Language: English Original: English

PROJECT: Urban Water Supply and Sanitation Project COUNTRY: Liberia

PROJECT APPRAISAL REPORT

April 2010

Task Team

Team Leader: Team Members: Sector Director Reg. Director: Sector Manager

Mr. Tom Mugoya Mr. Rex Situmbeko Mr. Paul Dzimiri M. S. Sahle Mr. Idrissa Samba Mr. M. A. Ibrahim Ms. N. Kgosidintsi Mr. S. Jallow Mr. F.J.Perrault Ms. Awa Bamba

Task Manager, Principal Water and Sanitation Engineer, OWAS.1 Financial Analyst, OWAS.1 Senior Financial Analyst, OWAS.2 Water and sanitation Engineer, consultant Environmentalist, Consultant Financial Analyst, consultant Health Expert, Consultant OIC, OWAS/AWF ORWB OWAS.1

Peer Reviewers

Mr. M. Ndong-Ntah Principal Policy Economist-ORCP Ms. M.A.Negussie Senior Water Engineer, AWF Ms. Saloua Sehli Sr. Country Economist, Ms Grace Kyokunda Investment Officer, OPSM

TABLE OF CONTENTS I – STRATEGIC THRUST & RATIONALE ............................................................................ 1

1.1. Project linkages with country strategy and objectives.................................................. 1 1.2. Rationale for Bank’s involvement ................................................................................ 1 1.3. Donor coordination ....................................................................................................... 2

II – PROJECT DESCRIPTION ................................................................................................. 3 2.1 Project components ...................................................................................................... 3 2.2. Technical Solutions retained and Other Alternatives explored .................................... 5 2.3. Project Type.................................................................................................................. 6 2.4. Project Costs and Financing Arrangements.................................................................. 6 2.5. Project’s target areas and beneficiaries ........................................................................ 8 2.6. Participatory process for project identification, design and implementation ............... 8 2.7. Bank Group experience, lessons reflected in project design ........................................ 8 2.8. Key performance indicators ......................................................................................... 9

III – PROJECT FEASIBILITY ............................................................................................... 10 3.1. Economic and financial performance ......................................................................... 10 3.2. Environmental and Social Impacts ............................................................................. 10

IV – IMPLEMENTATION ...................................................................................................... 12 4.1. Project Implementation Arrangements ....................................................................... 12 4.2. Monitoring .................................................................................................................. 13 4.3. Governance ................................................................................................................. 14 4.4. Sustainability .............................................................................................................. 15 4.5. Risk management ....................................................................................................... 16 4.6. Knowledge building ................................................................................................... 16

V – LEGAL INSTRUMENTS AND AUTHORITY............................................................... 17 5.1. Legal instrument ......................................................................................................... 17 5.2. Conditions associated with Bank’s intervention ........................................................ 17 5.3. Compliance with Bank Policies .................................................................................. 18

VI – RECOMMENDATION ................................................................................................... 18 Appendix I. Country’s comparative socio-economic indicators.............................................. 19 Appendix II. Table of ADB’s portfolio in the country ............................................................ 20 Appendix III. Key related projects financed by the Bank and other development partners in the country ............................................................................................................................... 21 Appendix IV. Map of the Project Area .................................................................................... 22

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Currency Equivalents July 2009

1 UA =1.55223 US Dollar (USD) 1 UA = 109.432 Liberian Dollar (LD) 1 USD = 70.50 Liberian Dollar (LD) FISCAL YEAR 1st July- 30th June

WEIGHTS AND MEASURES 1metric tonne = 2204 pounds (lbs) 1 kilogramme (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (“) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres 1 gallon = 3.7854 litres 1 inch = 25.4 mm

MEASURES AND ABBREVIATIONS km = Kilometre km3 = cubic kilometre l/c/d = liters per capita per day l/c/y = liters per capita per year l/s = liters per second MGD = Million Gallons per day m = Meter m3 = cubic meter m3/d = cubic meters per day mgd = million gallons per day mm = Millimetre mm3 = million cubic meter

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LIST OF ABBREVIATIONS AND ACRONYMS

AfDB (F) African Development Bank (Fund) AID Agricultural and Infrastructure Development Project by WB AWF African Water Facility hosted by AfDB DFID Department for International Development - United Kingdom DFID TC Fund DFID Technical Cooperation Fund available in the AfDB EA Executing Agency EC(U) European Commission (Union) EOCC Economic Opportunity Cost of Capital EOI Expression of Interest EPA Environmental Protection Agency EIRR Economic Internal Rate of Return ESA External Support Agency ESMP Environmental and Social Management Plan CIF Cost including Insurance and Freight FIRR Financial Internal Rate of Return GoL Government of Liberia GPN General Procurement Notice HSB Hydrological Service Bureau of the MLME IBSP Infrastructure and Basic Services Pillar ICB International Competitive Bidding ICRC International Committee for the Red Cross PRS Poverty Reduction Strategy of Liberia IRWR Internal Renewable Water Resources ISN Interim Strategy Note by AfDB/WB IWRM Integrated Water Resources Management IWRMP Integrated Water Resources Management Policy KVA Kilo Volt Ampere LHS Liberian Hydrological Service LISGIS Liberia Institute of Statistics and Geo-Information Services LWSC Liberia Water and Sewer Corporation M&E Monitoring and Evaluation MDGs Millennium Development Goals MIA Ministry of Internal Affairs MLME Ministry of Lands, Mines and Energy MOA Ministry of Agriculture MOF Ministry of Finance MOHSW Ministry of Health and Social Welfare MOT Ministry of Transport MPEA Ministry of Planning and Economic Affairs MPW Ministry of Public Works NCB National Competitive Bidding NGO Non Governmental Organization NS National Shopping O&M Operation and Maintenance PCR Project Completion Report PT Project Team SIU Special Implementation Unit SPN Special Procurement Notice

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PSCC Programme Steering Coordinating Committee TA Technical Assistance UA Unit of Account UFW Unaccounted-For-Water UK United Kingdom UNDP United Nations Development Program UNICEF United Nations Children’s Fund USAID United States Agency for International Development USD United States Dollar WB World Bank WSS/WATSAN Water Supply and Sanitation WTP Water Treatment Plant

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Grant Information

Client’s information

GRANT RECEPIENT: Government of Liberia BENEFICIAY/EXECUTING AGENCY: Liberia Water and Sewer Corporation Financing plan

Source Amount (UA) Instrument ADF 24.63 million Grant FSF Pillar I 0.57 million Grant FSF Pillar III 0.89 million Grant Government of Liberia Nil TOTAL COST 26.09 million

ADB’s key financing information

Loan / grant currency

Grant

Interest type NA Interest rate spread NA Commitment fee* NA Other fees* NA Tenor NA Grace period NA

FIRR, NPV (base case) 14.6%, USD 11.3 million, at 5%

EIRR, NPV (base case) 33.1 %, USD 35.0 million at 15%

*if applicable

Timeframe - Main Milestones (expected) Concept Note approval May 2009 Project approval May 2010

Effectiveness August, 2010 Completion December, 2013 Last Disbursement December, 2014 Last Repayment NA

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Project Summary 1. Project Overview 1.1 The provision of water supply and sanitation on a sustainable basis to the rural and urban population of Liberia constitutes a priority development objective for the Government of Liberia (GOL), which significantly contributes to the fight against poverty and disease. The goals of the GOL are to achieve the Millennium Development Goals (MDGs) for water and sanitation targeted at halving the proportion of the un-served population in both the urban and rural areas by 2015. After the end of the civil war, GOL prepared a post-conflict recovery program, which gives priority to the rehabilitation and expansion of basic infrastructure destroyed and vandalized during the 14 years of conflict. One component in this endeavour is the provision of safe and adequate water supply and sanitation facilities at affordable costs to restore 50% of the pre-war water distribution capacity, promote good health, fight disease and reduce morbidity and mortality rates resulting from poor Water Supply and Sanitation (WSS) services. The proposed project is the first water and sanitation investment by the Bank in Liberia and is an extension of the ongoing Monrovia Water Supply and Sanitation Rehabilitation Project (MWSSRP) funded by DFID and managed by the Bank. The proposed project is a key contribution to increasing national water supply coverage from the current 25% to 50% and sanitation coverage from 15% to 40% by the end of 2012. 1.2 The Urban Water Supply and Sanitation Project for Monrovia and the three county capitals contributes directly to the GOL’s water supply and sanitation recovery program (2009-2012). Monrovia and the three county capitals have a combined population of 1.16 million, with very low safe water coverage at 17% for Monorvia, below 10% for Kakata and Zwedru and 0% for Buchanan. These cities were selected based on their importance as political and economic centers, and the impacts of water related diseases on the health of their population. The project area covers high density residential & commercial areas as well as peri-urban and informal settlements. The main outputs of the project include (i) rehabilitated and expanded water supply and sanitation systems in the four cities, (ii) improved sanitation facilities for schools, health centres and other public places and (iii) institutional support and capacity building for the Liberia Water and Sewer Corporation (LWSC) and public education on proper sanitation and hygiene practices. The estimated total cost of the project is UA 26.09 million. The Project is expected to be completed by March 2014. 1.3 After commissioning in 2014, the proposed project will provide 50% of the 1.16 million population of Monrovia and 75% of the population in Buchanan, Kakata and Zwedru with safe, adequate and reliable water supply services at affordable prices. This in turn will prompt improvement in heath, productivity and subsequently spur all round economic development in the four towns. It is expected that the implementation phase of the project construction will contribute to local employment and supply of inputs for the project, support local entrepreneurs, small businesses and contribute to boosting the local economy. 2. Poverty Reduction Strategy The Liberia Poverty Reduction Strategy (PRS) (April 2008 - June 2011) is built around four pillars: (i) Peace and Security, (ii) Economic Revitalization, (iii) Governance and Rule of Law, and (iv) Infrastructure and Basic Services. In addition the PRS pursues a number of key crosscutting themes including: gender equity, peace-building, environmental sustainability, HIV and AIDS, children and youth, and Monitoring & Evaluation (M&E). The PRS recognizes poor access to safe drinking water and sanitation services as major causes of illness and poverty, with the greatest impact on the poor, who in most cases, are not

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connected to the existing system. The basic goal of the PRS with respect to water and sanitation is to reduce the water and sanitation-related disease burden in Liberia. In this regard, the following targets have been set:

• increase access to safe drinking water from 25 to 50 percent overall by 2011, including coverage to 45 percent of the rural population;

• increase access to human waste collection and disposal facilities from 15 to 40 percent, overall including coverage to 35 percent of the rural population; and

• ensure the sustainability of 90 percent of water and sanitation facilities throughout the country.

