimates based on data from the Censo Nacional de Poblaciones, Hogares y Viviendas and Instituto Nacional
de Estadísticas y Censos. 5 Norte Grande Water Infrastructure Project (IBRD Loan No. 7992-AR) and Second Norte Grande Water Infrastructure Project
(IBRD Loan No. 8032-AR); Development Programme's Norte Grande Provinces: WSS Infrastructure (IDB AR-L1136); and CAF’s Sanitation Programs for Norte Grande I and II (CAF Projects 8028 and 8640).
6 The national census measures access to sanitation services as access to a bathroom and/or sewerage. The NWSP estimates that only 15 percent to 20 percent of sewage collected is treated.
7 Under the Under-Secretariat of Water Resources of the Ministry of Interior, Works, and Housing.
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establishing new tariffs and subsidies schemes; (iv) developing a Sector Information System (SIS); (v) promoting best practices for improving the quality and efficiency of the provision of services; and (vi) strengthening provincial and municipal sector institutions, particularly the provincial regulatory agencies. Under the new NDSW, emphasis is given to the institutional reforms and strengthening of operational performance of service providers, including a different system of incentives for public sector service provision.
12. The NWSP establishes very ambitious targets for providing sustainable universal access to water by focusing on improving the coverage and the quality of WSS services as well as the performance of services providers. The NWSP aims to achieve 75 percent access to sanitation services for those living in urban areas by the end of 2019. This target translates into providing access to water to 8.2 million people and access to sanitation services to 8.9 million people. The investments, estimated at US$22 billion, are expected to come from national, provincial, and municipal governments, as well as from the service providers. For the first time in the water sector in Argentina, the NWSP also sets an important policy change by focusing on improving the efficiency and quality of service provision in a sustainable manner. A core instrument to foster sustainability of WSS service provision under the NWSP is the Management and Results Plan (MRP), conceived as the planning and performance monitoring instrument to drive a “utility turnaround” process. The MRP sets up a performance improvement path for each utility and defines the investments and activities envisioned to achieve the goals established in the plan.
13. Key strategic directions of the NWSP include the following:
• Establishing co-financing schemes between the national government, provinces, and municipalities as a means to develop ownership and accountability at the subnational level and increasing the pool of resources available for investments and reforms. By requiring that 33 percent of the infrastructure investments are financed from subnational resources, the NWSP is expected to provide incentives for improved performance of the provincial utilities and to generate funds to support the provincial contributions.
• Strengthening management of the utilities through incentives and technical assistance to improve the operational, commercial, and financial performance of the service providers.
• Reaching financial sustainability among service providers through revising tariff structures to increase revenues and subsidy schemes to better target the poor and vulnerable groups and reducing operational costs by means of efficiency gains that will be monitored and promoted through benchmarking and the use of incentives (reducing loses, optimizing energy use, introducing preventive maintenance, and so on).
Project Background
14. The Second Norte Grande Water Infrastructure Project was approved on April 5, 2011 with an IBRD loan of US$200 million (Loan No. 80320). The Loan Agreement was signed on November 23, 2011, and became effective on February 7, 2012. The current Closing Date of the original loan is April 30, 2017. The original PDO of the Project, which will now be modified, was “to increase sustainable access to sanitation and water supply services in the Norte Grande region of Argentina by providing investments in infrastructure and supporting institutional and operational development.” The proposed, new PDO would be “to increase access to water supply and sanitation services and improve the operational and
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financial performance of the water supply and sanitation service providers in the Project Area. The Project includes three components:
• Component 1: Water Supply and Sanitation Infrastructure (US$209 million, of which US$169.5 million financed by the Bank): Carrying out of demand-driven sub-projects consisting of the rehabilitation, upgrading and/or reconstruction of Participating Provinces’: (i) wastewater
collection, conveyance, treatment and disposal systems, such as wastewater treatment plants, pumping stations, main collectors and secondary sewerage networks; and (ii) water supply
systems including, for instance, production and distribution systems.
• Component 2: Institutional and Operational Development and Technical Assistance (US$15 million, all financed by the Bank): (i) Carrying out tailored institutional and/or operational strengthening programs and providing technical assistance for participating WSS service providers to improve their institutional organization, investment planning, management capabilities and technical, operational, commercial and financial efficiency; (ii) designing and implementing macro- and micro-metering (including minor works), and non-revenue water reduction programs; (iii) carrying out technical studies required to support the preparation and implementation of sub-projects; and (iv) carrying out communication plans, dissemination and knowledge-sharing activities related to the Project, and training and capacity building for the institutional strengthening of UCPyPFE (for its acronym in Spanish – Unidad Coordinadora de Programas y Proyectos con Financiamiento Externo y Unidad, Ejecutora de Programas Hídricos – Plan Belgrano) and Participating Provinces.
• Component 3: Project Management and Supervision (US$15 million, all financed by the Bank): (i) Carrying out specialized independent technical, environmental and social supervision of sub-projects’ implementation, as required; (ii) carrying out Project audits and monitoring and evaluation activities under the Project; and (iii) providing administrative and operational support (including the provision of Operating Costs) to UCPyPFE.
Status of Project Implementation and Performance to Date
15. The Project’s overall implementation performance and progress towards achieving the PDO have been consistently rated Moderately Satisfactory or better since effectiveness of the original loan. As of January 31, 2017, the Project had disbursed US$116.75 million, representing 58.4 percent of the original loan, with over 80 percent of loan proceeds committed. The implementation of the Project initially lagged behind, due to a one-year effectiveness delay and some delays in defining the demand-driven infrastructure to be financed. Once sub-projects planned under Component 1 are completed, key achievements would include: (i) 200,000 people in the city of Resistencia (Chaco Province) having access to sewerage and wastewater treatment services (about 23 percent of the 850,000 people in the province of Chaco today without access to sanitation services); (ii) 82,500 people having access to improved water services in the Provinces of Chaco and Salta (about 18 percent of the 450,000 people of Salta and Chaco provinces currently without access to potable water); and (iii) five service providers8 providing services to 8 The five WSS services providers are: the Chaco’s Water and Sanitation Services Provincial Company (SAMEEP for its
Spanish acronym - Servicios de Agua y Mantenimiento Empresa del Estado Provincial), the Service Provider of Tucuman (SAT for its acronym in Spanish - Sociedad Aguas de Tucumán), Waters of Formosa (AdF for its acronym in Spanish - Aguas
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1.5 million customers (about 61 percent of the total number of customers of the main WSS service providers in the ten provinces of the Plan Belgrano) having improved key operational and financial performance indicators.
16. Component 1 finances large infrastructure investments, with a strong focus on improvement of the sanitation system in the province of Chaco, one of the provinces with the lowest level of sewerage coverage (26 percent) and the highest percentage (91 percent) of households with NBI with no access to sewerage system. Investments in Chaco include the construction of a wastewater treatment plant (WWTP), with physical progress of 68 percent; and 27 kilometers of sewage collectors, with physical progress of 97 percent by December 2016. Other large infrastructure investments planned under Component 1 comprise the decommissioning of the treatment lagoons of Resistencia, and the expansion of water distribution networks, currently at the stage of technical design, in peri-urban and rural areas and small towns in the provinces of Chaco and Salta. The decommissioning of the existing wastewater treatment lagoons in Resistencia experienced some delays due to the fact that the work (to be implemented over a period of 24 months) can only start once the corresponding WWTP is operational (which is planned for August 2017).
17. Component 2 finances institutional and operational development through technical assistance and capacity building, with a specific focus on the five service providers in the provinces of Chaco, Tucuman, Formosa, Catamarca, and Salta. Specifically, Component 2 supports: (i) the design and implementation of macro- and micro-metering systems to improve operational performance and reduce non-revenue-water (NRW), and (ii) the provision of water quality laboratory equipment and automatic control systems to improve water quality. In the province of Misiones, Component 2 supports the preparation of the water and sanitation master plan for the city of Puerto Iguazu, the technical design of the sanitation system of the city of San Vicente, and the updating of the sanitation system of the city of Aristóbulo del Valle.
18. While the lack of a conducive policy environment has so far limited the capacity to fully address the issue of sustainability in the sector, the technical assistance and capacity building provided under Component 2 to the service providers in the provinces of Chaco, Tucuman, Formosa, Catamarca, and Salta have laid the groundwork to improve sustainability. The operational support to the Chaco and Catamarca service providers, coupled with the tariff increases approved in 2016, have led to improvements in key performance indicators. In the case of Chaco, the collection ratio increased from 45 percent (2013) to 62 percent (2016) and non-revenue water (NRW) decreased from 45 percent (2013) to 37 percent (2016). In addition, in the province of Tucuman, as a result of the provision of laboratory equipment and associated capacity building, compliance with bacteriological water quality has improved from 78 percent to 88 percent.
19. The Project is in full compliance with environmental and social safeguards policies and the UCPyPFE has demonstrated the necessary capacity for overseeing safeguards issues and ensuring full compliance with the Project’s safeguards instruments. For example, the Project has successfully addressed the environmental and social issues identified during the preparation of the Environmental Impact Assessment for the construction of the Resistencia WWTP and sewerage main collectors, and
de Formosa), Waters of Catamarca (AdC for its acronym in Spanish - Aguas de Catamarca), and Waters of the North in Salta (AsN for its acronym in Spanish - Aguas del Norte in Salta).
6
adequately implemented the identified mitigation measures. These included the implementation of a reforestation plan to compensate the impact of cutting trees on the site of the WWTP, the regular monitoring of river water quality at the level of the current point of water discharge, and consultation with a group of fishermen potentially affected by the change in the discharge outfall. The UCPyPFE has also regularly presented to the Bank the environmental and social management progress reports and implemented satisfactorily the institutional environmental and social strengthening plan to enhance the capacity of the service provider in the province of Chaco.
Rationale for Additional Financing
20. Strengthening the provision of WSS services in the northern provinces of Argentina is a key priority of the current Administration. The Administration sees the AF as a key instrument to: (i) rebalance investments across the Plan Belgrano provinces9 and (ii) scale up the Project interventions to increase financial and operational sustainability of the WSS providers in the Plan Belgrano provinces. The NWSP provides a more conducive sector policy environment for the Project, on which the AF would capitalize by increasing the focus of the Project on the promotion of the sustainability of WSS service providers.
21. Activities under the three components would be scaled up, with no changes to the overall Project design. Similar to the original Project, the AF has been designed as a framework Project. While there is a tentative list (a pool) of pre-identified WSS infrastructure and institutional and operational development sub-projects (refer to Annex 3), decisions about specific sub-projects to be financed would be made during the implementation, based on the priorities identified in the MRPs. The Project will provide technical assistance to support pipeline development and sub-project preparation through its component 2. Specific sub-projects approved for funding will need to comply with the technical, economic, financial, institutional, environmental and social eligibility criteria set forth in the Project’s Operational Manual, as well as with consultation and disclosure requirements. Sub-project proposals will be examined in the context of: (i) consistency with Project objectives, in particular their poverty reduction potential; (ii) compliance with all eligibility criteria; and (iii) level of sub-project’s ownership and results of stakeholder consultation at the local level. The AF is expected to improve the Project coverage of the Plan Belgrano provinces by financing additional activities particularly in provinces that were under represented under the original loan.
22. Component 1 of the AF would finance the provision of additional infrastructure in the Plan Belgrano provinces, similar to that successfully implemented in the Province of Chaco, to support part of the ambitious investment program of the Government, such as the construction, rehabilitation and expansion of water and sanitation networks in several provinces and the construction of water and waste water treatment plants.
23. Component 2 of the AF would finance additional activities to improve operational, commercial, and technical capacities of the WSS with a focus on increasing the sustainability of investments. Additional activities financed would aim to increase macro- and micro-metering, reduce non-revenue water, and improve WSS services provided to poor and dispersed communities. The AF would increase the relative
9 Actually, 95 percent of the funds of Component 1 and 2 were allocated to the province of Chaco to improve access to
sanitation service in the capital city of the province. The remaining 5 percent were allocated to the Province of Salta, Tucuman, Corrientes, Formosa and Catamarca.
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weight of this kind of activities, which represent 37.6 percent of proceeds of the additional loan compared to 7.5 percent for the original loan.
24. Component 3 of the AF would finance the additional coordination activities needed throughout the proposed longer implementation period. The AF would also finance the additional technical studies needed to support the preparation of the new sub-projects to be financed, as well as independent technical, environmental, and social supervision of sub-projects’ implementation.
25. The AF would strengthen the sustainability of WSS service providers. While the Project was already supporting the improved performance of service providers through the preparation of sustainability action plans for provincial utilities, the AF would benefit from the enabling environment created through the NWSP and the establishment of the MRP as a core planning and monitoring tool to achieve sustainability of WSS service provision. The Project would support the preparation of MRPs10 and would only finance activities and sub-projects that meet the eligibility criteria acceptable to the Bank (see more details in Annex 3). MRPs would include infrastructure to expand services, other works and goods to improve service quality and commercial, financial and operational efficiency, and capacity building. The MRP would be prepared by the service provider through a participatory and transparent process, including consultations with the provincial regulator, and would be approved by the provincial and federal sector authorities.
26. The Project is eligible for an AF in line with OP 10.00. The Project’s progress towards achieving the PDO and overall implementation progress have consistently been rated Moderately Satisfactory or better over the past 12 months. The Project is also fully in compliance with all of its conditions and legal covenants.
Building on Lessons Learned
27. The AF design incorporates lessons learned from the Argentina First and Second Norte Grande Water Infrastructure projects as well as the experience of World Bank-supported utility turnaround operations spanning countries such as Colombia, Brazil, Mexico, and Kenya. Specific lessons include:
• Improving operational and financial performance of service providers requires a conducive policy environment and sound, transparent, and holistic planning processes. The new approach from the GoA creates an appropriate enabling environment and would hence contribute to achieve the PDO and increase the sustainability of results.
• Combining infrastructure and institutional and operational development is necessary to build long-term sustainability of service delivery. The AF would continue to promote a two-pronged approach to infrastructure investments and performance improvement in line with the original Project, including through: (i) financing of infrastructure to improve service coverage, and (ii) supporting the managerial and operational improvements needed to ensure the financial sustainability of service providers. In line with the NWSP, the AF would rebalance investments more towards improving quality and efficiency of the service providers through institutional and operational development.
10 Preparation of MRP in Argentina is also supported by the Inter-American Development Bank.
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• Governance improvement both at the service provider and regulator level is a key precondition to improve service delivery at the provincial level. This is the main conclusion of the ongoing analytical work on “Improving Service Delivery for the Most Vulnerable in 10 Northern Argentinean Provinces”. Consistent with this vision, the AF would continue to support governance improvements through the development and implementation of the MRPs as a key instrument to improve sustainability and assign an important role to provincial regulators in the monitoring of MRP implementation.
Relationship to Country Partnership Strategy and World Bank Group Twin Goals
28. The Project supports the World Bank Group corporate goals and the FY15-FY18 Country Partnership Strategy (CPS). The AF is fully aligned with the World Bank Group’s FY15-FY18 CPS for Argentina, discussed by the Executive Director on September 9, 2014, and its Performance and Learning Review (Report No. 110546-AR). The CPS focuses on reducing poverty and promoting shared prosperity in a sustainable manner. The AF is expected to contribute to the CPS’s results area of “increasing access to electricity, safe drinking water, and sanitation services for the bottom 40 percent in low-income provinces and areas” by aiming to increasing access to safe drinking water and sanitation in the northern provinces of Argentina, which are among the poorest in the country. The AF would also contribute to the achievement of the United Nations Sustainable Development Goals 6.1 “achieve universal and equitable access to safe and affordable drinking water for all”.
29. The Project is expected to generate climate change adaptation/mitigation co-benefits though the replacement of aging equipment and improved performance of the service providers. On the mitigation side, the Project would lead to emissions savings. Assuming a daily water consumption of 300 liters per capita per day (lcd) in the Plan Belgrano provinces, and assuming water losses throughout the system of about 50 percent, then the per capita water production is estimated in 600 lcd. Given that the direct beneficiaries of the Project are 450,000 people, the total annual of water production associated with the Project is estimated in 98.6 million cubic meters (m3). In addition, it is assumed that water savings of 5 percent (reduction of 5 percent of NRW) after 3 years due to the project, a static business-as-usual scenario was set as counterfactual, and energy consumption per cubic meter produced and consumed was assumed to be 2.2 KWh/m3. Based on these assumptions and taking Argentina's CO2 Energy coefficient (0.535 tCO2/MWh), annual CO2 emission savings are estimated in the order of 5,800 tons of CO2 (tCO2) per year after the completion of the Project. Working with the WSS utilities to replace aging equipment and implement reduction of NRW programs, will also help to drive the reduction in emissions. Concerning adaptation to climate change, the Project will allow for engagement of the WSS utility to adopt policies and develop improved practices that will carry the potential for increased resilience to climate change.
Key Outcomes
30. The total number of direct beneficiaries represent 30 percent of the population of the Plan Belgrano provinces currently without access to adequate water and sanitation services. With the AF, the Project would increase the number of direct beneficiary to about 450,000 people with access to improved water and sanitation services compared to about 282,500 people under the original Project. The Project would also improve the operational and financial performance of the WSS service providers
in the provinces that form part of Plan Belgrano, with at least five service providers expected to achieve 90 percent coverage of O&M costs by the end of the Project implementation period.
Key Risks
31. The overall risk of the Project is rated Substantial. While the overall Project risk was assessed as High at the time of approval of the original loan, the rating is now lowered to Substantial based on the implementation experience: some of the original main risks have not materialized (stakeholders) while other risks have been mitigated in a satisfactory manner (institutional capacity). The Systematic Operations Risk-Rating Tool (SORT) is presented in Annex 2. The main risks and associated mitigation measures identified are the following:
• Technical design of project risk is rated as Substantial. This is due to the risk of giving financing priority to large infrastructure sub-projects that do not fulfill the sustainability criteria. To mitigate this risk, the AF introduces eligibility criteria for different types of investments, including important efficiency and cost recovery requirements as a precondition to financing large infrastructure. The MRPs also guide service providers to analyze expenditures ex-ante and thus anticipate future O&M costs in a more informed manner.
• Institutional capacity for implementation and sustainability risk is rated Substantial. The UCPyPFE has a proven record of managing and implementing water and sanitation infrastructure programs. However, the workload and inter-institutional coordination with provinces and municipalities required to scale up activities of the Project with a stronger focus on institutional and operational development and improved performance of operators and regulators will be challenging. To mitigate this risk, the implementing agency will hire additional staff to work exclusively on this operation and will maintain continuous dialogue between the national, provincial, and municipal governments. The new conducive policy environment of the NWSP and the MRP process are expected to address sustainability of the service providers.
• Fiduciary risk is rated Substantial. This is due to the option of delegating to provincial service providers the procurement of low value/low risk contracts included in the MRPs. This risk is mitigated by requesting the service provider to undergo a procurement assessment performed by the UCPyPFE with parameters acceptable to the Bank. Gradually strengthening procurement capacity of the service providers would also mitigate this risk.
• Environmental and Social risk is rated Substantial. This risk is due to the unknown nature and location of future sub-projects, and the fact that they could eventually be located in sensitive environments and social contexts. To mitigate the risk, clear guidelines are included in the Project Environment and Social Management Framework (ESMF), the Indigenous Peoples Planning Framework (IPPF) and the Resettlement Policy Framework (RPF) to guide the preparation of sub-projects. Investment proposals considered eligible for financing by the Project would undergo a detailed environmental assessment process, which includes: (i) environmental and social screening and categorization of sub-projects; (ii) preparation of environmental assessment (EA) (e.g., Environmental and Social Impact Assessments, Expedited Environmental and Social Assessment, or Strategic Environmental and Social Assessments), as well as Environmental
10
Management Plans (EMPs), for which basic terms of reference, guidelines, and minimum requirements for mitigation measures are provided; (iii) public consultation and disclosure; (iv) clearance of EAs; and (v) supervision of EMPs’ implementation. The Bank safeguard policies would only apply to those sub-projects included in the MRPs that would be financed by the Bank.
Implementation Arrangements
32. There would be no changes to the Project’s current institutional implementation arrangements, apart from minor changes to procurement arrangements. The Borrower would be the GoA and the implementing agency would be the UCPyPFE under the NWSD within the Public Works Secretariat of the Ministry of Interior, Public Works and Housing (MIPWH). At present, the NWSD and UCPyPFE are coordinating several programs financed by multilateral development banks, including the First and Second Norte Grande Water Infrastructure projects and the Development Program for the Norte Grande Region co-financed by the IADB. Although the UCPyPFE has successful experience and capacity in the implementation of similar projects, its capacity would be strengthened under the AF, in particular to provide technical assistance and capacity building to NDWS, WSS service providers, and provincial regulators. In addition to the Participation, Transfer and Maintenance Agreement signed between UCPyPFE and the corresponding Participating Province, the UCPyPFE could sign an agreement with service providers to carry out activities of component 2 and, when applicable, to carry out the procurement of low cost/low risk contract under Component 1. This option, further described under the procurement section, would be the only change in implementation arrangement introduced by the AF.
Procurement
33. Procurement activities for the Project would be conducted according to the World Bank’s Procurement Regulations for IPF Borrowers, issued in July 2016, for the supply of goods, works, non-consulting services, and consulting services.
34. The Project Procurement Strategy for Development (PPSD), prepared by the Borrower and transmitted to the Bank on January 20, 2017, was deemed acceptable to the Bank. The PPSD includes an evaluation of the capacity of the UCPyPFE to execute the procurement activities and proposes measures to mitigate the perceived procurement risk. The PPSD proposes that the UCPyPFE would continue to hold the overall fiduciary responsibility for the Project and would specifically retain responsibility for all high-value/high-risk contracts and activities. The PPSD recommends that the procurement team at UCPyPFE in charge of implementing ongoing Projects be strengthened in order to manage the expected workload increase. The PPSD presents the option and conditions to delegate the procurement of low value/low risk contract included in the MRP to service providers, which have demonstrated adequate capacity. This delegation would be subject to a procurement capacity assessment performed by the UCPyPFE over the service providers (with close supervision and assistance by the Bank) confirming services providers have procurement capacity satisfactory to the Bank.
35. Under Component 1, given the framework nature of the Project, the specific investments have not been selected. The PPSD will thus be updated as soon as the investments under Component 1 are identified. Under Component 2, the PPSD provides a detailed analysis on the critical procurement of micro-meters, including market analysis, lessons learned from past procurements, as well as social, economic and legal dimensions of such contracts. The PPSD concludes that the best alternative for the procurement of micro-meters would be to include the provision of equipment and the associated
11
installation service under the same process. In all cases, standard bidding documents previously agreed with the Bank would apply (for more details refer to Annex 4)
Safeguards
36. The AF would not raise new safeguards issues or trigger any additional safeguard policy. The Project was originally assigned an environmental screening Category A and this would remain unchanged under the AF. The Project’s performance in the implementation of the safeguards instruments has been satisfactory. Updated instruments for the AF have been prepared to incorporate the proposed changes and to account for the inclusion of the La Rioja province. Public consultations on the ESMF, including the IPPF and the RPF, jointly with the profile of the Water Supply and Sanitation Development Program – Plan Belgrano (P159928), were held and duly documented11 and included: (i) a virtual public consultation (via e-mail) on the draft terms of reference to update the current Second Norte Grande Project (P125151) RPF and IPPF; and (ii) two face-to-face consultations in the provinces of Chaco and La Rioja were held on July 26 and 28, 2016. The ESMF, IPPF, and the RPF, were originally disclosed in country on September 16, 2016 and on the Bank’s external website on September 27, 2016. The revised framework instruments were prepared by the Borrower and approved by the Bank, and disclosed in-country and on the Bank’s external website on February 3 and February 1, 2017, respectively. The Bank determined that the contents of the revised framework instruments are not substantively different compared to the versions disclosed in September 2016 to merit further consultation.
37. The design of the MRPs would include Strategic Environmental and Social Assessments (SESA) as per the ESMF. Bank safeguard policies would only apply to the sub-projects included in the MRPs and financed by the Bank. Thus, only sub-projects financed by the Bank would be subject to ESMF, IPPF and RPF.
III. Proposed Changes
Summary of Proposed Changes
The additional activities, the proposed inclusion of the La Rioja province, and the alignment of the objectives of the Project with the NWSP, would require the following changes: (i) modification of the PDO, (ii) modification of the Results Framework and monitoring indicators, (iii) extension of closing date, (iv) reallocation of funds among category of expenses and increase in percentage of Bank financing, (v) scaling up of financing to the three components, (vi) adjustments to procurement arrangements, and (vii) change in the implementation schedule.
Additionally, a change of the Project title is also proposed to align it with Plan Belgrano geographical area.
Change in Implementing Agency Yes [ ] No [ X ]
Change in Project's Development Objectives Yes [ X ] No [ ]
11 Results of the consultations can be found at http://www.ucpypfe.gob.ar/Progbirfapys.html
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Change in Results Framework Yes [ X ] No [ ]
Change in Safeguard Policies Triggered Yes [ ] No [ X ]
Change of EA category Yes [ ] No [ X ]
Other Changes to Safeguards Yes [ ] No [ X ]
Change in Legal Covenants Yes [ ] No [ X ]
Change in Loan Closing Date(s) Yes [ X ] No [ ]
Cancellations Proposed 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 [ X ] No [ ]
Change in Implementation Schedule Yes [ X ] No [ ]
Other Change(s) Yes [ X ] No [ ]
Development Objective/Results
Original Project’s Development Objectives
The original PDO is “to increase sustainable access to sanitation and water supply services in the Norte Grande region of Argentina, by providing investments in infrastructure and supporting institutional development.”
Change in Project's Development Objectives
The original PDO would be changed to align it with the Government’s flagship Plan Belgrano and the objectives of the NWSP. Proposed changes include: (i) change the geographical scope from the “Norte
13
Grande Region”’ to “the Project Area”, and (ii) focus on operational and financial performance of the water supply and sanitation service providers.
Proposed New PDO - Additional Financing (AF)
The proposed new PDO would be “to increase access to water supply and sanitation services and improve the operational and financial performance of the water supply and sanitation service providers in the Project Area.”
Change in Results Framework
Changes are proposed to the Results and Monitoring Framework to adjust existing indicators and introduce new ones to reflect the scaling up of activities and capture outcomes rather than outputs. Specific indicators are proposed to account for the adoption of the MRP as a strategic planning and monitoring instrument by the service providers and the increased focus on improving the operational and financial performance of the WSS service providers. The main changes proposed to the Results Framework are the following:
“Direct project beneficiaries” and “Female beneficiaries” would be moved from intermediate level to PDO level.
“People provided with access to improved sanitation facilities under the project” would be replaced with “People provided with access to improved sanitation services under the project”
“People provided with access to “improved sanitation services” – urban”, and “People provided with access to “improved sanitation services”’- rural” would be dropped.
“People provided with access to improved water services under the project” and “Number of service providers achieving 90 percent O&M cost recovery ratio” would be added as PDO indicators.
“Number of Service providers that have a monitoring system implemented (control panel) for decision making to improve management” would be moved from PDO level to intermediate level.
“Number of MRPs elaborated and approved”, “Number of capital cities where 90 percent of produced water is macro-metered”, and “Percentage of billed connections that are metered and read” would be added as intermediate indicators.
A few of the intermediate indicators would be dropped from the Results Framework since they are redundant.