To achieve these targets the Government is committed to undertaking the following actions:

• rehabilitate damaged water and waste collection/disposal facilities, and construct new facilities as needed with support from development partners;

• establish water quality testing facilities nationwide with trained staff and necessary equipment;

• scale-up hygiene promotion in schools and communities in all fifteen counties, including establishing or supporting existing water, sanitation, and hygiene (WASH) committees at the community level and engaging them in sensitization/training events; and

• carry out standardization and quality control of equipment and facilities. 3. Bank’s Added Value Since the end of the conflict in Liberia, the Bank’s level of investment placed it as the lead donor in the Water and Sanitation Sector with the financing of three operations, thus spearheading donor collaboration and coordination in the sector. The three operations are: (i) Monrovia Water Supply and Sanitation Rehabilitation Project (MWSSRP), (ii) Monrovia and three county capitals water supply and sanitation study, and (iii) Water sector reform study. The proposed project emanates from the “Monrovia and Three county capitals WSS study” financed by the African Water Facility (AWF). In addition to restoring access to clean water and adequate sanitation to 50 percent of pre-war capacity, the proposed project is expected to improve the performance of LWSC, which is the national urban water utility mandated with the development and implementation of all water and sanitation projects in the country. The LWSC is therefore the Implementing Entity of the proposed project. The proposed project will also benefit the Monrovia and the three county city councils, through the capacity development and institutional support components. The Bank demonstrated leadership in consulting all donors involved in the water and sanitation sector, coordinating on-going investments in the MWSSRP to clearly establish its funding and implementation status, and refine the design of the proposed project to ensure continuity, complementarily, and achievement of the projects’ objectives. The Bank held working sessions with USAID, UNICEF, the European Union, and the World Bank for contributing knowledge and experience for problem solving, and rallying considerable support and additional funds to cover the cost of ongoing components as well as a newly identified Capacity Development and Building component with the objective to build sustainable Water Sector program development and implementation capacity in Liberia, and for the management of ongoing and proposed projects. These efforts have resulted in additional funds from the World Bank and USAID. 4. Knowledge Management

Overall, the Bank is providing the LWSC technical assistance in project development, implementation readiness, project and construction management as well as sharing any

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pertinent knowledge and experience from similar projects at its disposal on a sliding scale of oversight to enhance institutional performance of the LWSC and to support completion of the project within time and budget. The Bank’s experience in supervision, monitoring and evaluation (M&E), reporting on implementation status, annual and midterm review reports, audit reports and the eventual Project Completion Report (PCR) will be invaluable sources of information and knowledge for both the Bank and the GOL. The day-to-day knowledge transfer and on-the-job-training provided by consulting firms and the Technical Assistance (TA) team will also benefit the LWSC as an institution as well as its professional staff individually. These actions will enhance future project development, planning, management and operation and maintenance.

The different technical documents including design reports, standards, procurement documents, and record keeping will support capacity building in the sector. The aggregate information and knowledge derived from the development and implementation of the project especially the Capacity Development and Building Component, which was designed as a specific response to Liberia’s capacity issues will be disseminated within the Bank to be applied in the design and implementation of future urban water and sanitation projects, especially in fragile states.

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LIBERIA: URBAN WATER SUPPLY AND SANITATION PROJECT (UWSSP) HIERARCHY OF OBJECTIVES

EXPECTED RESULTS REACH PERFORMANCE INDICATORS

INDICATIVE TARGETS AND TIMEFRAME

ASSUMPTIONS AND/RISKS

Sector Goal Impact Beneficiaries Impact Indicators Progress anticipated in the long term

Assumptions

To significantly contribute towards the improvement of the social well being, health and productivity of the population, enhance the performance of the national economy through the equitable provision of adequate quantity and quality of water and sanitation services at affordable prices and on sustainable basis.

1.Improved health of population 2. Enhanced productivity of the population 3.Improvements in income of families

Population of Monrovia and the three county capitals

1 Reduction in infant and child mortality rate 2.increase in life expectancy 3.Increased GDP growth 4. Increased National WSS coverage. 5.Improved sustainability of WSS facilities Source & Method: LSGOA statistics; MOH / MOP statistics; PRS monitoring reports

1. Infant and child mortality decreased from 72 and 111 per 1000 life births in 2008 to39 and 65 in 2015 2. Life expectancy increased from 43 years in 2008 to 50 years in 2015. 3 GDP growth increased from 4.9% in 2009 to 12.8% in 2015- 4.1 .National water supply coverage increased from 25% in 2008 to 50% in 2012 4.2 . National sanitation coverage increased from 15% in 2008 to 40% in 2012

1.Peace and security in the country 2.Dependable economic policy and growth strategy 3. Implementation of sector reform studies 4. Continued support from. Government & Donors to the water sector

Project objectives Outcomes Beneficiaries Outcome Indicators Progress anticipated in the medium term

Assumptions

1.Provision of improved access to adequate, safe and reliable water supply and public sanitation services to the people in the towns of Monrovia, Buchanan, Kakata and Zwedru on sustainable basis

1.Increased number of people in Monrovia, & the three county capitals to benefit from reliable, safe and adequate water and sanitation services

1 1.1.16 million people in Metro Monrovia Buchannan, Kakata and Zwedru. 2.Liberia Water and Sewer Corporation

1.1 Increase in percentage of population with access to safe and adequate water supply services 1.2 Increase in the number of functioning sanitation facilities in public places 1.3- Increase in water production in Monrovia 1.4 -Increased metered connections in Monrovia, Buchanan, Kakata and Zwedru

1.1.1 Access to safe and adequate water supply increased from 17% in 2010 to 67-% in 2015 and meeting 47% of 2015 demands in Monrovia 1.1.2 Access to safe and adequate water supply increased from 0 to 75% in Buchanan, and from 20 to 75% in Kakata and Zwedru by 2015. 1.2- 50% of existing Public toilets rehabilitated in Monrovia, Buchanan, Kakata and Zwedru

1. Facilities rehabilitated and constructed within the specified time 2. LWSC institutional and

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2. Enhancement of the institutional, operational and management capability and ensuring the long-term institutional & financial viability of LWSC

2. Improved management , operation & maintenance of Water & sanitation facilities in the four towns 3. Improved awareness and attitudes on sanitation, environmental cleanliness and personal hygienic practices among school pupils and residents of Monrovia, Buchanan, Kakata and Zwedru

2.1 Decrease in Unaccounted for water (UFW) 2.2 increase in revenue collection ratios 2.3 increase average daily hours of supply 2.4 decrease in time spent by women and children in collecting water 3.1 Increase in percentage of people practicing good hygiene 3.2 Reduction in incidences of diseases. Source LWSC M&E reports, MOH reports, Statistical reports

1.3-increase in water production from current 3 million gallons per day (8000M3/day) to 16 MGD (85, 220 M3/day) in Monrovia, from 0 to 1.7 MGD (640 M3/day) in Buchanan, from 160 M3/day to 512 M3/day in Kakata and from 180 M3/day to 576 M3/day in Zwedru by 2015 1.4 Percentage of metered connections increased from 10% in 2010 to 70% by 2015 2.1 UFW reduced from 79 % in 2010 to 30% by 2015 2.2 Collection ratio increased from 40% in 2010 to 90%-in 2015 2.3. Average daily hours of supply increased from 6 hrs in Monrovia, 5 to 10 hrs in Kakata and Zwedru and from 0 to 10 hrs in Buchanan by 2015 2.4 decrease in time of fetching water from 3 hrs t 0.5 hr 3.1 Percent of people who report practicing hand washing after toilet and before handling food doubled by 2015 3.2 reduction of diarrhoea by 50% by 2015

Management reforms carried out. 3. Operational staff adequately trained 4 community awareness and sensitization to be promoted

Activities Outputs: Beneficiaries Output Indicators Progress anticipated in the short term

Assumptions

1 Project management

1.1 Establishment of PMT & office 1.2 Audit Reports

1. LWSC 2. Population of Monrovia and the three county capitals, LWSC,

1.1 PMT composition 1.2. PMT office operational 1.3 Audit of Project accounts

1.1 PMT team functional by December 2010 1.2 Office and facilities available December 2010 1.3 Project accounts submitted by 31 December after end of GoL fiscal year

1. Timely execution of Project by LWSC 2 Strong PMT assigned and functional 3- Sanitation

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3. Town’ municipalities 4. LWSC 5. Health Centres -Schools -Markets 6. Private sector entrepreneurs

component coordinated with respective town councils 4 Timely recruitment of auditor 5 Finance available as scheduled 6 Consultants and contractors engaged

2. Rehabilitation and construction works for water supply system

2.1 Engineering consultancy supervision services 2.2 Rehabilitation of existing and installation of new water supply facilities 2.3 Installation of house connections 2.4 Installation of public water points and water kiosks.