Compliance
Covenants - Additional Financing (Additional Financing for Argentina Plan Belgrano Water Supply and Sanitation Services Development Project - P162712)
Source of Funds
Finance Agreement Reference
Description of Covenants
Date Due
Recurrent Frequency Action
14
IBRD Schedule 2, Section I, C.3
Prior to the carrying out of any given activity under Part B.1 of the Project, and any Sub-project included in the pertinent approved Management and Results Plan (which Sub-project meets the eligibility criteria set forth in the Operational Manual to be carried out by a WSS Service Provider), the Borrower, through MIPWH (through UCPyPFE), shall enter into an agreement (the Technical, Operation Agreement) with the corresponding WSS Service Provider, all under terms and conditions acceptable to the Bank, including, inter alia, those set forth in Schedule 5 to this Agreement.
X Continuous New
IBRD Schedule 2, Section I, F.3
The Borrower, through UCPyPFE-UEP, shall: (a) not later than December 31 of each year of Project implementation, prepare and furnish
X Yearly New
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to the Bank an Annual Operating Plan, acceptable to the Bank, which shall include, inter alia, the Project activities to be carried out during the following calendar year; and (b) immediately thereafter carry out or cause to be carried out the Project in accordance with said Annual Operating Plan.
Conditions
Source of Fund Name Type
Description of Condition
Risk
Risk Category Rating (H, S, M, L)
1. Political and Governance Moderate
2. Macroeconomic Moderate
3. Sector Strategies and Policies Moderate
4. Technical Design of Project or Program Substantial
5. Institutional Capacity for Implementation and Sustainability
Substantial
6. Fiduciary Substantial
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7. Environment and Social Substantial
8. Stakeholders Low
9. Other
OVERALL Substantial
Finance
Loan Closing Date - Additional Financing (Additional Financing for Argentina Plan Belgrano Water Supply and Sanitation Services Development Project – P162712)
Source of Funds Proposed Additional Financing Loan Closing Date
International Bank for Reconstruction and Development
30-April-2020
Loan Closing Date(s) - Parent (Argentina Second Norte Grande Water Infrastructure - P125151)
The Closing Date of the original loan would be extended by 36 months to April 30, 2020 to allow all ongoing and planned works and activities to be completed and to fully achieve the PDO.
Change in Disbursement Estimates (including all sources of Financing)
Changes to the disbursement estimates are proposed to reflect the change of the Project implementation period.
Expected Disbursements (in USD Million) (including all Sources of Financing)
Fiscal Year FY17 FY18 FY19 FY20
Original Loan 25.0 20.0 25.0 15.0
AF Loan 0.0 56.2 61.5 7.3
Cumulative 25.0 101.2 187.7 210.0
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Allocations - Additional Financing (Additional Financing for Argentina Plan Belgrano Water Supply and Sanitation Services Development Project - P162712)
Source of Fund
Currency Category of Expenditure
Allocation
(in million USD)
Disbursement %
(Type Total)
Proposed Proposed
IBRD USD CW under sub-projects
75.00 100.00
IBRD USD
GO, CW, CS, Non-CS,TR,OP –
Parts B & C
49.6875 100.00
IBRD USD Front End Fee 0.3125 100.00
Total: 125.00
Reallocation between Disbursement Categories
US$5.5 million would be re-allocated from to “GO, CW, CS, Non-CS, TR, OP - parts B & C” disbursement category to “CW under sub-projects” disbursement category. Bank financing would increase from 80 percent to 100 percent of eligible expenditure for “CW under sub-projects” disbursement category.
Ln/Cr/TF Currency Current Category of Expenditure
Allocation
(in million USD)
Disbursement %
(Type Total)
Current Proposed Current Proposed
IBRD-80320
USD
CW under sub-projects
169.50 174.60 80.00 100.00
IBRD-80320
GO, CW, CS, Non-CS,TR,OP - parts B & C
30.00 24.90 100.00 100.00
IBRD-80320
Designated Account
0.00 0.00 0.00 0.00
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IBRD-80320
FRONT END FEE 0.50 0.50 100.00 100.00
Total: 200.00 200.00
Components
Change to Components and Cost
The AF would finance additional activities under the original three components. There would be no change to the overall Project design nor to the Project components. Under Component 1, the AF would finance additional water and sanitation infrastructure. Under Component 2, the AF would finance additional activities to improve operational, commercial and technical capacities of the WSS service providers. Under Component 3, additional resources would be allocated to ensure proper Project management. The AF has been designed as a framework, as such while tentative pre-identified activities have been identified under Component 1 and Component 2, a screening exercise (through eligibility criteria acceptable to the Bank) would determine the activities to be financed by the Project. The AF would be used to increase funding for all the components.
Current Component
Name
Proposed Component
Name
Original Loan
(US$M)
Original Borrower (US$M)
Proposed AF (US$M)
Borrower (US$M)
Total Cost (US$M)
Component 1: Water Supply and Sanitation Infrastructure
Component 1: Water Supply and Sanitation Infrastructure
169.50 40.00 75.00 25.00 309.50
Component 2: Institutional and Operational Development and Technical Assistance
Component 2: Institutional and Operational Development and Technical Assistance
15.00 0.00 47.00 0.00 62.00
Component 3: Project Management and Supervision
Component 3: Project Management and Supervision
15.00 0.00 2.6875 0.00 17.6875
Front End Fee Front End Fee 0.50 0.3125 0.8125
Total: 200.00 40.00 125.00 25.00 390.00
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Other Change(s)
Changes in Implementing Agency
Implementing Agency Name Type Action
Ministry of Interior, Public Works and Housing, UCPyPFE
Implementing Agency No Change
Change in Procurement
The UCPyPFE would continue to hold the overall fiduciary responsibilities for the Project and would specifically retain responsibility for all high-value/high-risk contracts and activities. The AF would introduce the option to delegate the procurement of low value/low risk contract included in the MRP to service providers which have demonstrated adequate capacity. This delegation would be subject to a procurement capacity assessment performed by the UCPyPFE over the service providers with close supervision and assistance by the Bank. The rationale for introducing this option stems from the intention of empowering and increasing accountability of service providers.
Procurement would be conducted according to the World Bank’s ‘Procurement Regulations for IPF Borrowers’, issued in July 2016, for the supply of goods, works, non-consulting services, and consulting services under the project.
The Project Procurement Strategy for Development (PPSD) prepared by the Borrower was sent to the Bank on January 20, 2017 and was deemed acceptable to the Bank. The PPSD proposes the procurement arrangements that would best ensure the delivery of value for money while efficiently achieving the PDO. Given the framework nature of the AF, the specific investments under Component 1 have not been identified, while the nature of such investment does not present procurement challenges on the local markets. For these reasons, the PPSD is mainly focused on the scheme of decentralized procurement functions and the procurement of micro-meters included under Component 2, due to the importance of such activity for the achievement of the PDO.
Change in Implementation Schedule
The implementation period would be extended through April 30, 2020 to ensure that all ongoing and planned activities can be satisfactorily completed.
Other Change(s)
The geographic scope of the Project would be expanded beyond the nine provinces of the Norte Grande region, namely, Catamarca, Chaco, Corrientes, Formosa, Jujuy, Misiones, Salta, Santiago del Estero, and Tucuman; to also include the Province of La Rioja, which is part of the Plan Belgrano.
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In addition, the title of the Project (formerly Norte Grande Water and Sanitation Project) would be changed, at the request of the Government to align it with the Government’s flagship Plan Belgrano. The proposed new name is Plan Belgrano Water Supply and Sanitation Services Development Project.
IV. Appraisal Summary
Economic and Financial Analysis
Development impacts. As with the original Project, the AF is expected to generate a broad set of economic benefits, as well as improved environmental conditions and access to WSS services particularly in urban and peri-urban areas located in the poorest regions of Argentina. Bearing in mind that the AF would fund a framework of yet to be defined investments in infrastructure and non-infrastructure items, as with the original Project, three sub-projects12 funded by the First and Second Norte Grande Water Infrastructure Projects similar to the ones to be potentially financed under the AF have been analyzed. Economic results are positive (see Annex 5)
Standard cost-benefit Analysis (CBA) would be used for the economic analysis of infrastructure projects. The financial analysis for each new or rehabilitated infrastructure sub-project contained in each MRP would be conducted using the usual method of incremental financial flows to determine its sustainability, while its impact on the overall program would be based on the assessment of the performance indicators included in each MRP. Similarly, they would be evaluated using ex-ante standard CBA. The institutional and operational development activities contained in the MRP would generate efficiency and sustainability gains in service providers. It is expected that activities such as training, capacity building, installation of metering equipment, implementation of NRW reduction programs would lay the ground for efficiency and financial benefits progressively throughout the implementation of MRPs. Additionally, the MRPs would also guide service providers to analyze expenditures ex-ante and thus anticipate future O&M costs in a more informed manner to ensure long-term sustainability.
Rational for Public financing. The Project has a strong public investment justification, stemming from the market failures that characterized the provision of WSS services, such as existence of a natural monopoly, externalities and public good characteristics. Public funds are needed to finance investments in WSS in the Plan Belgrano’s provinces, where most of the poor population in Argentina who lack access to WSS services are concentrated.
World Bank value-added. The World Bank is well positioned to continue supporting WSS investments in infrastructure and institutional and operational development in the context of Plan Belgrano. The activities supported by the Project would complement well projects supported by other development partners including IADB and CAF. The World Bank would continue bringing in global experience and lessons learned for the comprehensive development of the sector.
12 They are: (i) the Drinking water supply for the localities of Wichi, El Sauzal, Misión Nueva Pompeya, and Fuerte Esperanza,
Province of Chaco; (ii) the treatment plant and mains: for the Presidencia Roca, Pampa del Indio, and localities along provincial highway 40 toward Las Garcitas and provincial highway 30 toward Capitán Solari, Province of Chaco; and (iii) “Sewer Master Plan, Interception and Discharge System for the Greater Resistencia Metropolitan Area (AMGR, in Spanish). Province of Chaco.”
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Technical Analysis
Technical, environmental, and social studies and economic analysis of the sub-projects would be prepared on a rolling basis throughout project implementation. The allocation of funds to specific sub-projects during the implementation of the Project would be based on the MRPs and associated eligibility criteria.
Social Analysis
The Project triggers the following World Bank social safeguard policies: Indigenous Peoples (OP/BP 4.10) and Involuntary Resettlement (OP/BP 4.12). An IPPF and a RPF have been prepared, disclosed and consulted by the GoA. The safeguards instruments prepared under the original Project were updated to incorporate the changes proposed under the AF and to account for the inclusion of the La Rioja province. The updated frameworks, acceptable to the Bank, were disclosed in-country on February 3, 2017 and in the Bank’s external website on February 1, 2017.
Main inputs received during consultation on July 26 and 28, 2016 were captured in the IPPF and include: (i) ensure timely and informed participation of indigenous communities leaders from the beginning of sub-projects; (ii) economic support be given to mobilize indigenous peoples from disperse locations; (iii) a fifteen-day period prior to sub-projects consultation as well as the mandatory use of the indigenous language in all written and oral communication and their consultation material in line with the National Law of Education; and (iv) assign women a protagonist role during the entire process of the project and develop specific trainings for women and children. The IPPF also builds on the implementation of two IPPs (Pampa del Indio and Wichi water supply sub-projects), financed under the First Norte Grande Water Infrastructure project (P120211).
The AF is expected to positively affect the people living in the targeted ten northern provinces that concentrate the largest share of the national population with NBI, and where WSS coverage is the lowest.
Positive impacts include: (i) better environmental health and sanitation conditions for poorer families due to less exposure to multiple disease vectors; (ii) increased savings in treating these waterborne diseases contributing to decreased morbidity and mortality; and (iii) increased income through job creation in WSS infrastructure construction and its supply chain provision of goods and services, contributing to growth of local economies.
Related to the potential downstream negative impacts (e.g., micro metering, and/or increase of water tariffs), the MRPs would support service providers to proactively tackle any potential impact for most vulnerable social groups with a differentiated gender perspective and access to Project’s benefits because of, among others, their geographical location, ethnical or poverty situation. The Project would finance: (i) strategies and plans that include most vulnerable social groups such as those already identified in the Salta and Jujuy MRPs; (ii) capacity building for the increased institutional expertise to assess and address this type of need; (iii) tailored analysis regarding these potential social negative impacts such as affordability for payment of services; and (iv) setting enabling the environment for informed social participation through a citizen engagement system for improving service access and delivery including communication plans,
22
public commitments agreement with users and relevant stakeholder, and feedback and claims redressing mechanisms.
The Project would remain gender-informed as the social analysis of the Project includes patterns of women in access and uses of WSS services. Furthermore, the Project also includes assessing this macro trend in the specific social assessment of sub-projects, from their screening for eligibility and monitoring of progress. Similar social analysis would also be conducted for the La Rioja province.
The Project would actively engage citizens by enabling beneficiaries and stakeholders to provide feedback and by integrating their feedback to improve results throughout the project cycle through the Project’s public citizen engagement system and its specific tools. The Project has already in place grievance redress mechanisms.
Environmental Analysis
The Project was originally assigned an environmental screening Category A and this would remain unchanged under the AF. No new safeguards policies are triggered and there are no new safeguards related issues.
The Original Project (P125151) has been executed in full compliance with the environmental and social safeguards policies. With regard to the OP 4.01, the PIU has properly addressed the environmental and social issues identified during the preparation of the ESIA for the construction of the waste water treatment plant (WWTP) and sanitation main collectors. These included the implementation of a reforestation plan to compensate the impact of the cutting of palm trees on the construction site of the WWTP, the regular monitoring of the water quality of the river at the level of the current point of water discharge and consultation with a group of fishermen potentially affected by the change of the discharge outfall. The PIU has regularly presented to the Bank the environmental and social management progress reports and implemented satisfactorily some institutional environmental and social strengthening activities to develop the capacity of the service provider (SAMEEP) in the Province of Chaco.
In relation to the OP 4.04, the works site is located in the vicinity of a RAMSAR site (high conservation value wetlands) and specific mitigation measures to protect fauna and flora were included in the EMP and the biding documents.
The Project triggers the following World Bank environmental safeguard policies: Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Forests (OP/BP 4.36), Physical Cultural Resources (OP/BP 4.11), Pest Management (OP 4.09), Safety of Dams (OP/BP 4.37), and Projects on International Waterways (OP/BP 7.50). The ESMF includes provisions to understand the applicability and ensure compliance with Natural Habitats policy (OP/BP 4.04), requiring careful design accounting for cumulative impacts, contingencies and links to important natural habitats. Forests (OP/BP 4.36). Some sub-projects could affect small fractions of native forest in the proximity of infrastructure to be built. In these cases the EA to be undertaken for each future sub-project will analyze
23
this issue in depth, and the EMP will determine the specific management measures and eventual compensation measures following the ESMF guidelines. Physical Cultural Resources (OP/BP 4.11). It is possible that the civil works constructed under the Project may directly or indirectly affect physical cultural property, mostly in cities. The ESMF includes specific requirements to screen for these impacts and includes mitigation measures. Pest Management (OP 4.09). The ESMF includes specific requirements to ensure that all construction contracts and infrastructure operation manuals will include measures to manage pesticides following Bank's policy.
Safety of Dams (OP/BP 4.37). This policy is triggered as the Project may finance projects that could rely on the performance of an existing dam or a dam under construction (DUC). The ESMF includes appropriate guidance to identify and manage impacts when identifying these types of sub-projects during implementation.
OP 7.50 is triggered as the sub-projects to be considered for funding may be located on waterways that form part of the La Plata Basin River basin, which originates in Argentina, Bolivia and Brazil, and flows through Argentina, Paraguay and Uruguay. Following OP/BP 7.50 requirements, on November 3, 2016, the Bank sent a formal notification of the Water Supply and Sanitation Development Program – Plan Belgrano (P159928) and its elements to riparian countries comprising Bolivia, Brazil, Paraguay and Uruguay. Bolivia responded on January 12, 2017 requesting additional information about the location of the sub-projects when it becomes available. The Bank replied to Bolivia on January 25, 2017 indicating a commitment to provide the information requested when available. Brazil responded to the Bank on January 23, 2017 acknowledging the notification and welcoming the Project. No further communication was received from the riparians and the Bank considered the notification process completed on February 3, 2017. The Project is not expected to: (a) cause appreciable harm to the other riparians; or (b) be appreciably harmed by the other riparians’ possible water use.
The original ESMF prepared for the Project was updated and disclosed in country and in the Bank’s website on September 27, 2016. Updated versions of the ESMF, the IPPF, and the RPF acceptable to the Bank were disclosed in country on February 3, 2017 and in the Bank’s website on February 1, 2017.
Public consultations on the ESMF, including the IPPF and the RPF, jointly with the profile of the Water Supply and Sanitation Development Program – Plan Belgrano (P159928), were held and duly documented and included: (i) a virtual public consultation (via e-mail) on the draft terms of reference to update the current Second Norte Grande Project (P125151) RPF and IPPF; and (ii) two face-to-face consultations in the provinces of Chaco and La Rioja were held on July 26 and 28, 2016. As per the updated version of the ESMF, infrastructure sub-projects, non-structural measures, and activities that would be proposed for Bank funding would undergo a screening to determine their eligibility for financing. Once specific investment proposals are considered eligible for financing by the Project, they would undergo a detailed environmental assessment process, which includes: (i) environmental and social screening and categorization of sub-projects; (ii) preparation of EA (e.g., Environmental and Social Impact Assessments, Expedited Environmental and Social Assessment, or Strategic Environmental and Social Assessments), as well as EMPs, for which basic terms of reference, guidelines, and minimum requirements for mitigation measures are provided; (iii) public consultation and disclosure; (iv) clearance of EAs; and (v) supervision of
24
EMPs’ implementation. The Bank safeguard policies would only apply to those sub-projects included in the MRPs that would be financed by the Bank.
The design of the MRPs would include Strategic Environmental and Social Assessments (SESA) as per the ESMF. Bank safeguard policies would only apply to the sub-projects included in the MRPs and financed by the Bank. Thus, only sub-projects financed by the Bank would be subject to ESMF, IPPF and RPF.
The Project is expected to contribute to significant improvements in water quality and the quality of life of the population living in targeted areas. However, the cumulative benefits to the region will depend on the combined effectiveness of all the various programs, the growth and development trends in the different basins as well as other development projects currently being developed or planned in the Plan Belgrano region.
From the environmental standpoint during construction the main potential environmental impacts will be temporary and typical of the construction of large-scale civil works such as the expansion of sanitation systems. With appropriate prevention, mitigation and supervision measures, these impacts are considered moderate and temporary and readily manageable. Negative cumulative impacts should be carefully considered, particularly in those sub-projects constructed in arid or semi-arid areas, as well as in endorheic and arheic basins, where water sources and receiving bodies (such as aquifers and wetlands) can be subject to multiple competing uses, and particularly vulnerable to pressures, not only from the works to be constructed under the current operation, but also from other existing and/or planned stressors. The UCPyPFE has a dedicated team of at least four part-time specialists with a strong experience on the management of the environmental and social aspects of similar projects. To ensure sound social and environmental management, an “Institutional Strengthening Plan” was prepared to strengthen the capacities of the UCPyPFE, the provinces and the service providers. In brief, the distribution of responsibilities for the environmental management, inspection, and supervision of the works to be financed will follow the same arrangements already in place for the Project.
Risk
The Project’s overall risk was originally rated High but the overall risk rating is now assessed as Substantial, given the satisfactory performance of the Project to date and the effectiveness of the mitigation measures.
V. World Bank Grievance Redress
38. Communities and individuals who believe that they are adversely affected by a World Bank supported Project may submit complaints to the existing Project-level grievance redress mechanisms or the World Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address Project-related concerns. Project affected communities and individuals may submit their complaint to the World Bank’s independent Inspection Panel, which determines whether harm occurred, or could occur, as a result of World Bank non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service
25
(GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.
ANNEX 1. Revised Results Framework and Monitoring Indicators
Project Name:
PLAN BELGRANO WATER SUPPLY AND SANITATION SERVICES DEVELOPMENT PROJECT (P162712)
Project Stage:
Additional Financing Status: FINAL
Team Leaders:
Christophe Prevost/Gustavo Saltiel
Requesting Unit:
LCC7C Created by: Maria Florencia Liporaci on 22-Dec-2016
Product Line:
IBRD Responsible Unit:
GWA04 Modified by: Maria Florencia Liporaci on 19-Jan-2017
Country: Argentina Approval FY: 2017
Region: LATIN AMERICA AND CARIBBEAN
Lending Instrument: Investment Project Financing
Parent Project ID: P125151 Parent Project Name: AR Second Norte Grande Water Infrastructure (P125151)
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Project Development Objectives
Original Project Development Objective - Parent:
The Project Development Objective is to increase sustainable access to sanitation and water supply services in the Norte Grande region of Argentina, by providing investments in infrastructure and supporting institutional development.
Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target
Moved from intermediate level
Direct project beneficiaries Number Value 0 0 450,000
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
Moved from intermediate level
Female beneficiaries Percentage
Sub-type
Supplemental
Value 0.00 0.00 50.00
Date 26-Mar-2012 26-Dec-2016 30-Apr-2020
Comment
Revised People provided with access to improved sanitation services under the project
Number Value 0 0 210,000
Date 26-Mar-2012 26-Dec-2016 30-Apr-2020
Comment
Marked for deletion
People provided with access to improved sanitation facilities under the project - urban
Number Value 0 0 200,000
Date 26-Mar-2012 26-Dec-2016 28-Apr-2017
Comment
Marked for deletion
Number Value 0 0 10,000
Date 26-Mar-2012 26-Dec-2016 28-Apr-2017
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People provided with access to improved sanitation facilities under the project - rural
Comment
New
People provided with access to improved water services under the project
Number Value 0 0 250,000
Date 26-Mar-2012 26-Dec-2016 30-Apr-2020
Comment
Moved to intermediate level
Number of Service providers that have a monitoring system implemented (control panel) for decision making to improve management
Number Value 0 3 5
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
New Service providers achieving a 90 percent in O&M cost recovery ratio (Measured as collected revenue from WSS bills over O&M costs)
Number Value 0 0 5
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
Intermediate Results Indicators
Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target
Moved to PDO level
Direct project beneficiaries Number Value 0 0 450,000
Date 30-Nov-2016 26-Dec-2016 28-Apr-2017
Comment
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Moved to PDO level
Female beneficiaries Percentage Value 0.00 0.00 50.00
Date 26-Mar-2012 26-Dec-2016 28-Apr-2017
Comment
New Number of MRPs elaborated and approved
Number Value 0 0 10
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
New Number of service providers that have a monitoring system implemented (control panel) for decision making to improve management
Number Value 3 3 5
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
New Number of capital cities where 90 percent of produced water is macro-metered
Number Value 2 2 5
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
New Percentage of billed connections that are metered and read (measured over the total number of connections billed by user type – residential and non-residential)
Percentage Value 41.00 41.00 60.00
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
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New Number of sub-projects prepared that meet Project eligibility criteria to be approved for funding
Number Value 0 0 14
Date 30-Nov-2016 26-Dec-2016 30-Apr-2020
Comment
Marked for deletion
Number of water utilities that the project is supporting
Number Value 0 4 4
Date 01-Aug-2011 26-Dec-2016 26-Apr-2017
Comment
Marked for deletion
Km of sewerage collectors rehabilitated under the Project
Km Value 0.00 20.00 27.00
Date 01-Aug-2011 26-Dec-2016 26-Apr-2017
Comment
Marked for deletion
Evidence that the UCPyPFE unit is operational and functions effectively
Yes/No Value N Y Y
Date 01-Aug-2011 26-Dec-2016 26-Apr-2017
Comment
Marked for deletion
Development, launching and continuing the implementation of a Communication Strategy for the Project following the project design guidelines
Yes/No Value N Y Y
Date 01-Aug-2011 26-Dec-2016 26-Apr-2017
Comment
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Marked for deletion
Volume of treated wastewater that complies with the provincial and federal standard for effluent discharged due to investments made under the project
4. Technical Design of Project or Program Substantial
5. Institutional Capacity for Implementation and Sustainability Substantial
6. Fiduciary Substantial
7. Environment and Social Substantial
8. Stakeholders Low
9. Other
OVERALL Substantial
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ANNEX 3. Detailed Description of Project Activities
Current Situation of WSS Services, Challenges and Priorities in the Plan Belgrano Provinces13
1. Given the federal structure of Argentina, each provincial government has jurisdiction over its territory, natural resources, and most of the public services. In most of the provinces, there is a main WSS service provider and in some cases, secondary service providers, such as municipalities or cooperatives. It is estimated that across Argentina there are 1,828 WSS service providers in urban areas, of which 23 are provincial and one is the national service provider Agua y Saneamiento Argentinos SA (AySA). The WSS service providers serve 60 percent of the population; four private WSS service providers serve 10 percent of the population; and municipalities or cooperatives14 serve the remaining 30 percent of the population. Most of the provinces also have a regulatory agency (sectoral or multisectoral) with a mandate to regulate and control the main provincial service provider and in some cases, secondary service providers as well.
Table 3.1. Access to Water Supply and Wastewater Services, Plan Belgrano Provinces
Province Total
Households
Water Coverage
(% of total households)
Wastewater Services
Coverage (% of total
households)
Households with NBI
% of Households
with NBI with No
Access to Piped Water
% of Households
with No NBI with
No Access to Piped Water
% of Households
with NBI with No
Access to Sewerage
System
% of Households
with No NBI with
No Sewerage
System
Catamarca 96,001 93 44 11 16 6 81 52
Chaco 288,422 77 26 18 35 21 93 69
Corrientes 267,797 87 53 15 23 11 78 41
Formosa 140,303 77 31 20 36 20 87 64
Jujuy 174,630 94 61 15 13 4 69 34
La Rioja 91,097 94 51 12 14 5 76 45
Misiones 302,953 72 19 16 43 25 94 79
Salta 299,794 91 62 19 18 7 72 30
Santiago del Estero
218,025 76 22 18 44 20 96 74
Tucumán 368,538 89 47 13 18 10 84 49
Total 2,247,560 84 41 16 28 14 84 54
Source: Own elaboration based on National Household Survey, 2010.
13 A summary table of financial and efficiency indicators is found in annex 5. 14 NWSP, 2015.
S del Estero 168.223 114,44 79,31 76% 139% 106% 106%
Salta 512.738 66,96 102,51 92% 68% 62% 98%
Tucumán 470.000 48,89 35,70 63% 137% 86% 86%
Source: own elaboration. Note: Tucumán and Catamarca subsidize energy costs, though the amounts are not known.
2. Hereafter are presented the current situation of WSS services, challenges, and priorities in the provinces covered by the Plan Belgrano.
Province of Chaco
3. The Province of Chaco has 1,143,201 inhabitants and an NBI index of 18.2 percent. The provincial water coverage is 77 percent and the sewerage coverage only 26 percent. The main provider of WSS services is a provincial company (SAMEEP), with 295,276 water connections that serve 91 percent of the provincial population. Coverage in its service area is 79 percent for water and 44 percent for sewerage. Other small municipal providers and cooperatives manage 16,216 connections and the Provincial Water Administration manages 2,703 water connections.
4. Important infrastructure, such as aqueducts and water and sewage treatment plants, have been built in SAMEEP’s service area in recent years, including in remote areas with large indigenous populations. This will facilitate coverage expansion in the near future through execution of tertiary networks and household connections for both water and sewerage.
5. Micrometering is at 37 percent, with 186,908 connections not yet metered. The acquisition and installation of 12,000 meters is in progress. To reduce NRW, rehabilitation of water pipes in the oldest part of the City of Resistencia is in the planning phase. SAMEEP’s major challenge is improving sustainability of services, as reflected by its low operating ratio.