2.1 Infrastructure facilities rehabilitated and water production capacity increased 2.2 Number of house connections installed in Monrovia and the three county capitals 2.3 number of public water kiosks installed in the three county -

2.1.1 Capacity of the WTP increased from 2MGD to 16 MGD by 2014 in Monrovia 2.1.2 21 Km transmission rehabilitated by 2014 in Monrovia 2.1.3 17 new wells (5 in Monrovia, 6 in Buchanan 3 in Kakata, 3 in Zwedru) developed by 2014 2.1.4 Four existing wells rehabilitated in Buchanan by 2014 2.2.1- 2800 new house connections (2000 in Monrovia and 400 in Buchanan, 200 in Kakata and 200 in Zwedru) installed by 2014 2.3.1 40 Water kiosks ( 25 in Monrovia and 5 each for Buchanan, Kakata and Zwedru) installed 2014

3. Sanitation facilities

3.1 Public sanitation facilities rehabilitated and installed in Monrovia, Buchanan, Kakata and Zwedru towns

3.1 Number of Public toilets built and in use 3.2 Number of public toilets adequately maintained by communities;

3.1.1 16 New Ecosan facilities installed in Monrovia by 2014 3.1.2 12 New Ecosan facilities (4 each for Buchanan, Kakata and Zwedru) installed by 2014

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3.3 Percent of women in community management committees

3.1.3 20 existing toilets rehabilitated and 12 new constructed in Monrovia, by 2014- 3.1.4 15 new toilets ( 5 each for Buchanan, Kakata, and Zwedru) and 9 rehabilitated ( 3 for each county capital) by 2014 3.2,1 Total of 60 public toilets maintained by communities 3.3.1 Women constitute at least 30% of the community management committees

4. Environmental awareness, & Sensitization

4.1 Increased awareness on the need for environmental protection

4.1number of community management committees & attendants trained in maintenance of public toilets, and water kiosk managers trained in water safety

4.1 70 attendants representing communities trained in maintenance of toilets 4.1 15 CMCs established, 60 attendants trained, and 50 water kiosk managers trained

5Institutional Support Inputs/Resources ADF Grant: UA 26.09 m

5.1. Enhancement of the LWSC & Buchanan WSS offices, and respective town councils in terms of technical, managerial and financial performances vis a vis operational practices and procedures, billing and collections and financial management..

5.1Number of management systems introduced 5.2 numbers of people from Municipalities and communities trained.

5.1.1 New systems (tariff, resources, organization structure, accounting and Billing) adopted. Minimum of 50 Staff of LWSC trained in new management systems 5.2.1 At least 15 staff trained from municipal councils 5.2.2 Minimum 35 people from municipal staff and community workers, half of whom are women are trained in publicity and the management of kiosks

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REPORT AND RECOMMENDATION OF THE M ANAGEMENT OF THE ADB GROUP TO THE BOARD

OF DIRECTORS ON A PROPOSED GRANT TO L IBERIA FOR THE URBAN WATER SUPPLY

AND SANITATION PROJECT Management submits the following Report and Recommendation on a proposed ADF Grant of UA 24.63 million, an FSF pillar I Grant of UA 0.57 million and an FSF pillar III Grant of UA 0.89 million to finance the Liberia Urban Water Supply and Sanitation Project. I – STRATEGIC THRUST & RATIONALE

1.1. Project linkages with country strategy and objectives 1.1.1 Rebuilding the basic infrastructure to increase access to clean water and safe sanitation services is currently a top priority in GOL’s strategy to improve health conditions, spur economic growth, and thus reduce poverty as projected in its Poverty Reduction Strategy (PRS). This development imperative is also a key component of its strategy for improving the living standards of the population, and for achieving the MDGs of halving the proportion of people without access to safe water and sanitation by 2015, and to contributing to better health (maternal and child mortality), education, gender, environment and poverty eradication. The proposed project contributes to achieving these strategic goals and is aligned with the Liberia Integrated Water Resources Management Policy (IWRMP), and on the Water and Sanitation Strategy, currently in the process of being approved by parliament. In addition, the project contributes to the objectives of the Liberia Water Rehabilitation Works Program (2007-2008), and that of the Water Sector Recovery Program (2009-2012). The Project underpins the PRS objective for the rehabilitation of basic infrastructure and the delivery of basic social services in order to promote sustainable growth and poverty reduction. Furthermore, the project is in line with Bank’s medium term development strategy as supports Pillar II of the current CAS for Liberia, which aims to contribute to jump-starting and facilitating pro-poor growth through improved access to key infrastructure services. The project is specified in the CAS as one of the operations identified for investment by the Bank within the current lending cycle. The proposed project provides the key components that complement the Bank/DFID funded and on-going Monrovia Water Supply and Sanitation Rehabilitation Project (MWSSRP), which focuses on rehabilitating the Monrovia distribution network to increase water production capacity from the current 3 MGD to its prewar capacity of 16 MGD. Clearly, without this project, the objectives of the MWSSRP cannot be met. After completion and commissioning, the project will improve water and sanitation services in Monrovia & Buchannan and, enhance the management and technical capacity of the Liberia Water and Sewer Corporation (LWSC) for improved development and management of future projects and water and sanitation service delivery. The Bank Group’s intervention is also justified because the project is consistent with the priorities of ADF-11, which focuses on promoting poverty reduction through growth driven investment in infrastructure, governance and regional integration.

1.2. Rationale for Bank’s involvement 1.2.1 Liberia is transiting from post-conflict recovery to long-term development; thus the project is in conformity with the Bank’s strategy of rehabilitating infrastructure to jump-starting economic growth, rebuilding core state functions and institutions, and facilitating pro-poor growth. The GOL’s strategy to provide basic services to the population is hampered by: (i) wide-spread destruction of water supply and sanitation facilities; (ii) low human and institutional capacity ; (iii) poor performance by the service provider; (iv) and low level of capital investments in the sector. The Government is addressing these issues by seeking investments in the sector primarily for the rehabilitation of the physical infrastructure and undertaking sector reforms for the provision of sustainable service.

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The Bank’s interventions in Liberia contribute directly to the achievement of GOL’s development objectives aimed at providing basic services to the population and improving the performance of the service providers to ensure long-term sustainability of the water supply and sanitation sector. The Bank’s comparative advantage and added value stems from its recent experience and positive achievements in the implementation of water and sanitation operations in the country. In particular, the Bank is in a unique position to finance the proposed project as it would expand on the three ongoing operations funded by the Bank and under implementation namely (i) Monrovia Water Supply and Sanitation Rehabilitation Project (MWSSRP), (ii) The Urban Water and Sanitation Study, (UWSSS), and (iii) the Water Sector Reform Study. The proposed project will build on the lessons learnt from these operations to improve implementation readiness, project implementation, quality control, and supervision. One of the key lessons learnt is that though Liberia has made significant progress in rebuilding core state functions and institutions, project/programme implementation capacity remains weak, causing significant delays in grants processing, procurement and contracting, which negatively impacts the timely implementation of projects within budget. To overcome this constraint the Bank together with other donors will provide support to LWSC to establish and develop a strong Project Management Team. The Bank’s experiences in water sector reforms will be an important value addition to government and other development partners’ efforts to improve performance in the sector. 1.2.2 The Bank will also bring other experiences gained from supporting urban water and sanitation sector development in other regional member countries. Financing the proposed Project will consolidate the Bank’s continued involvement and support for the water sector in Liberia.

1.3. Donor coordination

Sector

Size

GDP Exports Labour Force

Water and Sanitation Na Nr Na

Players - Public Annual Expenditure (average)

Government Donors

(UAm)

% 2.3 6 World Bank 3 6 DFID 4 7

EU 2.8 5

UNICEF 1.3 2

AfDB 23 43

NGO Consortium 8.14 15

JICA 8.7 16

Level of Donor Coordination

Existence of Thematic Working Groups Yes Existence of SWAPs or Integrated Sector Approaches No

ADB's Involvement in donor coordination in water sector*** L L: leader 1.3.1 Donor activities are coordinated through the Water Supply and Sanitation Donor Coordination Group which has been set up under the auspices of the Ministry of Lands, Mines and Energy (MLME), chaired by the Minister. The Group meets monthly to review donor involvement in the sector, to coordinate and harmonize design and implementation of projects

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and programmes, and to present a common voice on policy and governance issues in the sector. Through this forum, GOL coordinates the different Donors to solicit their support in program implementation that would lead to the attainment of water related MDGs. As lead donor in the water sector, the physical absence of the Bank in Liberia reduces the efficiency in donor coordination. The GOL as well as other donors have expressed the need for the Bank’s presence for better coordination and leadership in developing and delivering donor support in the sector. In response to the GOL’s request for such support, the Bank, through its Fragile State Unit, will provide financing to recruit a long-term consultant over a one year period to provide field technical assistance and oversight to the Water Sector in Liberia and support the project together with the Sierra Leone field office (SLFO) as an interim solution to a full bank field presence in Liberia. II – PROJECT DESCRIPTION 2.1 Project components 2.1.1 The proposed project seeks to (i) improve access to adequate, safe and reliable water supply and public sanitation services to the people in the towns of Monrovia, Buchanan, Kakata and Zwedru on a sustainable basis (ii). Enhance the institutional, operational and management capacity, and (iii) Ensure the long-term institutional and financial viability of LWSC. 2.1.2 Table 2.1 below provides a summary of the project components while their detailed description is presented in Annex B2.