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Province of Salta
6. Water supply and sewerage coverage in the Province of Salta are 91 percent and 62 percent, respectively. The NBI at the provincial level is 19.4 percent, one of the highest in the country. The public company, Aguas del Norte SA (AdN), is the provincial service provider and has jurisdiction over the entire province, with the exception of one municipality that provides its own municipal services (1,358 connections). AdN manages 291,000 water connections.
7. The two main challenges faced by AdN are the geographical dispersion of its users and the need to provide services to the most isolated populations. Specific water quality problems and high levels of NRW are also key problems faced by the service provider. Given that the company has only 23 percent of connections metered, it needs to increase macro-metering and micro-metering. The energy efficiency of the service is low because most of the production is through scattered wells. As such, the company is considering increasing surface water production in the long-term.
8. With regard to sewerage, while there is a treatment plant for the capital’s metropolitan area, networks expansion and household connections must be prioritized to increase service coverage in line with the objectives of the NWSP.
Province of Tucumán
9. The Province of Tucumán is the most populous of the northern provinces of Argentina. It has water coverage of 89 percent and sewerage coverage of 47 percent for the total population of 1,592,878 inhabitants. The NBI at the provincial level is 13.3 percent. Sociedad de Aguas de Tucumán (SAT) is the main WSS service provider with 276,000 water connections. SEPAPYS is the secondary provider with 51,017 water connections. Four municipalities manage the remaining 18,700 connections.
10. SAT’s service area has water coverage of 83 percent and sewerage coverage of 58 percent. Hence, the Province has prioritized expanding networks and service connections. SAT has a sewage treatment plant for the Greater Tucuman City area, which constitutes a model in the region. The company has the lowest micro-metered coverage in the country (6 percent), with 260,000 unmetered connections.
11. SAT operates a large number of deep wells and most of them require a rehabilitation plan, macro-metering, physical security of premises, improvements in electrical panels, pumps, and chlorination devices. Remote system monitoring has been considered as a means to improve the quality of service (pressure and continuity) and water quality (though verification of chlorination is today one of the major deficiencies).
Province of Formosa
12. The Province of Formosa has 579,250 inhabitants and an NBI of 19.7 percent, the highest in Argentina. The provincial water coverage is 77 percent and sewerage coverage is at 31 percent. The main provider of water and sewerage services is Aguas de Formosa (AdF), which serves the metropolitan area of the capital city and 48 percent of the provincial population. The secondary provider, the Provincial Service for Potable Water, provides services in the interior of the province through the operation of 46,942 water connections. Cooperatives and other small providers manage 13,426 water connections.
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13. Within the AdF service area, water coverage is 80 percent and sewerage coverage is 48 percent. Still, a significant effort is needed to increase coverage through secondary networks and connections, both in the capital and in the interior of the province. AdF has proposed a remote monitoring sub-project that would significantly improve the quality of service.
Province of Jujuy
14. Water supply and sewerage coverage in the Province of Jujuy are 94 percent and 61 percent, respectively. The NBI at the provincial level is 15.5 percent. According to the legal framework recently approved, Agua Potable de Jujuy is the only WSS services provider in the province, with 214.800 potable water connections. There are also a group of cooperatives and other small providers that currently serve 7,278 water connections and are in the process of transferring to Agua Potable de Jujuy.
15. With the incorporation of rural areas to the company, the main challenge is to expand water services outside of the original service area, mainly to cover around 550 remote communities. Given the relatively low sewerage coverage level (65 percent,) network expansion efforts and the establishment of connections are key priorities in the capital’s metropolitan area.
16. Despite the high levels of micro-metering rates in the province (85 percent), the service provider has set the goal of reaching 100 percent. To meet this goal, 61,000 meters would be required, including the replacement of meters that have exceeded their useful life. The service provider also intends to reduce commercial and physical losses in the distribution system.
Province of Catamarca
17. Catamarca has the second lowest population in the north (396,895 inhabitants) and an NBI of 11.3 percent. The water coverage in this province is 93 percent and sewerage coverage is 44 percent. The main provider, Aguas de Catamarca, serves three municipalities: San Fernando del Valle de Catamarca, Valle Viejo, and Fray Mamerto Esquiú through 55,687 water connections equivalent to 45 percent of the provincial population. The secondary provider is the Interior Directorate of Water and Sanitation, with 50,955 water connections spread throughout the province. Neighborhood centers also manage water services for 16,213 connections.
18. Water coverage in the area of service of Aguas de Catamarca is 80 percent and sewerage coverage is 61 percent. There are 35,915 unmetered water connections.
19. While the company has a new water treatment plant that has the ability to supply all users, there is a lack of water mains and reservoirs. These elements will allow significantly lower operating costs for electricity (by replacing the use of wells with surface water), and will improve service quality (pressure, continuity, and water quality).
Province of Santiago del Estero
20. The Province of Santiago del Estero has 928,097 inhabitants and an NBI of 17.6 percent. It is the second largest province in northern Argentina with extensive forested areas. Water coverage is 76 percent and sewerage coverage is 22 percent. The main service provider is Aguas de Santiago, a private concessionaire that provides and serves 47 percent of the provincial population. It has water coverage of
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78 percent in its area of service (the lowest among major service providers) and sewerage coverage of 40 percent. Metering coverage is only 3 percent, the lowest in northern Argentina (107,958 unmetered connections).
21. The Directorate of Sanitary Works of Santiago del Estero is the secondary provider with 54,297 water connections. About 165,000 of these residents receive their water resources through trucks, while 80,000 residents are served by cooperatives. For these service providers, who are not very strong institutionally, the greatest challenge is serving small and dispersed populations in distant settlements, many of which are often subject to precarious means of communication. These are the areas where the service coverage and quality deficits are more significant. The province needs important reforms to meet the challenge of service expansion and sustainability.
Province of Corrientes
22. The Province of Corrientes has 1,070,283 inhabitants and 15 percent of households with NBI. The provincial water coverage is 87 percent and the sewerage coverage is 53 percent. The main provider is Aguas de Corrientes, a private concessionaire providing services in the capital and 9 other cities to 86 percent of the provincial population, with a coverage of 94 percent for water and 75 percent for sewerage. Micro metering coverage is 95 percent.
23. The greatest needs to increase coverage are outside the service area of Aguas de Corrientes, in small municipalities and scattered rural communities. The Provincial Water Authority is developing a program to provide technical assistance to these small service providers in a sustainable manner.
Province of Misiones
24. The Province of Misiones has 1,189,446 inhabitants and a 15.6 percent NBI. The provincial water coverage is 72 percent and the sewerage coverage is 19 percent. The main service provider is Misiones’ Water Services (SAMSA), a private service provider for the cities of Posadas and Guarupá, together making up 32 percent of the provincial population. SAMSA has a water coverage of 81 percent and a sewerage coverage of 48 percent. Micro-metered coverage is 96 percent.
25. The biggest challenge is to increase access in communities where service provision falls under the responsibility of small water supply cooperatives associated, through a federation.
Province of La Rioja
26. The Province of La Rioja, with a population 333,642 inhabitants, is the least populated province of northern Argentina. The provincial water coverage is 94 percent and the sewerage coverage is 51 percent. The Province of La Rioja has an NBI of 12 percent.
27. The main service provider provides services to 90 percent of the provincial population with 92 percent water coverage and 90 percent sewer coverage within its concession area. Micro-metering is 48 percent, with 36,983 non-metered connections.
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Project Description
28. The AF has been designed to scale up the Argentina Second Norte Grande Project (P125151) to support Argentina’s flagship Plan Belgrano and the implementation of the NWSP, both launched in 2016 by the new Administration. The Project aims at addressing infrastructure gaps in the northern provinces of the country as well as sustainability issues in order to generate long-lasting performance improvements in the WSS sector. The proposed AF will finance the scaling up of infrastructure and institutional and operational strengthening activities of the same nature as those of the original Project.
Project Components and Activities
29. Component 1: Water Supply and Sanitation Infrastructure (US$100 million, of which US$75 million of Bank funding): Carrying out of demand-driven Sub-projects consisting of the rehabilitation, upgrading and/or reconstruction of Participating Provinces’: (i) wastewater collection, conveyance, treatment and disposal systems, such as wastewater treatment plants, pumping stations, main collectors and secondary sewerage networks; and (ii) water supply systems including, for instance, production and distribution systems.
30. Component 2: Institutional and Operational Development and Technical Assistance (US$47 million, all financed by the Bank): (i) Carrying out of tailored institutional and/or operational strengthening programs and provision of technical assistance for participating WSS Service Providers to improve their institutional organization, investment planning, management capabilities and technical, operational, commercial and financial efficiency including, for instance: (a) the development of WSS-related management and information systems; (b) the development of WSS customer databases and cadastres; (c) the provision of technical assistance related to strategic planning, energy efficiency and operational efficiency programs; (d) the carrying out of analysis of cost-recovery options and optimization of rates and subsidy structures; (e) design and implementation of macro- and micro-metering (including minor works), and NRW reduction programs; (f) the provision of technical assistance for institutional reorganization; and (g) the design of training programs for O&M of systems and installations (focused on wastewater treatment plants, water treatment plants and pumping stations), and the carrying out of studies related thereto, all under terms of reference acceptable to the Bank; (ii) Carrying out of technical studies required to support the preparation and implementation of Sub-projects, for instance, feasibility studies, analysis of alternatives, engineering designs, economic and financial analysis, socio-economic surveys, environmental and social impact assessments and management plans (including screening and risk assessments, support to the preparation of safeguard instruments and monitoring) and other studies related thereto, all under terms of reference acceptable to the Bank; and (iii) Carrying out of communication plans, dissemination and knowledge-sharing activities related to the Project, and training and capacity building for the institutional strengthening of UCPyPFE and Participating Provinces.
31. Component 3: Project Management and Supervision (US$3 million, all financed by the Bank): (i) Carrying out of specialized independent technical, environmental and social supervision of Sub-projects’ implementation, as required; (ii) Carrying out of Project audits and monitoring and evaluation activities under the Project; and (iii) Provision of administrative and operational support (including the provision of Operating Costs) to UCPyPFE and UCPyPFE-UEP in the administration, monitoring, coordination and supervision of Project implementation.
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Preliminary Pipeline of Potential Sub-project
32. Aguas del Norte SA (Salta), SAMEEP (Chaco), Sociedad de Aguas de Tucumán (Tucuman), Agua de Formosa (Formosa) and Agua Potable de Jujuy (Jujuy) have prepared a draft MRP during the preparation of the proposed AF. It is expected that during implementation of the AF, all main service providers operating in the provinces covered by Plan Belgrano would prepare their MRPs.
33. A preliminary pipeline of potential sub-projects and activities was proposed by the NDWS, based on the priorities identified in the MRPs prepared by the service providers (see Table 3.3. Summary of Pre-Identified Activities and Investments under Components 1 and 2). Sub-projects would still need to go through a rigorous selection process, including meeting eligibility criteria.
Table 3.3. Summary of Pre-Identified Activities and Investments Identified Under Components 1 and 2
Province Provider Works / Activities US$m Component 1 Salta AdN "3 Cerritos" water and sanitation networks' rehabilitation 8 Salta AdN Water treatment Plant and water networks in Tartagal 31 Jujuy APJ Waste water plant and sewerage networks in La Quiaca 7 Jujuy APJ Improve water main (Rehabilitation) in Huayco 1 Tucuman SAT Rehabilitation of water networks in Tucuman city 9 Chaco SAMEEP Construction water distribution network in Pinedo (new clients) 6 Chaco SAMEEP Construction water distribution network in Corzuela (new clients) 6 Chaco SAMEEP Improve water networks in old Resistencia (Sectorization, macro metering) 5 Formosa AFSA New water networks (Expansion) in Formosa 2 Formosa AFSA New sewerage networks in Formosa 9 Formosa AFSA Water and sewerage networks rehabilitation 9 TOTAL COMPONENT 1 (USD million) 100 Component 2 8 Provinces Procurement macro metering (production capitals) 5 9 Provinces Procurement & Installation 200.000 micro metering 20 Jujuy 33.000 Micro metering 5 Salta 20.000 Micro metering 4 Salta Macro metering 3 Jujuy Macro metering 4 6 provinces Improve service provision in poor and remote communities 3 Regulatory capacity building at provincial level 1 5 provinces Tariff restructuring 2
TOTAL COMPONENT 2 (USD million) 47 GRAN TOTAL (USD million) 147
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General Eligibility Criteria for Sub-projects
34. The following eligibility criteria15 must be met for sub-projects to be considered and financed under the Project:
• Consistency with Project objectives, in particular their poverty reduction potential. Sub-projects must largely benefit low-income populations.
• Infrastructure works or activities to be financed must be included in the corresponding provider’s MRP, approved by the provincial authorities and the UCPyPFE, where the justifications and prioritization criteria will be included by impact, either by the amount of direct and indirect beneficiaries to whom service will be expanded or improved, or because of the number of low-income population or indigenous peoples benefited.
• Sub-projects included in the Project must have complete technical designs, be economically viable and financially sustainable, be managed by stable institutions and warrant satisfactory environmental and social management, and be consistent with project objectives.
• Sub-projects must be in compliance with the economic, financial, legal, technical, institutional, social, and environmental eligibility criteria to be documented in relevant studies,16 be approved by the UCPyPFE, and have the formal no objection of the World Bank.
• Participating provinces and/or service providers must demonstrate (as documented in studies) sufficient and sustainable technical, institutional and financial capacity to manage, operate and maintain the investments. If technical and institutional capacity is insufficient, the service providers must enroll in an institutional strengthening program.
• Low-value/risk contracts included in the MRPs could be procured by the service providers at the provincial level subject to the service provider capacity. The procurement capacity assessment will be performed by the UCPyPFE over the service providers with close supervision and assistance by the Bank.
• The province and the relevant service provider will agree to comply with the rules and guidelines of the Project and implement agreed Action Plans for institutional improvements.
• Current and estimated revenues of sub-projects or the provincial WSS service providers (including any applicable subsidies from provincial or federal budget) must cover the current and estimated costs of operating and maintaining such sub-projects.