Table 2.1: Project Components Component Nr. Est.

Cost ‘000 UA

Details

1 Infrastructure 19,398 1.1 Water Supply

system 15,842

1.1.1 Monrovia

12,600

-Rehabilitation of White plains Water Treatment Plant (WTP), to full pre-war production capacity of 16 MGD. - Installation of sludge treatment facility. -Rehabilitation of the 36”diameter and 21 Kms long transmission main from the "White plains treatment plant to Paynesville Red light. - Rehabilitation of 20 km distribution network - Development of 5 new boreholes and construction of 10 km transmission and 40 km distribution network in Paynesville - Installation of 2000 new house connections and 25 water Kiosks

1.1.2 Buchanan

1,657 -Rehabilitation of 3 existing boreholes and sinking of 6 new wells, c/w provision of submersible pumps, generator sets, - 4 km transmission lines, - booster pumps, - construction of 250m3 tank, rehabilitation & fencing of reservoir and elevated tank, - 8 km distribution network, - 400 house connections with water meters& 5 water kiosks

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Component Nr. Est. Cost ‘000 UA

Details

1.1.3- Kakata 829 -Boreholes construction -3 - Transmission pipes -2KM - Distribution Network-6 KM - Ground Tank-300 cubic meters, 1. -New elevated tank 30 M high and 125 cubic meters - High lift pumps (16 cubic meters/hr and H-100 meters). - Chlorination System complete - Two Generators complete with panel control 150 Kva -Electrical cables and switch gears etc. - 200 House Connections with Water Meters and 5.Water Kioks - Renovation or construction of new buildings

1.1.3 Zwedru 757 Boreholes construction -3 No. - Transmission pipes -2.5 KM - Distribution Network-5 KM - Ground Tank-250 cubic meters, -New elevated tank 30 M high and 125 cubic meters - Three High lift pumps (16 cubic meters/hr and H-100 meters). - Chlorination System complete - Generators complete with panel control 150 Kva -Electrical cables and switch gears etc. - 200 House connections with Water meters and 5 No. Water Kiosks. -Renovation or construction of new buildings

1.2Sanitation Facilities

1,298

1.2.1 Monrovia

858 - Provision of a combination of Ecosan, pour flush toilets and Double VIPs in markets, schools, etc - 20VIPS to be rehabilitated and 7 new ones to be built; 16-Ecosan systems to be installed - Rehabilitation of sewer line in central Monrovia and Sinko

1.2.2 Buchannan/Kakata/Zwedru

441 - Provision of a combination of Ecosan, pour flush toilets and Double VIPs in markets, schools, etc- - - 15 VIPs (5 for each town) to be constructed , 9 (3 for each town) latrines to be rehabilitated and 12 (4 per town) Ecosans to be installed

1.3 Design review and construction supervision

2,258 -Provision of Engineering supervision and management services through the recruitment of specialized engineering consulting firms ( 1 for Monrovia and another for the 3 county capitals)

2 Institutional Support

5,074

2.1 Capacity Development support to LWSC staff

1,093 - Capacity development of LWSC staff in projects management through on-the job-training and longterm term training inside and outside Liberia

2.2 Institutional support to LWSC

3,424

- Management Support to LWSC and the city councils of Monrovia,, Buchanan, Kakata and Zwedru in the preparation of a new Business Plan; assisting LWSC in enhancing its capacity in technical, commercial, operation and maintenance and financial areas; assisting LWSC reduce unaccounted-for-water; support the billing and collection systems; carrying out a financial management systems study of the IE and design and implement a new accounting system; Study for the development of a pro- poor strategy to access water services and support to its implementation; providing logistical support, equipment and training; providing short-term training including study tours for key staff; undertaking of studies to update the fixed assets register and revaluing of the fixed assets; undertaking a tariff study to assist in the implementation of recommendations; -PPP transaction advisory support -Provision of operational, IT and office equipment (logistics and software

2.3 Environment, hygiene and

558 - Implementation of the ESMP: - The mitigation measures resulting from the environmental and social

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Component Nr. Est. Cost ‘000 UA

Details

sanitation sensitization

assessments. - Training and capacity building as well as monitoring of implementing the mitigation measures and the evolution of environmental parameters. - Carrying out public health awareness/sanitation and hygiene promotion to address/mitigate the issues of behaviours and lack of understanding that leads to improper hygiene and health conditions.

3 Project Management

1,616

-Provision of project management services to execute administer, supervise, monitor the project through a PMT, guided by a project steering committee Provision of TAs ( WSS engineer, Financial specialist, Environmental and Social Assessment Specialist, Community Management and Hygiene Specialist and Procurement expert) -Operating cost -Audit

Total 26,088

2.2 Technical Solutions retained and Other Alternatives explored 2.2.1 During project design and due diligence, several options were explored for: (i) the source of water and treatment, (ii) transmission, (iii) distribution, (iv) sanitation facilities. The factors affecting the choices made include: (i) Safety, (ii) Adequacy, (iii) reliability of supply, (iv) Affordability, (ii) Ease of operation and maintenance and sustainability, (v) user friendliness and acceptability. Water Supply 2.2.2 The project focuses on the rehabilitation of existing facilities and technologies. The selected options involve the rehabilitation of existing systems in Monrovia, Buchanan, Kakata and Zwedru with focus on provision of parts, equipment and material that are less costly, and easy to operate and maintain. Monrovia 2.2.3 Both groundwater and surface water system as source of water supply were considered for Monrovia. While surface water has been historically tapped as water supply source, there have been instances of seawater intrusion, especially during the dry season. Groundwater sources on the other hand are uncertain both in quantity and quality due to unavailable data and information on the groundwater base. The sustainability of the surface water supply source lies in carefully managing pumping time and levels during the dry season to control seawater intrusion. 2.2.4 Monrovia suffers from high water tables and poor drainage, especially during the wet season which covers an important part of the year. While it is well recognized that this problem needs to be addressed through the design and construction of an appropriate storm drainage system, the proposed project does not have the necessary resources to cover the huge costs associated with this solution. Buchanan, Kakata, Zwedru 2.2.5 In three the County Capitals, the existing groundwater based schemes were maintained for economic reasons against the alternative of tapping new surface water sources which are deemed costly. The major parts of the civil construction require little rehabilitation and the existing boreholes, for the most part, can be rehabilitated without (relatively) large capital. For the expansion component of the project, the source of bulk water supply is from a known well field, thus minimizing the uncertainties linked with the quality and quantity of ground water production from new wells. This choice provides continuity with established O&M practices.

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Sanitation 2.2.6 Simple water dependant and non water dependant systems like multi-compartment Eco-San Facilities, Pour Flush toilets and the Double Ventilated Improved Pit latrine (DVIP) technologies were selected as viable alternatives to conventional sewerage system, which are expensive and challenging to operate and maintain on a sustainable basis as is demonstrated by the existing Monrovia conventional sewerage system which is not currently operational.

Table 2.2: Technical Alternatives considered and reasons for rejection Alternative Brief Description Reasons for Rejection Ground water source for Monrovia to replace the WTP

Development of a large number of wells with transmission, storage, and distribution facilities

The capital cost for new development of groundwater including hydro-geological studies, drilling well development pumping, transmission and storage equipment and services coupled with low yield of wells makes this option unattractive at this time -Uncertainties in water quality and quantity make it undesirable for the high water demand in Monrovia.

Surface water sources for Buchanan/Kakata/Zwedru

Full-fledged conventional surface water treatments would be required including the full range of clarifiers, filters chlorinators sludge removal etc

-High Capital and operation and maintenance cost; -Demand for consumables -Frequent breakdowns of the system more likely

Conventional waste treatment for Monrovia

Conventional treatment using sedimentation, filtration and sludge treatment options

Prohibitive cost of investment as well as the low number of connections to the sewer system makes this option not feasible for the present time.

2.3. Project Type 2.3.1 The project is a stand-alone operation. however it complements the MWSSRP and is designed using a programmatic approach and closely coordinated with other development partners especially USAID and UNICEF who will provide parallel financing for the multi donor funded capacity development of the Project Management Team (ref . Annex B2, section F). The World Bank-EU will also support financing of key infrastructure elements including an important access road to complete the project. 2.3.2 The project is guided by detailed designs, engineering cost estimates and tender documents prepared for the Monrovia water treatment plant and feasibility study and preliminary engineering designs developed for Buchanan, Kakata and Zwedru. These documents have been thoroughly reviewed during the due diligence period and adjusted to reflect current price conditions based on international standards.

2.4. Project Costs and Financing Arrangements 2.4.1 The total cost of the project is estimated at UA 26. 09 million (US$ 40.50million), net of taxes and duties, of which UA 19,917 million (76 %) is in foreign currency and UA 6,171 million (24%) in local costs. The cost estimates include contingency 10% for physical contingency for both foreign and local costs, and price contingency of 13.33 % on all works and goods and services items. These levels of contingencies stems from due diligence on actual price and projected price on goods and services based on procurement of goods and services for the implementation for the MWSSRP. A summary of the project cost by components is presented in Table 2.3 below.