• The guidelines of the Project’s Environmental and Social Management Framework (ESMF) for sub-projects financed by the Bank must be followed in applying the safeguards related eligibility criteria and to ensure compliance with applicable social and environmental
15 Eligibility criteria are further detailed in the project’s OM. 16 Studies will follow agreed ToR and guidelines described in the OM.
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safeguard policies including preparing the necessary instruments and undertaking consultation and disclosure.
• The sub-projects financed by the Bank must provide an Environmental and Social Impact Assessment (ESIA) acceptable to the environmental authority of the relevant province and the World Bank. The ESIA will incorporate the results of public consultations, prepared following the guidelines of the ESMF.
• The ESIA must include mitigation measures and programs for the construction and operation phases. In the case of sub-projects involving involuntary resettlement or affecting indigenous peoples, specific provisions will be outlined in a Resettlement Action Plan (RAP) or an Indigenous Peoples Plan based on the updated Resettlement Policy Framework and Indigenous Peoples Planning Framework of the project.
• All costs associated with the implementation of the sub-project ESMP, RAP, and/or IPP and any mitigation measures and monitoring programs must be budgeted for (under Component 2 of the Project).
• The sub-project must demonstrate sustainability from an environmental and social standpoint, which entails preventing: (i) permanent negative impacts on protected areas or cultural heritage; (ii) negative impacts on species threatened by extinction; (iii) negative environmental impacts that cannot be mitigated to acceptable levels; and (iv) social costs deemed unacceptable and/or unable to be mitigated by the affected communities.
• Sub-projects do not contravene national laws and policies including guidelines related to land use and urbanization plans and Argentina’s obligations under international treaties.
Management and Results Plans (MRPs)
35. The MRPs are conceived as a key planning instrument, which will set up a performance improvement path for each service provider including the investments and activities envisioned to achieve the goals established in the plans. Thus, the MRPs include infrastructure to expand services, other works, and goods, to improve service quality and commercial, financial, and operational efficiency and capacity building. The preparation of the MRPs is being supported by the World Bank and the IADB during project preparation.
36. Main areas covered by MRPs include the following:
• Technical assessment: Water coverage: Population served; analysis of total, active and metered house connections; analysis of consumption levels, per capita water production, analysis of the ability to provide the service to peri-urban areas (non-conventional, innovative, off-network solutions), and so on Analysis of the installed capacity to meet the current and projected water demand; Description of the current service provided (market analysis) to citizens living in peri-urban and rural areas not served by the service providers, including
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fees/tariffs, service quality, and informal service providers, among others; Assessment of the current status and design capacity for existing infrastructure, including bulk water infrastructure, production plants, distribution networks, pumping stations, and the analysis of the energy efficiency processes; Sewerage coverage and household connections; Analysis of the water quality and wastewater effluent quality highlighting issues arising from this and how they can be mitigated; Status of water bodies receiving wastewater discharges; Analysis of the installed capacity to meet the current and projected sewage service demand; Assessment of the current status and design capacity for existing infrastructure, including collection networks, main sewers, wastewater treatment, and reuse; Assessment of the service provider’s scale of operations in terms of number of connections; profile of customer base (commercial, industrial, residential, and urban poor); population served; metered customers; number of staff per connection;; Analysis of the effectiveness and efficiency of key technical operational processes (including network management—network information systems and mapping, O&M, water loss/leakage detection and repair, capital planning, and so on); the extent to which these technical processes are documented and followed; and the technical competence and motivation of staff in following these processes and in creating and implementing innovations in technical processes
• Assessment of institutional, commercial, and Financial Management (FM) practices: Assessment of the organizational structure of the service provider, including regional offices and all departments and their inter-relationships; Analysis of the staffing categories and rapid assessment of their capacity, motivation, and terms and conditions of employment (for example, contract employees versus permanent, government employees, pay scales, and benefits). Assessment of the working environment, including equipment and facilities available to staff to undertake their duties; Assessment of the effectiveness of existing performance data monitoring systems and tools—that is, what performance data is collected; who collects it; how is it checked, analyzed, and communicated; how effective are the data capture, aggregation, reporting and feedback systems? To what extent does the company benchmark externally and internally; Analysis of the effectiveness and efficiency of key commercial processes and systems, including customer databases, metering, billing and revenue collection, connection rules, NRW reduction strategies and so on, and the extent to which operational processes are driven by cost-effectiveness, operating efficiency, and the desire to improve commercial performance. This will involve reviewing existing strategic plans, NRW strategies, and other available documentation; Analysis of the effectiveness of key customer service processes, facilities, and systems, including the existence or not (in the main office and in regional offices) of customer service desks, customer complaint handling and response systems, office ambience, and so on. Assessment of the extent to which management and staff see serving customers as their primary function; how they understand current and future customer needs; how they meet customer requirements and strive to exceed customer expectations; and the extent to which customer feedback is sought, communicated, and used to improve service delivery; Tariffs: Tariff structure; tariff disaggregation (potable water, sewerage, and wastewater treatment); tariff gaps; and special provisions for infrastructure financing; Analysis of financial planning and management
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processes, including the process of predicting, monitoring, and controlling financial resources; cost control systems in place; the extent to which financial resources are defined and assigned to different regions or departments; the extent to which FM risks are identified and mitigated.
37. Business strategy for the service provider. The business strategy for the service providers will include: most significant challenges the service provider faces and a proposed sequenced set of measures to address such challenges; opportunities to provide service in unserved areas and restrictions and bottlenecks to the sustainable provision of WSS services; existing investments and suitability with the long-term plans of the service provider; revenues requirements in the short, medium, and long term; critical investments and other actions with particular emphasis on those that could be implemented within the first three years of the Project; and soft-actions to improve service provider performance, especially those that could produce quick results, including in the commercial and operational areas.
38. Safeguards. The ESMF provides guidance on the safeguard instrument that would need to be prepared during implementation, such as Expedited Environmental and Social Assessment (ESAex), Strategic Environmental and Social Assessments (SESA), among other. Bank safeguard policies would only apply to those sub-projects included in the MRPs financed by the Bank. Thus, only sub-projects financed by the Bank would be subject to ESMP, IPPF and RPF.
39. Targets and performance. The MRPs will identify realistic targets for critical performance areas of improvement and then define a rational action plan to implement a forward-looking strategy for the service provider in the short, medium, and long-term. This will include the projection of water and sewerage service coverage, review of tariffs structures and subsidies, financial modeling, and preparation of bankable projects. This action plan will help identify different sources and mechanisms for financing investments and will provide an analysis of their effectiveness and how they would affect the performance of the service provider. The MRPs will describe the implementation strategy of such identified actions and investments. To monitor progress toward performance improvement and sustainability, the MRPs include a baseline and a set of key performance indicators along key strategic areas as indicated in Table 3.4.
Table 3.4. Table of Key Performance Indicators of the Management and Results Plans
Coverage
Indicator 1: Water supply coverage. Households with water supply connection, over total number of households in the service provider’s service area Indicator 2: Sewerage coverage. Households with sewerage connection, over total number of households in the service provider’s service area.
Efficiency
Indicator 3: Collection ratio. Collected revenue over total amount billed for water and wastewater services Indicator 4: Percentage of produced water that is macro metered. Percentage of volume produced that is metered with macro-meters in good working conditions. Indicator 5: Percentage of billed connections that are metered and read. Percentage of connections that are metered and read over the total number of connections billed, by user type
Financial performance
Indicator 6: Cost-recovery ratio. Revenue collected from tariffs over total O&M costs.
Service quality Indicator 7: Residual chlorine. Percentage of residual chlorine in water at the end of the network.
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Other indicator/s that the provider considers convenient.
40. The regulators will also play a role in the validation of the annual progress reports of the MRPs, which would also contribute to reestablishing and strengthening the water sector institutional system at the provincial level.
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ANNEX 4. Implementation Arrangements
Project Institutional and Implementation Arrangements 1. The Borrower is the GoA. The proposed AF activities would be implemented by the existing well-established institutional implementation structure of the Project, the UCPyPFE17under the NWSD within the Public Works Secretariat of the Ministry of Public Works and Housing (MIPWH). At present, the NWSD and UCPyPFE are coordinating several programs financed by multilateral development banks, including the Water Infrastructure Project in the Norte Grande Region co-financed by the IADB, and Norte Grande Water Infrastructure Projects I and II. Although the UCPyPFE has successful experience and capacity in the implementation of similar projects, its capacity will be reinforced under the proposed AF, in particular to provide technical assistance and capacity building to NDWS, water service providers and regulators.
2. At the provincial level, water service providers are responsible for preparation and implementation of the MRPs with assistance from the NDWS, under a framework agreed upon for the proposed AF. All the investments proposed under the Management and Results Plans (MRP) will have to be carried out within the service provider’s concession area.
3. Through the key role assigned to the provincial regulators in the validation of the MRP annual reports, the program is expected to contribute to strengthening the water sector institutional system at the provincial level. The following scheme illustrates the responsibilities linked to the preparation and implementation of the MRPs.
Figure 4.1. Roles of Provincial Institutions in Implementation
Note: PGR refers to the acronym MRP in Spanish (Plan de Gestión y Resultados). DNAyS refers to the acronym NWSD in Spanish (Dirección Nacional de Agua y Saneamiento).
17 The UCPyPFE was created by Resolution 165/2000 of the former Ministry of Infrastructure and Housing, and its duties and
responsibilities were modified by Executive Decree 1,142/2003.
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4. Before any investments, the UCPyPFE and the provincial authorities will sign a Participation, Transfer, and Maintenance of Works Agreement (PTA) to specify the role and responsibilities of each parties, the UCPyPFE, the provincial authorities and the service providers. Moreover, a technical agreement between the UCPyPFE and the services providers will be signed in order to determine the role and responsibilities of the service providers. Upon completion of the works, the WSS assets will be transferred to the provinces and subsequently to the WSS services providers for their management and O&M.
5. The provinces, through the signature of the PTA, will commit to: (i) work with and support the UCPyPFE in the execution and supervision of technical aspects of the sub-project; (ii) meet the requirements for sub-projects to be eligible for financing under the Project; (iii) coordinate the activities needed to achieve project objectives and allocate all human, technical, and administrative resources needed to meet the obligations assumed; (iv) take ownership of project-financed works and equipment; and (v) guarantee that, once works have been transferred, sufficient human, physical, and financial resources are in place to support the O&M, in accordance with a plan approved in advance.
Figure 4.2. Implementation Arrangements
6. The main responsibilities of the UCPyPFE will be to: (i) Coordinate with provinces to identify sub-projects for financing and carry out the necessary assessments to ensure compliance with eligibility requirements; (ii) provide guidance and support to provinces and the WSS service providers on technical, economic, environmental, and social aspects in the preparation and implementation of sub-projects; (iii) coordinate with provinces on the preparation and implementation of the MRPs; (iv) supervise the FM, procurement, and disbursement functions of the project, including keeping project files and records; (v)
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retain auditors acceptable to the World Bank to audit the project accounts; (vi) oversee compliance with World Bank safeguard policies on social and environmental issues; (vii) make official requests for no-objections to the World Bank and liaise with the borrower on official requests for changes to the project scope or terms; and (viii) submit semiannual progress reports detailing progress in achieving project objectives. The format and content of these progress reports will be approved by the World Bank.
Measures to Address Capacity Constraints
7. The administrative structure of the UCPyPFE will be strengthened to meet the incremental needs associated with the administration and execution of the project, in particular, the fiduciary, environmental, and social safeguard aspects. Technical assistance for participating provinces and service providers will be available with the same goal. These efforts will be financed by Component 3.
8. Works will be generally supervised by a specialized, independent consulting firm to be contracted by the UCPyPFE. The UCPyPFE will provide further supervision and regularly inspect the works, as well as the implementation of the EMP and social impact mitigation measures during construction. Depending on the capacity of the province, relevant provincial entities with support from the UCPyPFE will supervise the implementation of social and environmental mitigation and compensation plans, as well as minor investment projects. Consulting services for the supervision of major investment works will be hired before the contracts for the respective works are signed, according to terms agreed upon with the World Bank.
Monitoring and Evaluation
9. The monitoring and evaluation system is designed to assess whether or not the Project is being implemented in line with the proposed objectives and to measure fulfillment of agreed target. Project progress reports will be prepared by the UCPyPFE on a semi-annual basis and submitted to the Bank. These reports should indicate the progress made under the different Project components and measure performance against the results indicators established in the results framework (Annex 1) and other relevant activities financed by the Project. In addition, progress reports will include information regarding: (i) disbursement performance over the period and an updated disbursement calendar; (ii) a procurement report, and an updated procurement plan for activities under each of the Project’s components; (iii) progress in the implementation of the EMP laying out any issues identified as well as documenting positive environmental and social impacts of the Project in the areas of intervention; (iv) a section describing potential developments that could affect Project implementation, which should consist of a review of the main risks and the impact of mitigation measures envisioned; and (v) an annual operation plan for the following year, presented in the second semester report.
10. Collaboration arrangements between the UCPyPFE, participating provinces, regulators and service providers for monitoring of different outcome indicators and intermediate indicators will be included in each PTA. The Project’s Operational Manual (OM) provides more specific procedures and monitoring and evaluation responsibilities at the provincial and national level.
Financial Management
11. Financial management (FM) and disbursements arrangements for the scaled-up activities will follow the arrangements already in place for the original Project. The UCPyPFE will continue to be
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responsible for the Project’s FM and disbursement functions comprising: the project’s accounts management; overseeing budgeting formulation and execution; making payments to assure adequate and timely financing of eligible expenses; maintain project’s accounting records and preparing the requisite financial reports to monitor implementation; and complying with project’s external auditing arrangements. The UCPyPFE has relevant experience implementing Bank-funded projects18 as well as several programs financed by other multilateral development organizations.