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Table 2.3: Project Cost Estimates by Component (‘000 UA)

Component Cost (UA '000) %

Local Foreign Total Foreign Base Costs Water Supply facilities 3,046 9,914 12,960 76 61

Sanitation facilities 316 737 1,053 70 5

Engineering Design review and supervision 323 1,506 1,829 82 9 Capacity Development Support to water and sanitation sector staff

9 877 886 99 4

Institutional Support to LWSC 467 2,311 2,778 83 13

Environmental and sensitization Campaign 273 112 385 29 2

Project management 570 692 1,262 55 6

Total Base Costs 5,004 16,149 21,153 76 100 Physical Contingencies (10%) 500 1,614 2,114 Price Contingencies (13.33%) 667 2,153 2,821

Total 6,171 19,917 26,088

2.4.2 The cost of the project will be financed by ADF grant, as shown in Table 2.4 below. The Bank will finance UA 26.088 million, contributing 100% of the total project cost. The proposed ADF financing plan is in line with the Bank’s “Joint Assistance Strategy” for Liberia, (2007-2010).

Table 2.4: Sources of financing (‘000 UA) Source UA ‘000 %Total

Local Currency Foreign currency Total ADF 6032 18598 24630 94 FSF 29 1429 1458 6 Total 6061 20027 26088 100

The cost of the project by category of expenditure is presented on Table 2.5 below

Table 2.5.1: Project Cost by Category of Expenditure (‘000 UA) Disbursement categories In UA ‘000

Foreign Cost Local Cost Total Cost Civil Works 13,068 4,147 17,215 Goods 2,157 46 2,203 Services 3,821 907 4,728 Operating Costs 102 702 804 Miscellaneous (Revolving Social Connection Fund) 0 250 250 Total cost 19,148 6,052 25,200

Table 2.5.2: Project Cost by Category of Expenditure (‘000 UA) FSF financing

Annual schedule of expenditure by component is presented on Table 2.6 below Table 2.6: Annual Expenditure Schedule by Component (‘000 UA)

Component 2010 2011 2012 2013 Total Water Supply Facilities 455 5059 6693 753 12960 Sanitation Facilities 49 489 496 19 1053 Engineering Design review and supervision 50 848 827 104 1829 Capacity development support to LWSC staff 100 342 294 150 886 Institutional Support to LWSC 49 1646 1043 40 2778 Environmental and Sensitization Campaign 6 180 179 20 385 Project Management 50 513 490 209 1262

Total Base Costs 759 9077 10022 1295 21153 Physical Contingencies 76 908 1002 130 2115 Price Contingencies 101 1210 1336 173 2820

Total Project Cost 936 11195 12360 1597 26088

(UA '000) Category of Expenditure Foreign Local Total Civil Works 550 20 570 Services 795 0 795 Miscellaneous 82 9 91 Total Project Cost 1429 29 1458

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2.5 Project’s target areas and beneficiaries 2.5.1 The proposed project targets urban and peri-urban settlements as well as schools, markets and health centres in Monrovia, Buchanan, Kakata and Zwedru. The direct beneficiaries are 580,000 residents in Monrovia, 45,400 in Buchanan, 39,300 in Kakata and 27,000 in Zwedru; the Liberia Water and Sewer Corporation (LWSC) and the Monrovia Metropolitan Corporation (MMC). The outcomes of the project are increased coverage and functioning of water and sanitation services in the project area, and improved performance of LWSC. 2.5.2 The residents/retail customers of the water utilities will benefit from better service, both in terms of access and quantity delivered. The water utility will benefit from improved capacity to deliver better services. 2.5.3 The capacity building component will also benefit small-scale service providers of water and sanitation services (management of kiosk and public sanitation facilities), mainly targeting women groups. The adoption of improved hygienic practices and use of sanitation will lead to improved sanitary environment benefiting all the residents of the four cities.

2.6 Participatory process for project identification, design and implementation 2.6.1 With financing from the Bank, a consulting firm prepared the feasibility studies and detailed engineering design with quality control provided by LWSC strengthened by a technical assistance team. During the design stage, the consulting firm and LWSC have widely consulted the beneficiary communities of the project. At the end of the feasibility stage, a stakeholders workshop was held to discuss project design and impacts. The views and concerns of the communities regarding the design, location and management of the facilities, were taken into account to finalize the project design. The donor community including WB, EC, UNICEF, USAID, JICA, and DFID was consulted. The Bank missions also visited some schools, markets and health facilities in the project areas to discuss the provision of sanitation facilities. Consultations were conducted with the Monrovia, Buchanan, Kakta and Zwedru Metropolitan Corporations, NGOs and selected peri-urban communities.

2.7 Bank Group experience, lessons reflected in project design 2.7.1 The Bank reengaged in Liberia in 2007 and has several operations on the ground. Lack of qualified water engineers and specialists and lack of adequate technical and managerial capacity, especially in the areas of procurement and management, were found to be the main issues affecting the implementation of ongoing operations. The experiences gained by the Bank and other donors in project development and implementation in Liberia have been built into the design of the proposed project. The detailed designs and tender documents for the major components of the project have been prepared and approved by the Bank. Particular attention is paid to Quality-at-Entry, by preparing detailed designs and tender documents beforehand, and by minimizing the number of conditions precedent to first disbursement by identifying process driven elements to be implemented through the project’s multi-year work plan, and streamlining project components and contract packages to launch priority procurement on time. This is aimed at fast-tracking implementation readiness of the project to ensure quick start-up and procurement of goods, works and services. Finally, the project will strengthen internal implementation capacity through training and technical assistance. 2.7.2 In order to enhance the long-term viability of the project and the improved operational and financial management performance of LWSC, the institutional support component includes: development of LWSC project management capacity; introduction of new management system, and enhancement of managerial capacity development, and hygiene education and awareness creation of citizens as well as by selecting the appropriate options for WSS systems construction.

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2.7.3 Currently, the LWSC has the mandate to provide technical oversight of the following projects/programmes:

1. The joint World Bank and European Commission Urban Water and Sanitation for Monrovia

2. JICA Master Plan Study for Monrovia and projects that have been identified 3. DFID/AfDB Monrovia Water Supply and Sanitation Rehabilitation Project 4. AWF/AfDB Monrovia Expansion and Rehabilitation of three county Capitals Water

Supply & Sanitation Feasibility Study; 5. The proposed Urban Water Supply and Sanitation Project for Monrovia, Buchanan,

Kakata and Zwedru; 6. Planning/Supervision/Monitoring and Evaluation of NGOs’ Consortium operating in the

rural areas; 7. Review of UNICEF Work Plan for suitability; 8. Upcoming USAID three urban cities water supply rehabilitation; 9. And many more projects that are in the pipeline.

2.7.4 With its diminished capacity as a result of the brain drain experienced during the war, the LWSC requires capacity development and building targeted at its specific situation in order to effectively carry out its mandate and continue to provide technical guidance in the water sector in a context of growing post-war emergency responses, and development planning activities in the water sector in the short, medium and long term. 2.7.5 To respond to this critical constraint, a two-pronged multi donor funded approach is proposed: (i) Build a project team assisted by a strong pool of technical experts (consultants) for the ongoing and future projects thus establishing a strong water project management team. The emphasis is on filling key technical positions for which national experts are not available; (ii) Identity a pool of Liberians to be trained over various periods as needed and will be incorporated into project management over the short, medium and long-term as required. The trained staff will gradually taking over project development and implementation responsibilities from the TAs. ADB. USAID and UNICEF agreed to provide support for the implementation of this initiative. The implementation of the initiative will commence with this project.

2.8 Key performance indicators 2.8.1 The indicators for M&E are presented in the project log frame. LWSC will be responsible for monitoring and evaluation of the project in accordance with the log frame. The M&E capacity of LWSC is being developed through the Bank-financed operations and will be reinforced in the proposed project. Monitoring and evaluation of sector indicators are inadequate and are done on irregular basis. The project will assist some ministries such as Ministry of Lands, Mines and Environment (MLME), and Ministry of Health and Social Welfare (MOHSW) to build their capacity for M&E. In addition to regular supervision missions, joint sector reviews will be carried out annually together with the government and key stakeholders to monitor and review progress on the key target indicators. The Bank will also provide close monitoring and evaluation of the project during implementation through regular follow-up, review and supervision missions. The project will introduce M&E systems through establishment of baseline data on all its aspects including, (i) Technical - production, losses, costs of production and operation, maintenance schedules;(ii) Financial billing and collection efficiency, water samples meeting quality standards etc, (iii) Socio Economic – average time used in collecting water, number of income generating activities, (iv) Gender – number of women involved in management of water kiosks, number of women teachers trained in hygiene and sanitation promotion, number of women groups/entrepreneurs providing water and sanitation services and (v) Hygiene, Sanitation and Environmental - Evolution of pathogenic germs and chemical pollutants content in the raw water pumped from St Paul River and the borehole fields (to monitor effectiveness of protection measures), pathogen germs and chemical pollutants at the

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consumer level (to monitor efficiency of water treatment), evolution of health parameters (diseases related to water quality), percentage of residents having access to sanitation facilities, girl/boy pupil per toilet ratio, mortality related to water borne diseases. The annualised monitoring indicators, targets and responsibilities for monitoring are detailed in annex B9. III – PROJECT FEASIBILITY

3.1 Economic and financial performance

Table C.1: key economic and financial figures

FIRR, NPV (base case)9.9%

NPV USD 22.6million, at 0, 05%)

EIRR, NPV (base case)25%

NVP USD 24.8 million at 15. %)

NB: detailed calculations are available in Annex B7-

The project is financially and economically viable as shown by the above indicators. The assumptions that serve as the basis for calculations of the FIRR and the EIRR are provided in Annex B7. The main assumptions are: the cost streams include investment cost; operations and maintenance (O&M) and reinvestment cost during the life of project. The project is also assumed to start producing water by the third year into execution because it mainly involves rehabilitation work. The economic life of the project is estimated at 25 years with a 20% salvage value at the end, since most of the project cost will be in the form of civil works and pipes which can last up to 50 years. Operations and Maintenance has been assumed at 5% of the project cost, while the average tariff is assumed at USD 0.70 per cubic meter. The financial benefits of the project from LWSC’s perspective consist of incremental revenues resulting from increased water production and sales in Monrovia and the three county capitals totalling 55,403 cubic meters per day for domestic, industrial and commercial uses. The economic benefits of the project mainly consist of increased economic activities that will spur industrial and commercial output in the four cities as reflected in the consumer surplus resulting from the availability of reliable water supply and the resultant improvement in the sanitation services provided to the population. The economic benefits also include health and time savings resulting from the provision of service to the population in the four cities.

3.2 Environmental and Social Impacts

Environment 3.2.1 The project is classified as Category 2 based on the ADB Environmental and Social Policies and Procedures. Categorization is justified on the basis that the project is mainly: 1) rehabilitation and extension of water production and distribution networks, 2) Construction of sanitation facilities in public places such as public schools, hospitals, market places and car parks; 3) Institutional Support and, 4) Project Management. An Environmental and Social Impact Assessment (ESIA) has been prepared and finalized in June 2009, as well as an ESMP to be posted. The following impacts are expected: 1) key adverse impacts from the prevailing environmental conditions negatively affecting the project and its results, rather than the reverse, especially during operation: high water table in Monrovia and some areas of three county capitals, garbage littering and poor sanitation with high risks of contamination and recontamination of water sources and distribution networks. Mitigation measures include careful timing of construction to be conducted during the dry season, and local chlorination at specific locations along the water distribution network to address potential recontamination and ensure delivery of safe water; 2) project’s negative impacts on the environment are more likely to occur during construction and could easily be mitigated by the implementation of the measures

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described in the ESIA reports and through a strict environmental monitoring program; 3) impacts expected from the project are mainly positive as the project aims at improving access to safe water supply and hygienic sanitation services. Detailed cost of mitigation is in the annex B8. The total mitigation cost for the project is UA 32,000 and is a subcomponent of the works.

Climate change 3.2.2 The Climate Vulnerability Assessment conducted during the preparation of the climate change National Adaptation Program of Action (2008) reveals that erratic rainfall pattern has resulted in decreased agricultural production, while in the coastal region of the country there has been an increased incidence of floods resulting in inundation of coastal low and arable lands,, pollution of ground and surface water, reduction of drinking water availability, destruction of infrastructure, and increased human settlements.. These impacts above on coastal areas are the most significant impact of climate change on the project in Monrovia constituting a significant threat to drinking water quality. In the three county capitals the effects can be on groundwater table and resources. This situation, combined with change in average daily temperature, among others, exacerbates vector-and water borne diseases. Adaptation measures from the program of actions are proposed in annex B8. Key adaptation measures include laying of ductile iron pipes in low lying areas, use of water tight toilets i.e. ecosan toilets and environmental education to promote improved hygiene and environmental sanitation among residents.

Involuntary resettlement 3.2.3 The project may involve relocation of some houses and other assets such as small shops in the three county capitals. In Monrovia there is a severe scarcity of public land, which affects the building of public facilities. The municipalities may acquire land at market prices if required but the favoured approach that is already adopted and used under ongoing projects is to sign Memorandum of Understanding (MoU) with owners to construct public facilities (toilets and water kiosks). It is expected that assets could be temporarily and partially damaged (walls, small shops/sheds, etc...) during construction. Mitigation will be insured by integrating compensation and rehabilitation of damaged assets in the specifications for the procurement of construction. The number, size and extent of affected assets do not justify the preparation of a resettlement plan.

Gender Impact 3.2.4 The project will reduce time spent in collecting water, improve the health status and therefore reduce the need to care for sick members of the household. The economic pressure on the non-connected households who pay excessively high water prices (over 20% of household monthly income) and health will drop. This will also have a positive impact on women by practically reducing their workload. The project will establish 2 women entrepreneur groups and train them as small-scale water, hygiene and sanitation service providers. Residents will be trained in refuse collection, waste water disposal, hygiene promotion, water utilization, and water management with special focus and targeting of women. Hence an improvement of health, economic situation, and quality of life is expected. 3.2.5 The project aims at increasing the proportion of the female membership of Water Consumer Association to at least 30% s, in accordance with national policy. The project will also promote the recruitment of female professional staff at LWSC towards achieving the national target of 30%. Currently, LWSC has only 3 female professional staff, representing less than 5% of total professional staff. Social Impact 3.2.6 Through increased production and distribution capacity, 1.16 million additional people in the Monrovia and the three county capitals will have access to safe drinking water and sanitation

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facilities following the rehabilitation and expanding of the water system. This will raise consumption from current levels of about 10 litres per person per day to at least 50 litres per person. The project will facilitate the construction of 40 water kiosks and 2,000 house connections in the four cities. 3.2.7 In addition, the project will establish a Revolving Social Connection Fund that will provide loans for house connections for the poor who cannot afford high connection fees on a loan basis to be reimbursed in instalments and paid along with water bills. This approach shows immediate double benefits: 1) a high number of households will be easily connected and have access to safe water, hence readily contributing to the attainment of the MDGs; and 2) the high number of households connected in conjunction with planned actions to improve LWSC’s performance including improvement in an accounted for water improved financial management and governance and reduction in O & M will help to generate much higher revenues, hence gearing the corporation towards self-sufficiency and sustainability. The project will develop beneficiary eligibility criteria to identify the target population to benefit from the funds, and define how the fund will be properly managed. 3.2.8 Synchronized with hygiene promotion, this intervention will reduce infant mortality rates from 72/1000 to 39/ 1000 by 2015. The under-five child mortality rate should be reduced from 111/1000 to 65/1000 by 2015. This will be through reduction of diarrhoea among children under five by 50% by 2015; the major disease causing child mortality. Community’s public awareness campaigns on sanitation and hygiene promotion are expected to increase access to sanitation by 30% and in increasing residents practicing improved hygiene by 30% by 2015. This will contribute to human and economic development, and reduced health expenditure. 3.2.9 The project will install adequate water and sanitation facilities in basic education primary schools. Sanitation and hand washing facilities for health centres and market places will also be covered by 2015. 3.2.10 People are likely to profit from the increase of employment of skilled and unskilled workers during the construction phase. This will be complemented by capacity building for local artisans, women’s groups and community based organizations to undertake small businesses for service delivery. (More detailed in annex B8) 3.2.11 The communication and information campaign will be carried mainly through the local media and local social organisation entities and leaders such as mosques and churches, health posts, parent associations, market vendor associations, etc. IV – IMPLEMENTATION

4.1 Project Implementation Arrangements 4.1.1 The Government of Liberia will be the recipient of the Grant. LWSC will assume the overall responsibility for the supervision, monitoring, reporting, audit and overall project management. LWSC will establish a Project Management Team (PMT). The PMT will be staffed with LWSC staff and local consultants supported by TAs. Key staff include: a Project Coordinator, Water and Sanitation Engineers, Procurement/Contracts Management Expert, Gender Specialist, Social/Community Mobilization Expert, and Financial Management Expert. LWSC will recruit and train young professionals, as well as train existing staff in institutions mainly in the West African Region who will then be attached to the PMT TAs for on the job training on return. The team will be accountable to the LWSC. The conceptual framework for capacity development and building towards the PMT is presented in Annex B2. The implementation of sanitation activities would be undertaken in collaboration with WASH Consortium since it has acquired adequate experience in the field, and as a result will adopt the

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appropriate technology to the specificities of each of the towns’ areas. The respective municipal authorities of Monrovia, Buchanan, Kakata and Zwedru will be involved in project management in partnership with the LWSC. Procurement Arrangements 4.1.2 All procurement of goods, works and consultants’ services financed by the Bank will be in accordance with the Bank's new Rules and Procedure for Procurement of Goods and Works as appropriate, and the Rules and Procedure for the Use of Consultants, respectively using the relevant Bank Standard Bidding Documents. To speed up procurement and project implementation, Advance Contracting (AC) facility has been utilized for the construction of the Water Treatment Plant and engineering consultancy services. The detailed procurement arrangements are given in Annex B5. Disbursement Arrangements 4.1.3 The Grant will be disbursed through four categories of expenditure namely, works, goods, services and miscellaneous in accordance with the Bank’s disbursement rules. Disbursements from the ADF resources will mainly be made by direct payment to the suppliers, contractors and consultants for all procurement packages. Payments for small expenditures limited to training, project management and sanitation education and promotion shall be made using the Special Account method. LWSC currently uses the Special Account method to pay for the cost of some components in the ongoing Bank financed operations. This will be continued in the proposed project. Financial Management 4.1.4 Proper financial records shall be maintained by a qualified accountant during implementation. The Executing Agency shall establish a Special Account for ADF funds to expedite disbursement of small expenditures of the project activities. The accounts shall be audited annually according to International Standards on Auditing (ISAs) and International Financial Reporting Standards (IFRSs). The audit reports shall be submitted to the Bank not later than six months after closure of the GoL fiscal year. 4.1.5 Reporting and auditing: The Monitoring and Evaluation of project activities will be the responsibility of the LWSC as a regular management function. The project costs include an allocation for the development of a GIS based monitoring and evaluation system for the water and sanitation sector. This M&E system will be interfaced and be compatible with the Liberia Poverty Reduction Strategy (PRS) Monitoring and Evaluation system. Also the project cost includes a financial annual audit. The audit will be carried out by an independent reputable firm to be recruited on competitive basis contracted for the duration of the project.