12. The FM arrangements currently in place at UCPyPFE continue to comply with Bank’s requirements as evidenced by the results of the annual financial audit reports and latest Bank FM supervision reports. FM supervision mission carried out in October 2016 determined that project FM performance continued to be satisfactory. Besides, there are no overdue audits for the ongoing projects under implementation by the MIPWH.
13. The Bank will continue disbursing on the basis of advances through a Designated Account (DA). The DA and the operative account from which payments in local currency are made will continue to be both managed by the UCPyPFE at the national level. In relation to the Management and Results Plans (MRP), some low-value/risk contracts included in the MRPs could be implemented by water service providers at the subnational level in certain circumstances. For this modality, there will be no advances of the Bank loan proceeds to participating provinces or third parties. It is envisioned that UCPyPFE will make payments of MRP eligible expenses following the request of each water service provider implementing an MRP.
Procurement
14. Procurement will be conducted according to the World Bank’s Procurement Regulations for IPF Borrowers, issued in July 2016, for the supply of goods, works, non-consulting services, and consulting services under the Project.
15. The UCPyPFE within the Public Works Secretariat of the MIPWH will have the procurement responsibility for the Project. However, once the MRPs have been approved and the contracts to be implemented have been defined, the UCPyPFE would carry out a capacity assessment to the service providers to determine whether the execution of low risk / low value procurement processes would be carried out centrally, or in a decentralized way, by delegation of (and with support from) the UCPyPFE to service providers at provincial level. These assessments would be carried out according to the methodology and parameters agreed with the Bank and with close supervision and support from the Bank.
16. Regarding the procurement capacity, the procurement team at UCPyPFE in charge of implementing ongoing projects, would need to be strengthened in order to address the increasing workload. At the local level, two operators have been preliminarily assessed by the Borrower and the Bank (Aguas del Norte in the Province of Salta and Aguas de Formosa) concluding that they have the capacity to implement procurement processes and manage low value /low risk contracts. However, once the procurement processes are identified, a detailed capacity assessment will be carried out to identify possible weaknesses and define relevant mitigation measures.
18 Norte Grande Water Infrastructure Project (P120211, Ln 7992-AR, USD 200 Million); and Second Norte Grande Water
17. The Project Procurement Strategy for Development (PPSD), prepared by the Borrower and transmitted to the Bank on January 20, 2017, was deemed acceptable to the Bank. The PPSD proposes the procurement arrangements that would best ensure the delivery of value for money. Given the framework nature of the AF, the specific investments under Component 1 have not been selected, while the nature of pre-identified investments does not present procurement challenges on the local markets. For these reasons, the PPSD is mainly focused on the scheme of decentralized procurement functions and the critical procurement of micro-meters included under Component 2, due to the importance of such activity for the achievement of the PDO.
18. Regarding the procurement of micro-meters, the strategy concludes, based on the market analysis and lessons learned from previous similar experiences, that the best alternative would be to include the provision of equipment and the associated installation service under the same process. The activity would be carried out through a request for bids with an open and international approach, as per the new Procurement Regulations for IPF Borrowers dated July 2016, and a framework agreement contractual arrangement, would be applied for a term that is not less than 2 years with lots conformed by type of micro-meter. The strategy also addresses in general terms the contracting of works under Component 2 that would be done through an open and national request for bids, with the possibility of having an international approach in cases in which the estimated costs exceed the thresholds set by the Bank for international competitive processes in Argentina. In all cases, standard bidding documents previously agreed with the Bank would apply.
19. The capacity assessment of the implementing agency has recommended annual supervision missions to visit the field to carry out post review of procurement actions, in addition to the prior review supervision visits to be carried out from Bank offices.
Environmental and Social (including safeguards)
Social Issues
20. This AF anticipates an overall positive social impact by directly benefiting the targeted ten provinces of the Northwest region - NOA (Catamarca, Jujuy, La Rioja, Salta, and Santiago del Estero) and Northeast region - NEA (Formosa, Chaco, Corrientes, Misiones and Tucumán). These provinces concentrate the largest share of the national population with NBI, where WSS coverage is the lowest, including increased urban poor affected by damage from environmental health problems associated with urban and indoor air pollution, noise, inadequate water supply, and sanitation and hygiene that are equivalent to about 3 to 4 percent of GDP. The main outcomes of the Social Analysis (SA) of the project, are presented below.
21. General social positive impacts include: (i) better environmental health and sanitation conditions for poorer families due to less exposure to multiple disease vectors; (ii) increased savings in treating these waterborne diseases contributing to decreased morbidity and mortality; and (iii) increased income through job creation in WSS infrastructure construction and its supply chain provision of goods and services, contributing to growth of local economies.
22. To ensure that these general positive social impacts will include the most vulnerable social groups, the project will benefit from two tools: (i) at sub-project level, through the project’s Social Assessment provisions as reflected in the ESMF and the IPPF, both related to infrastructure works and activities
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conducting to them for the access and/or improvement to WSS services; and (ii) at policy level, by means of the social provisions included in the MRPs of the services providers.
23. The Project’s Social Analysis built a macro baseline information that will serve as the entry points for specific social assessment at policy or sub-project level during project’s implementation. Specific social assessment will have the aim of removing obstacles posed by the existing WSS governance framework for differentiated social groups needs in access or improvement to WSS infrastructure and services so appropriate measures and resources are put in place. Particularly, the Social Analysis will search for a better understanding of key issues such as: (i) existence of social groups - and their differentiated needs - that have suffered systematically WSS services access or improvement exclusions; (ii) conflict-resolution mechanisms in areas where safe water is used for multiple purposes; (iii) differences in the patterns of water access and uses between men and women; (iv) patterns of availability of public information on WSS infrastructure and services and communication needs per social group - including gender specifics - and their relevance for informed participation in activities such as public health/hygiene education; and (v) types of capacity building needed to ensure and sustain women’s participation at different levels and phases of WSS sector development, among others.
24. Related to the potential downstream negative impacts already identified such as i.e., micro metering, tariffing and/or increase of tariffs of the services provisions, the MRPs of service providers will support WSS service providers’ strategies and projects to proactively tackle any potential barriers for most vulnerable social groups - with a differentiated gender perspective - access to project’s benefits because of, among others, their geographical location, ethnical or poverty situation by: (i) financing strategies and plans that include most vulnerable social groups such as those already identified in the Salta and Jujuy MRPs; (ii) providing capacity building for the increased institutional expertise to assess and address this type of need; (iii) conducting tailored analysis regarding these potential social negative impacts such as affordability for payment of services; and (iv) enabling the environment for informed social participation through a citizen engagement system for improving service access and delivery including communication plans, public commitments agreement with users and relevant stakeholder, and feedback and claims redressing mechanisms.
25. Other temporary negative impacts during WSS infrastructure works such as public safety, noise, traffic disruption and other social risks will be managed according to the sub-project’s environmental and social management plans as foreseen in the ESMF.
26. Gender. The Project is gender-informed as: (i) the social analysis of the project include patterns of women in access and uses of WSS services, and (ii) includes assessing this macro trend in the specific social assessments per sub-projects from their screening for eligibility and monitoring of their progress throughout the project cycle.
27. Citizen engagement. The Project will actively engage citizens by enabling beneficiaries and stakeholders to provide feedback and by integrating their feedback to improve results throughout the project cycle through the project’s public citizen engagement system and its specific tools, as further described in the project’s M&E system.
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Social Safeguards Triggered by the Project
28. The AF triggers the Indigenous Peoples (OP/BP 4.10) and Involuntary Resettlement (OP/BP 4.12) safeguards policies so an IPPF and a RPF have been prepared, disclosed and consulted by the GoA. All these activities were based on the Argentina legal framework and the OPs/BPs 4.10 and 4.12, and lessons from the two current World Bank supported WSS projects in the Norte Grande region (IBRD loans 7992 and 8032-AR).
29. Public consultations on the IPPF and RPF, jointly with the profile of the Water Supply and Sanitation Development Program – Plan Belgrano (P159928) and the ESMF have been held and duly documented and include: (i) a virtual public consultation (via e-mail) on the draft terms of reference to update the current Norte Grande Water Infrastructure RPF and IPPF for the Belgrano Project ; (ii) two face-to-face consultation in the provinces of Chaco and La Rioja, were held on 26 and 28 July, 2016; and (iii) additionally, the IPPF also received feedback from indigenous institutions, including the Instituto de Comunidades Aborígenes (ICA) of Formosa on September 26, 2016; the Instituto del Aborígen del Chaco (IDACH) of Chaco on October 7 2016; the Secretaría de Asuntos Indígenas of Chaco; and the Instituto Nacional del Indígena (INAI), which will continue disseminating and consulting with other provincial indigenous organizations. These consultations have confirmed that there is broad community support to the project. Documents, have been disclosed ìn-country on February 3, 2017 and on the Bank’s external website on February 1, 2017.
30. The IPPF and the RPF foresee grievance redress mechanisms tailored to their purposes and appropriate institutional arrangements to ensure adequate implementation.
31. Indigenous Peoples (OP/BP 4.10). This policy is triggered because there are around 260,000 people19 who self-identify as indigenous (Census 2010) in the ten provinces of the project’s area. More than half of the indigenous peoples - with the exception of Misiones and Santiago del Estero - live in cities, with the high percentage in La Rioja (88.8 percent) and Corrientes (85.5 percent). Despite improvement of indigenous communities’ access to basic services over the previous decade, the Plan Belgrano provinces remain the most lacking in terms of access.
32. To remove any barriers for the inclusion of indigenous peoples, the Project will have two tools: (i) at policy level, by including indigenous peoples as direct beneficiaries as one of the eligibility criteria for sub-projects and financing strengthening of strategies/plans/projects of WSS operators to serve social vulnerable groups, and (ii) at sub-project level, the IPPF will guide the preparation of specific Indigenous Peoples Plan (IPPs) to be implemented during project’s implementation.
33. Main inputs received during consultation were captured by the IPPF and include: (i) ensure timely and informed participation of indigenous communities leaders from the beginning of sub-projects; (ii) economic support be given to mobilize indigenous peoples from disperse locations; (iii) a fifteen-day period prior to sub-projects consultation as well as the mandatory use of the indigenous language in all written and oral communication and their consultation material in line with the National Law of Education;
19 This the official data of the last Census carried out in 2010. There are differences in the number of Indigenous Peoples in
these areas. Details are explained in the IPPF. The Project will address this by carrying out due disclosure and consultation at local level when an IPP will be prepared.
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and (iv) assign women a protagonist role during the entire process of the program. The IPPF also builds on the implementation of two IPPs (Pampa del Indio and Wichi).20
34. Involuntary Resettlement (OP/BP 4.12). Although the Project is not expecting to have any involuntary resettlement, a RPF was prepared. Indeed, the RPF covers potential direct economic and social impacts caused by a sub-project for the involuntary taking of land resulting in relocation or loss of shelter; loss of assets or access to assets; or loss of income sources or means of livelihood, whether or not the affected persons must move to another location. For the purposes of the RPF, "involuntary" means actions that may be taken without the displaced person's informed consent or power of choice.
35. Provisions of OP/BP 4.12 will cover gaps between the national legislation in issues such as eligibility of squatters, replacement costs and types of assistance.
36. The Bank social safeguard policies would only apply to those sub-projects included in the MRPs financed by the Bank.
Environment (including Safeguards)
37. Environmental categorization and Bank safeguards policies triggered. The Project has been classified as Category A. The categorization considered: (i) the social and environmental sensitivities of the Project area; (ii) the types of proposed investments; (iii) the weak provincial, municipal, or utilities capacities with regard to environmental and social management; and (iv) the unknown extent and precise location of future investments. The Project triggers the following World Bank environmental safeguard policies: Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Forests (OP/BP 4.36), Physical Cultural Resources (OP/BP 4.11), Pest Management (OP 4.09), Safety of Dams (OP/BP 4.37), and Projects on International Waterways (OP/BP 7.50). With regard to the latter, in response to the GoA’s request, a formal notification about the proposed Project and its elements was sent by the World Bank to the Republics of Bolivia, Brazil, Paraguay, and Uruguay, on behalf of Argentina. Bolivia responded on January 12, 2017 requesting additional information about the location of the sub-projects when it becomes available. The Bank replied to Bolivia on January 25, 2017 indicating a commitment to provide the information requested when available. Brazil responded to the Bank on January 23, 2017 acknowledging the notification and welcoming the Project. No further communication was received from the riparians and the Bank considered the notification process completed on February 3, 2017. The Project is not expected to: (i) cause appreciable harm to the other riparians; or (ii) be appreciably harmed by the other riparians’ possible water use.
38. Safeguards instruments and Environmental Assessment (EA) process. The safeguards instrument prepared by the borrower is the ESMF, which integrates the RPF and the IPPF. It addresses requirements of each of the triggered safeguard policies. The safeguards preparation benefited from the work done under the original Project. According to the ESMF, future investment proposals (both infrastructure sub-projects and non-structural measures and activities) that will be proposed for funding will undergo a screening to determine their eligibility for financing according to the eligibility criteria. Once specific investment proposals are considered eligible, they will undergo a detailed environmental assessment process, which includes procedures for: (i) environmental and social screening and categorization of sub-projects; (ii) preparation of EAs (Environmental and Social Impact Assessments,
20 First and Second Water Infrastructure Project in the Norte Grande region (IBRD loans 7992-AR and 8032-AR).
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Expedited Environmental and Social Assessment, or Strategic Environmental and Social Assessments), as well as Environmental Management Plans (EMPs), for which basic ToRs, guidelines, and minimum requirements for mitigation measures are provided; (iii) public consultation and disclosure; (iv) clearance of EAs; and (v) supervision of EMPs’ implementation. The Bank environmental safeguard policies would only apply to those sub-projects included in the MRPs financed by the Bank.