4.2 Monitoring 4.2.1 The indicators for M&E are presented in the project log frame. LWSC with collaboration of the regulating ministry will be responsible for monitoring and evaluation of the project in accordance with the log frame. The M&E capacity of the sector Ministries, (MLME, MHSD, MGD and MP) is being developed through donor support. However, in Liberia monitoring and evaluation of sector indicators are inadequate and are done on ad-hoc basis. The project will assist the government to build the capacity for M&E. In addition to regular supervision missions, Joint sector reviews will be carried out annually together with the government’s and key stakeholders to monitor and review progress on the key target indicators. The Bank will also carry out close monitoring and evaluation of the project during implementation through regular follow-up, review and supervision missions. The project will introduce M&E mechanisms with the installation of a sector focused M&E system, of baseline data along with appropriate indicators on the overall performance of the project and the LWSC. The critical milestones during the period of project implementation are presented below:

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Timeframe Milestone Monitoring Process / Feedback loop May 2010 Grant Approval Schedule of activities to Board approval July 2010 Grant signature Grant Signature executed August 2010 Grant effectiveness Grant conditions approved by the Bank October 2010 Project launch Project launch report November 2010 Engagement of TAs Quarterly Reports, Supervision missions December 2010 Engineering Consultancy

start up (AC) Supervision missions; bidding and contract documents; Bank’s “No objection”

March. 2011 Start of construction works (WTP_June . 2010 AC)-

Quarterly and annual reports, supervision reports, Bidding and contract documents; Bank’s “No objection”; Bank feed-back on reports

February 2012 Mid-term review Supervision reports, other periodic reports, Audit reports. December. 2013 Project completion Project Commissioning January 2014 Project completion report Project completion mission

4.3 Governance 4.3.1 Liberia’s governance has shown some improvement since the end of the war. A democratically elected government and bicameral parliament are now in place and functioning properly. The Government and the parliament have shown full commitment to strengthening and improving all aspects of Good Governance in the country and combating corruption. The rule of law is mostly observed and the institutions in charge of assuring good governance such as the Judiciary, the Governance Commission, and the Audit Commission are functioning. The recently set up Governance Commission is mandated to carry out activities to enhance political and legal reforms, public sector reforms, civil education, national identity and national vision, and, national integrity system. Specifically, an independent Anticorruption Commission with prosecutorial powers has been established. In this short period Liberia has shown some progress in combating corruption. The Government plans to develop a decentralization policy. 4.3.2 Liberia’s financial governance has been adversely affected during the war and is now emerging from the past setbacks to rebuild its financial management system. DFID, WB, AfDB are presently engaged in assisting the country to develop an adequate financial governance system. These efforts are coordinated through the mechanism of Governance and Economic Management Programme (GEMAP) in which the Bank and other donors including the WB are participating. The programme aims at: (i) securing Liberia’s revenue base; (ii) improving budget and expenditure management (iii) improving procurement practices and granting of concessions; (iv) establishing processes to control corruption; (v) supporting key Institutions of Government; and (vi) capacity building. The AfDB is currently financing the Institutional Support Project for Economic Management and Good Governance. The project aims at improving the macro-fiscal policy analysis and formulation, revenue collection and monitoring; and budget preparation and monitoring of budget execution.

4.3.3 The World Bank is supporting the improvement of the financial governance of the country through Public Financial Management and Capacity Building Project. The project is supporting the country to improve the efficiency and transparency in managing public financial and human resources, focusing on revenue administration, public procurement, budget execution and payroll management, strengthening the role of key institutions including the Ministry of Finance, Liberian Institute of Public Administration, and the Civil Service Agency. The European Commission is enhancing the capacity of the Audit Commission. As a result of these efforts by the donor community and commitment of the government, Liberia is making appreciable progress in the financial governance arena in the last two years.

4.3.4 LWSC is a public corporation with sufficient autonomy to run its business; The regulatory overseer of LWSC is Ministry of Lands, Mines and Energy. It is governed by an eight member Board of directors, three of whom represent the government while the rest are

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selected from the private sector. The Board has sufficient powers to supervise the investment, operation, budget and finance of the Corporation. The management of the Corporation is headed by a Managing Director assisted by two deputies (operations/management). LWSC has its own accounting system independent of the government systems and prepares its annual financial statements in accordance with GAAP. The Corporation follows government procurement rules for major contracts. The project will strengthen the financial management system by introducing a modern fully automated utility system.

4.3.5 In order to mitigate governance issues linked with procurement and contracting of major works, standard Bank bidding/contracting procedures and guidelines will be applied, in addition to the Governments’ emerging procurement procedures. These shall reinforce transparency and accountability. Provision has been made for annual audits to be carried out to cover all aspects of projects implementation.

4.4 Sustainability 4.4.1 Sustainability is measured through advancement of the governance and acceleration of the performance of the sector, LWSC’s financial viability to keep operations and maintenance costs at manageable levels, adequate tariff levels and retain technical staff that will adequately operate and manage water and sanitation facilities. 4.4.2 The Government of Liberia is fully committed to the improvement of living conditions and health of its citizens through, among others, the provision of adequate supply of potable water supply and sanitation services in all parts of the country. To achieve these goals and attract investment into the sector, Liberia has taken steps to advance the governance and accelerate the performance of the sector. In this regard, an Integrated Water Resources Management (IWRM) policy and Water Supply and Sanitation White Paper (Sector Policy) have been formulated. The IWRM Policy has been submitted to parliament for endorsement. The Water Supply and Sanitation White Paper is being discussed through various stakeholders’ fora. In addition, the ongoing sector study financed by the Bank will establish the definitive Enabling Environment for sustainable sector development, and will subsequently enunciate the changing role of public institutions in line with Government reform, and usher in Public Private Partnership (PPP) and meaningful Private Sector participation (PSP). This will eventually result in effective service delivery, through clearly defining the respective roles of the different stakeholders’ involved in the sector. The implementation of these policy measures will enhance the sustainability of the project. 4.4.3 Although the civil war decimated the institutional capability of LWSC, the capacity development and capacity building sub component planned as part of the project and includes support to recruitment and training of young professionals who will receive professional training as well as on-job-support will ensure operational and management capacity. Institutional support will be provided to LWSC for the sustained improvements in the quality of service delivery including operation and maintenance of the water supply and sewerage system, and allow for the management of the facilities on a commercial basis. 4.4.4 The project will not be subject to government counterpart contribution since it is entirely financed by the Bank and LWSC contribution will be in kind consisting of providing office facilities. Although water tariffs in Liberia are considered adequate compared to those prevailing in the region, a tariff study will be carried out during the implementation of the project and revisions upward could be made if necessary. Furthermore, the large increase in water sales is expected to add to the financial sustainability of the project in the long-run.

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4.5 Risk management 4.5.1 There is a possible risk that the current policies being formulated may not be completed in time or implemented sufficiently to have the desired positive impact on the project. Specifically, this could pose a major risk to the implementation of institutional and policy reforms under the project. To mitigate this risk the project is designed to facilitate extensive awareness creation and consensus building among stakeholders and civil society, including the leading political groups in the country. Also, reforms must be started early during implementation to ensure their completion during the current political administration. Finally, a condition of the Grant will require Government to evidence that recommendations of the institutional support Consultancies result in an Action plan which will be implemented according to the timeframe and schedule set by the outcome of the consultancy study, before the completion of the project. 4.5.2 Another risk of the project is the lack of sufficient institutional capacity to implement and manage the project and operate it after completion. This has been the experience in Liberia since reengagement of the Bank Group in the country. This risk is mitigated by recruiting international technical assistance staff to assist the EA in the implementation and management of project. In addition, TA support will be provided to PMT and extensive training will be carried out as a part of the project to ensure the project is completed within time and budget, and that an adequate number of cadres are trained to manage the facilities provided. 4.5.3 Because of the social aspect of water and sanitation and given the widespread perception among the population that water should be provided free or charge, the increases in the tariffs may be resisted. There could also be some risk associated with the commercial as well as with the private sector operations of the system. The institutional risks would be mitigated by front-loading institutional support activities implementation before the physical components of the project are implemented. The institutional support activities will include sensitization campaigns and wide consultation with various interest groups from civil society, women’s groups, academia and political parties, to achieve broad consensus on pricing implication. The TA to the LWSC will include strengthening customer orientation and introduction of pro-poor supply strategy. The capacity of LWSC to carry out campaigns to encourage customers to pay for services will be built. 4.5.4 Any potential fiduciary risks would be mitigated through rigorous financial control, procurement process and proper contract design and execution.

4.6 Knowledge building 4.6.1 Various project components are geared towards improving operational and management performance of the LWSC, the owner of the facilities to be built under the project. This will be done with private sector involvement through service provision by private operators. The project is therefore expected to generate knowledge and experience that will add value and build up lessons leant for planning, design and management of future WSS infrastructure extensions and rehabilitation projects. 4.6.2 The implementation of the project will involve effective participation of urban and peri-urban communities therefore creating public knowledge and awareness for lifelong changes of attitudes mainly regarding the importance of paying for the WSS services, proper use of the services, consumer rights and responsibilities, personal hygiene, and public and environmental health. It will also engage schools in creating awareness and knowledge amongst teachers and children, which will benefit in particular the future generations.

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4.6.3 The implementation of the capacity development and building sub component especially designed for a fragile state will generate lessons to be used to fine tune the concept and adapt it to projects in other fragile states and countries. 4.6.4 The Bank’s supervision missions, quarterly and annual progress reports, mid-term review, audit and completion reports will also provide information on various aspects of the project for further diagnosis. The knowledge obtained will be shared within the Bank and with other development partners as well as with RMCs. V – LEGAL INSTRUMENTS AND AUTHORITY

5.1 Legal instrument An ADF Grant will be used to finance this project.

5.2 Conditions associated with Bank’s intervention A. Conditions Precedent to Entry into Force of the Grant Agreement The Recipient shall submit documentary evidence that:

(i) Submit evidence to the Bank that the Project Management Teams (PMT), have been nominated by Liberia Water and Sewer Corporation, comprising a Focal Person/Team Leader, Water and Sanitation Engineer, an Institutional Expert, a Financial Management Expert, a Procurement Expert and a Socio Economist/Community Management Training Expert whose qualifications and experience are acceptable to the Fund;

(ii) A Retrocession agreement has been signed between the Government Liberia and the Liberia Water and Sewer Corporation (LWSC) transferring the entire proceeds to the latter on terms and conditions acceptable to the Bank.

(iii) LWSC has opened special account (in foreign currency) for the project.

B. Other Conditions (i) Submit to the Bank not later than December 2010 the audited accounts of LWSC for

the fiscal years of 2006, 2007, and 2008. (ii) The recommendations of the consultant under the institutional support component

will result in an Action Plan agreed with the Fund not later than December 2012. (iii) Provide evidence to the Bank that the Action Plan as defined in paragraph (ii) above, of

the institutional support study will be implemented according to the timeframe and schedule set by the outcome of the said study.

C. Conditions for the disbursement of the Revolving Social Connection Fund

(i) The first tranche of UA 125,000 equivalent will be disbursed on the provision of the following that will be subject to Bank approval:

i. Eligibility Criteria; ii. List of selected beneficiaries; iii. Evidence of the beneficiaries capacity to pay; iv. Agreements between Liberia Water and Sewer Corporation (LWSC) and

beneficiaries; and v. LWSC will open a separate account with the same criteria as a Special

Account to receive the Fund. (ii) The second tranche of UA 125,000 equivalent will be disbursed on the provision of the

following that are subject to Bank approval: i. Quarterly reports that have been received starting with the first quarter

after the disbursement of the first tranche; ii. Bank Statements of the Fund account; and

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iii. An independent audit report confirming the funds of the first tranche were utilized for the purposes intended

5.3 Compliance with Bank Policies This project complies with all applicable Bank policies. VI – RECOMMENDATION Management recommends that the Boards of Directors approve the proposed ADF Grant of UA 24.63 million, an FSF pillar I Grant of UA 0.57 million and an FSF pillar III Grant of UA 0.89 million to the Government of the Republic of Liberia for the purposes and subject to the conditions stipulated in this report.

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Appendix I. Country’s comparative socio-economic indicators

1990 2006 *Area ( '000 Km²) 30,307 80,976Total Population (millions) 2.1 3.4 924.3 5,325.8Population growth (annual %) -1.1 2.2 2.1 1.4Life expectancy at birth, total (years) 43 43 51 64Mortality rate, infant (per 1,000 live births) 162.0 134.0 82.5 58.3Physicians per 100,000 People ... 3.2 38.2 78.0Births attended by skilled health staff (% of total) ... 89.1 43.7 59.0Immunization, measles (% of children ages 12-23 months) ... 94.0 68.0 74.1Prevalence of HIV, total (% of population ages 15-49) ... 6.6 4.5 4.5School enrollment, primary (% gross) 29.8 105.4 96.7 91.0School enrollment, secondary (% gross) 13.8 34.0 40.8 88.0Ratio of girls to boys in primary education (%) 68.6 72.2 87.2 …Illiteracy rate, adult total (% of people ages 15 and above) 60.8 40.2 43.3 26.6Access to Safe Water (% of Population) 46.0 ... 62.3 78.0Access to Sanitation (% of Population) 38.0 26.0 44.2 …Human Develop. Index Value (0-1) ... ... 0.475 0.694Human Poverty Index (% of Population) ... ... 38.0 …

Economy 1990 2000 2005 2006GNI per capita, Atlas method (current US$) ... 130 130 …GDP (current Million US$) 384 526 530 661GDP growth (annual %) 0.3 ... ... ...Per capita GDP growth (annual %) 1.4 -5.0 -1.3 -2.2Gross Domestic Investment (% of GDP) ... ... ... ...Inflation (annual %) 12.0 10.0 6.9 8.0Budget surplus/deficit (% of GDP) ... ... ... ...

Private Sector Development & Infrastructure 1990 2000 2005 2006Time required to start a business (days) … … ... ...Investor Protection Index (0-10) … … ... ...Fixed line and mobile phone subscribers (per 1000 people) 4 3 ... …Internet users (per 1,000 people) ... 0 ... …Roads, paved (% of total roads) 6 ... ... …Electricity Consumption per Capita (KWh) 132 106 108 …

Trade, External Debt & Financial Flows 1990 2000 2005 2006Export Growth, volume (%) … … … …Import Growth, volume (%) … … … …Terms of Trade (% change from previous year) … … … …Trade Balance ( mn US$) .. .. .. ..Trade balance (% of GDP) … … … …Current Account ( mn US$) .. .. .. ..Current Account (% of GDP) … … … …Debt Service (% of Exports) … … … …External Debt (% of GDP) … … … …Net Total Inflows ( mn US$) 518.6 631.6 -1,402.7 …Net Total Official Development Assistance (mn US$) 113.7 67.4 236.2 …Foreign Direct Investment Inflows (mn US$) 225.2 20.8 194.0 …External reserves (mn US$) ... 0.3 25.4 45.6

External reserves (in month of imports) ... ... ... ...

* Most recent year

Development Indicators - Liberia

Developing countries

Source: ADB Statistics Department, based on various national and international sources

LiberiaAfricaSocial Indicators

111

Liberia

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Appendix II. Table of ADB’s portfolio in the countr y List of active projects (loans and grants) by Sector:

Sector: Rural and Environment Name Type1 Rating Amount (UA) Date approved Disbursements

(million) 1. Agric Sector Rehab

project G NA 6.5 million 29/4/09 -

TOTAL APPROVALS 6.5 Sector: Infrastructure and Transport 1. Monrovia WSS

Rehabilitation- 2 G

NA

4 million

(22.11 2007)

0.6

2. Monrovia & 3 Towns WSS Study

G

NA

1.33million

(17/01/09)

0.5

3. Sector Reform Study-3

G NA 1.48 million (3/12/2009) --

4 Labour Based Public Works Project

G NA 15.24million (18.12.2007) 2.9

TOTAL APPROVALS 19.05 million 4.0

Sector: Social 1 Emergency Assistance to Control & avert Caterpillar infestations

G NA 0.66 million (27/05/2009 -

TOTAL APPROVALS G NA 0.66 million

Multi Sector 1 Institutional Support Project for Economic Management and Good Governance

G NA 3 million 27/10/2009 0.7

2. Poverty Reduction G NA 9. million 22/12/09 9.0

3. Supplementary Support to the Public Financial Management Reform Support Programme

G NA 3.4 27/5/09 -

TOTAL APPROVALS 17.7 million 9.7

Sector: Private Sector Name Type1 Rating Amount (UA) Date approved -

LBDI LOC 3.2 10/09/09

TOTAL APPROVALS 3.2 -

-1 L: loan, G: grant 2. DFID financed 3- AWF

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Appendix III. Key related projects financed by the Bank and other development partners in the country

Some of the ongoing urban water supply and sanitation operations are given in the table below.

No Project Area Financier Start of project

Cost UA

Status, Performance

1 Monrovia Water Supply and Sanitation Rehabilitation Programme

Monrovia AfDB/DFID/WB/EC

2008 16.83 million In progress, MS

2 Monrovia Expansion & Three Towns WSS Study

Monrovia, Buchannan, Kakata, Zwedru

AfDB 2008 1.49 million In progress, S

3 Water Sector Reform All country AfDB Yet to start 1.49 million

4 WASH UNICEF 2008 1.29 per year

In progress s

5 Monrovia water supply study

Monrovia JICA 2009 8.70 million In progress, S

6 Rural Water Some Counties OXFAM/Consortium

2008 8.14 In progress s

Total 37.94

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Appendix IV. Map of the Project Area Urban Water Supply and Sanitation Project

Map of Project area

DISCLAIMER: This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgement concerning the legal status of a territory nor any approval or acceptance of these borders. The use of this map for any other purposes is strictly prohibited.