39. Commonly identified negative and mostly temporary negative impacts to people and communities associated with the construction phase of any of WSS infrastructure works. From the environmental standpoint during construction the main potential environmental impacts will be temporary and typical of the construction of large-scale civil works such as the expansion of sanitation systems. Possible impacts and risks include the following: (i) temporary disruption to local traffic flows; (ii) temporary loss of access to recreational, residential and commercial areas during the construction period; (iii) dust and noise; (iv) production of waste and construction debris; (v) occupational emergencies; (vi) erosion and siltation; (vii) chance archeological finds; and (viii) alteration of the topography and the hydrologic cycles, (ix) soil compacting, and (x) accidents with heavy construction equipment. With appropriate prevention, mitigation and supervision measures, these impacts are considered moderate and temporary and readily manageable. The management of construction impacts will be the responsibility of contractors and specific environmental measures will be specified within the construction contract.
40. During the operational phase, the main environmental impacts and risks relate to: (i) the risk of poor operation resulting in environmental and human health effects from the wastewater discharges (e.g. potential localized impacts on fisheries caused by effluents); (ii) the potential environmental and human health risks associated with the management and disposal of continuously generated bio-solids and sludges; (iii) odor and noise nuisances; and (iv) health and safety risks.
41. Cumulative Impacts. The Project is expected to contribute to significant improvements in water quality and the quality of life of the population living in targeted areas. However, the cumulative benefits to the region will depend on the combined effectiveness of all the various programs, the growth and development trends in the different basins as well as other development projects currently being developed or planned in the Plan Belgrano region. Negative cumulative impacts should be carefully considered, particularly in those sub-projects constructed in arid or semi-arid areas, as well as in endorheic and arheic basins, where water sources and receiving bodies (such as aquifers and wetlands) can be subject to multiple competing uses, and particularly vulnerable to pressures, not only from the works to be constructed under the current operation, but also from other existing and/or planned stressors. The interaction of these various factors may have an important regional or cumulative impact, which cannot be addressed by a single project entity.
42. Borrower capacity to plan and implement the described management. The PIU has a dedicated team of at least four specialists with experience on the management of the environmental and social aspects of similar projects. However, most environmental and social regulatory and enforcement powers and the day-to-day management are in the hands of the provinces or the service providers. Given the existing capacities’ heterogeneity, an Institutional Strengthening Plan was prepared, focusing on the social and environmental aspects of the water and sanitation sub-projects to be financed by the Project. In general terms, the distribution of responsibilities for the environmental management, inspection, and
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supervision of the works to be financed will follow the same arrangements that have proven effective in previous projects managed by the PIU (for example, the supervision to the implementation of EMPs to be conducted by UCPyPFE’s staff will be complemented by specific independent supervision contracts, to ensure proper safeguards monitoring during the implementation of all sub-project).
43. No other safeguard policies are triggered for the Project.
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ANNEX 5. Economic and Financial Analysis
1. As the original Project, the AF has been designed as a framework project. The sub-projects to be financed will be selected through the MRP preparation process and the screening based in the eligibility criteria acceptable to the Bank during project implementation.
2. It should be noted that the economic and financial analysis takes into consideration the important efficiency and financial sustainability improvements envisaged in the NWSP. These include: (i) strengthening management of the utilities through incentives and technical assistance for improvement of operational, commercial, and financial performance of the service providers; and (ii) reaching financial sustainability of the service providers through revising tariff structures to increase revenues and subsidy schemes to better target the poor and vulnerable groups and reducing operational costs by means of efficiency gains that will be monitored and promoted through benchmarking and the use of incentives (reducing loses, optimizing energy use, introducing preventive maintenance, and so on).
3. To assess the economic feasibility of the AF, a standard cost-benefit analysis of three sub-projects funded by the First and Second Norte Grande Water Infrastructure Projects (P120211 and P125151) was carried out. The following sub-projects were assessed: (i) the Drinking water supply for the localities of Wichi, El Sauzal, Misión Nueva Pompeya, and Fuerte Esperanza, Province of Chaco; (ii) the treatment plant and mains: for the Presidencia Roca, Pampa del Indio, and localities along provincial highway 40 toward Las Garcitas and provincial highway 30 toward Capitán Solari, Province of Chaco; and (iii) “Sewer Master Plan, Interception and Discharge System for the Greater Resistencia Metropolitan Area (AMGR, in Spanish). Province of Chaco.”
4. The results of the sub-projects ’evaluations are acceptable (see Table 5.1). The first two sub-projects, despite being designed to serve low-density areas with complex service provision challenges, are expected to generate positive social returns. The Sewer Effluent Treatment Plant sub-project estimates unfounded increasing consumption volumes increase costs and, therefore, the results obtained would be accordingly underestimated. Moreover, in the case of o the Sewer Master Plan, Interception and Discharge System for the Greater Resistencia Metropolitan Area, it is possible that some of the benefits have been underestimated because the analysis for the increase in coverage of drinking water does not consider the following potential benefits for households and society: (i) elimination of the cost of construction and maintenance of wells, engines, and pumps; (ii) elimination of household water storage costs and reduction in fuel costs associated with the operation of electric machinery that provides energy; and (iii) reduction in labor costs for personnel to maintain pumps.
5. With regard to the economic analysis of non-infrastructure activities contained in each MRP aiming at efficiency and sustainability gains in service providers, it is expected that activities such as capacity building, installation of metering equipment, and operational and commercial management improvements will lay the ground for efficiency and financial benefits progressively throughout the implementation of MRPs.
6. Some of these sub-projects may be evaluated, by using the CBA or, by default, the cost-efficiency methodology; these could in turn originate economic benefits if savings are invested in rehabilitation or new infrastructure, which should also be assessed under a CBA approach, following the criteria detailed
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in the Operational Manual. Preliminary analysis on financial indicators in the 10 main province service providers show that between US$47 million to US$190 million can be obtained under a progressive improvement of the financial trajectory during 5 years.
Criteria for Cost-Benefit Analysis
7. The Standard CBA expected for each eligible sub-project that is part of an MRP will take into consideration the following criteria: (i) for water sub-projects, a standard approach is to determine revenues generated by consumers and possible consumer surplus from the difference between piped water (a situation with project) and another source of water (a situation without a project); however, should data be available from Contingent valuations or hedonic pricing in Argentina, the evaluator can use that type of data but ensure that the studies they draw from are similar and recent; (ii) for sewerage collection and treatment sub-projects, there may be various options depending on what consumers will receive as benefits: hedonic pricing or contingent valuation studies can be used if such studies are available for Argentina and they are relatively recent and comparable. In the event that none of the above are available, the evaluator can use the revenues generated by the sub-project (financial benefits) of collection, and add to that the impact (benefits) of the treatment of wastewater, and the benefits from reuse of the treated wastewater by other sectors; and (iii) for sub-projects that shall be part of the program aim at cost reduction; the CBA or Cost- efficiency methodology may be used, as applicable - particularly, the cost-efficiency methodology may be used only when cost reduction is expected.
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Table 5.1: Sub-projects economic analysis
Sub-Project Drinking water supply for the localities of Wichi, El Sauzal, Misión Nueva Pompeya, and Fuerte Esperanza (Province of Chaco)
Treatment Plant and mains: (Province of Chaco)
Sewer Master Plan, Interception and Discharge System for the Greater Resistencia Metropolitan Area (Province of Chaco)
Objective Water intake, treatment plant, and networks to serve the urban and disperse population from localities that lack network service or are subject to rationing.
Resolution of existing drinking water service challenges, including lack of a safe drinking water source in sufficient quantity and adequate quality in the following localities of the Province of Chaco: Presidencia Roca, Pampa del Indio, Laguna Limpia, Las Garcitas, Ciervo Petiso, Colonias Unidas, and Capitán Solari.
Discontinuance of the current stabilization ponds; Refurbishment of the existing sewer system; Integration of the sewer system in the Greater Resistencia Metropolitan Area; Extension of the sewer system's current coverage, and improvement of the sanitation system's technical efficiency; Treatment of the captured effluents.
Design population: 61,000 56,000 First stage, year 2022: 281,990
Second stage, year 2032: 402,436
Amount of investment at market prices
US$92.0 million US$48.0 million US$130.1 million
Methodology CBA21 CBA22 CBA23
Benefits valued through avoided costs method
The elimination of intermittent water supply (cost of alternative service to reach a supply of 110 liters per capita per day (lpcd).
Elimination of intermittent water supply
Increase in drinking water coverage
The benefits identified are derived from the following concepts (Calculated by the hedonic pricing methodology): (i) Increase in the value of property in the
21 For the purposes of the valuation, daily water usage is assumed to be 110 lpcd while the design standard is 250 lpcd. This approach yields a conservative estimate of the
estimated benefits. Investment and marginal costs of O&M have been considered at economic values. 22 For the purposes of the valuation, daily water usage is assumed to be 190 lpcd, while the design standard is 200 lpcd. 23 The economic return to the network calculation is carried out based on an increasing water consumption volume, from 216 lpcd (2012) to 280 lpcd (2032).
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Increase in drinking water coverage (cost of alternative service to reach a supply of 110 lpcd. Improvements in drinking water service quality (cost of medical attention)
Public health improvements (cost of medical attention). Reduction in time spent gathering water (hourly wage for unskilled labor)
project's direct area of influence, generated as a result of the supply of sewerage connections; (ii) Increase in the value of property located near the contaminated areas, generated as a result of the supply of a wastewater treatment system, a Treatment Plant.
EIRR 11.46 percent 14.2 percent 16.03 percent
Net value US$11.6 millions US$11.2 millions US$24.3 millions
Discount rate 10 percent 10 percent 10 percent
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Financial Analysis of Operators
8. The financial analysis for each new or rehabilitated infrastructure project contained in each MRP will be conducted using the usual method of incremental financial flows to determine its sustainability, while its impact on the overall project is based on the assessment of the performance indicators included in each MRP.
9. With the exception of three main operators, revenues from billing WSS services are not sufficient to cover O&M costs. The remaining funds necessary to run the utility come from provincial subsidies. Investments are also fully subsidized by the National and provincial governments. The operating income gap, is mainly due to low tariffs that have evolved below inflation levels in the last years but also due to, lack of metering, inadequate billing or high O&M costs.
10. It is estimated that the services in all 10 provinces shall amount, at least, between US$532 million and US$625 million. Operators cover operating costs from tariff revenues and provincial subsidies, while capital expenditures are financed almost exclusively by the national government. Table 5.2 below describes the various funding sources and expenditures.
Table 5.2. Financial Estimate for WSS Services - Plan Belgrano Provinces
USD millions
Source Alternative A Alternative B
Tariff Revenue 166.1 166.1
Provincial Subsidies 97.3 97.3
National Government Contributions 268.8 361.1
Total 532.1 624.5
Expenditure Alternative A Alternative B
OPEX 260.9 260.9
CAPEX 271.2 363.6
Total 532.1 624.5
Source: own elaboration based on information from the 2016 National Budget and Financial Statements of 10 main operators. Note: OPEX = Operating Expenditure; CAPEX = Capital Expenditure
Main operators - operating resources and possible financial impact of the MRPs
11. For the 10 main operators, Table 5.3 shows key financial indicators.
S del Estero 168.223 114,44 79,31 76% 139% 106% 106%
Salta 512.738 66,96 102,51 92% 68% 62% 98%
Tucumán 470.000 48,89 35,70 63% 137% 86% 86%
Source: own elaboration. Note: Tucumán and Catamarca subsidize energy costs, though the amounts are not known. 12. Although it cannot be generalized, the variation in the indicator values allows the estimation of financial improvements that might be successfully obtained if values that are similar to the best ones are reached in all cases. For example, operators with the highest billing revenues (between US$110 to US$120 per connection and service annually) surpass others in significant terms, hence other factors than merely the socioeconomic status of users may be explaining these differences. Accordingly, it is safe to assume that there is room to improve revenues from billing in a significant number of operators. While commercial efficiency (collection/billing) shows less variation in numbers there seems to also be room for improving collection and revenues in some operators.
13. While comparability among operators with regard to connection costs may be more complex, improvements could also be estimated assuming the worst-performing operators as being close to the best ones.
14. MRPs would be the right tool for planning and improving efficiency and sustainability of operators and a credible regulatory base to establish tariffs. Comparability of indicators among operators should be an incentive to obtain efficiency gains.
Estimation of Financial Impact from Gains in Operator’s Efficiency
15. It was estimated the financial impact obtained from efficiency gains for different operators if those operators with poor indicators improve to get a similar the level of performance as the best operators. Two circumstances were estimated: (i) less efficient operators show improvements to the level
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of the operator ranked third in each indicator; and (ii) less efficient operators show improvements to the level of the operator ranked fifth in each indicator. Results are presented in Table 5.4. 24
Table 5.4. Financial Gains in Operators that Improve to Reach the Third or Fifth Ranked Operator
Indicator 3rd ARS 5th ARS
Connection and service billing 103.9 23.0
Commercial efficiency 15.7 14.2
OPEX by connection 71.1 50.2
Total 190.8 87.4
Impact as % of billing 93 42
OPEX in Chaco 25.2 9.8
Total 144.8 47.0
Impact as % of billing 70 23
Source: own elaboration
16. Estimated results reveal that if the 10 main operators reach the same level of the third ranked operator in each indicator, the annual income would almost duplicate from the current levels (improvement of 93 percent per year). If they reached the same level of the fifth ranked operator in each indicator, the annual revenues would improve by 42 percent. In the alternative scenario (where Chaco does not include improvements in OPEX), it would mean a growth of operational revenues between 23 percent and 70 percent.
17. Finally, if all 10 main operators progressively improve to the point of increasing revenues by 50 percent after five years of project implementation, the estimated gain would total US$100 million per year, which is equivalent to the funds the World Bank will contribute to the project. Considering the numbers shown above, an improvement in revenues of about 50 percent seem feasible to obtain.
24 Catamarca and Tucumán are not included in the estimation of the connection OPEX cost because they are subsidized, as
mentioned previously. The second scenario did not consider improvements in OPEX at Chaco Province because its relative weight in the total may distort the results of estimation.
