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Document of The World Bank Report No: ICR2000 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-39950) ON A CREDIT IN THE AMOUNT OF SDR 9.6 MILLION (US$ 14.10 MILLION EQUIVALENT) TO THE KINGDOM OF LESOTHO FOR A LESOTHO WATER SECTOR IMPROVEMENT PROJECT February 7, 2012 Water and Urban Unit (AFTUW) Lesotho Country Department (AFCS1) Africa Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

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Page 1: Document of The World Bank Report No: ICR2000 … · 2016. 7. 13. · document of the world bank report no: icr2000 implementation completion and results report (ida-39950) on a credit

Document of

The World Bank

Report No: ICR2000

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA-39950)

ON A

CREDIT

IN THE AMOUNT OF SDR 9.6 MILLION

(US$ 14.10 MILLION EQUIVALENT)

TO THE

KINGDOM OF LESOTHO

FOR A

LESOTHO WATER SECTOR IMPROVEMENT PROJECT

February 7, 2012

Water and Urban Unit (AFTUW)

Lesotho Country Department (AFCS1)

Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November, 2011)

Currency Unit = Maloti (M)

M8.02 = US$1

US$1.57 = SDR1

FISCAL YEAR

April 1 – March 31

ABBREVIATIONS AND ACRONYMS APL Adaptable Program Lending

CMP Catchment Management Plan

CoW Commissioner of Water

CQS Consultants Qualification Selection

CV Coefficient of Variation

DoE Department for Environment

DoC Department of Culture

DSA Debt Sustainability Analysis

EC European Commission

ECA Export Credit Arrangement

EIB European Investment Bank

EMP Environmental Management Plan

EoI Expression of Interest

ESIA Environmental and Social Impact Assessment

FM Financial management

GoL Government of Lesotho

HIV Human Immunodeficiency Virus

IDA International Development Association

KB Kuwait Fund and BADEA

LEA Lesotho Electricity Authority

LEWA Lesotho Electricity and Water Authority

LEC Lesotho Electricity Corporation

LHDA Lesotho Highlands Development Authority

LHWP Lesotho Highlands Water Project

LWJV Lesotho Waterworks Joint Venture

MA Metolong Authority

MCA-L Millennium Challenge Account - Lesotho

MCC Millennium Challenge Corporation

MCM Million Cubic Meters

MDWSP Metolong Dam and Water Supply Programme

MNR Ministry of Natural Resources

MFDP Ministry of Finance and Development Planning

MoU Memorandum of Understanding

NES National Environment Secretariat

NGO Non-Governmental Organization

O&M Operation and Maintenance

PoE Panel of Expert

PPF Project Preparation Facility

PPSU Policy, Planning and Strategy Unit

RAP Resettlement Action Plan

RfP Request for Proposal

ToR Terms of Reference

TRC Transformation Resource Center

TY Teyateyaneng

UN United Nations

VIP Ventilated Improved Pit Latrine

WASA Water and Sewerage Authority

WASCo Water and Sewerage Company

WATSAN Water and Sanitation

WB World Bank

WSIP Water Sector Improvement Project

WTW Water Treatment Works

WWTW Waste Water Treatment Works

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3

Vice President: Obiageli K. Ezekwesili

Country Director: Ruth Kagia

Sector Director: Jamal Saghir

Sector Manager: Junaid Kamal Ahmad

Project Team Leader: Elisabeth Sherwood

ICR Team Leader: Kremena Ionkova

ICR Author: Louise Croneborg

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KINGDOM OF LESOTHO

LESOTHO WATER SECTOR IMPROVEMENT PROJECT

Table of Contents

A. Basic Information ........................................................................................................... 5

B. Key Dates ....................................................................................................................... 5

C. Ratings Summary ........................................................................................................... 5

D. Sector and Theme Codes ................................................................................................ 5

E. Bank Staff ....................................................................................................................... 6

F. Results Framework Analysis .......................................................................................... 6

G. Ratings of Project Performance in ISRs ......................................................................... 9

H. Restructuring ................................................................................................................ 10

I. Disbursement Profile ..................................................................................................... 11

1. Project Context, Development Objectives and Design ................................................. 12

2. Key Factors Affecting Implementation and Outcomes ................................................. 16

3. Assessment of Outcomes .............................................................................................. 21

4. Assessment of Risk to Development Outcome ............................................................. 27

5. Assessment of Bank and Borrower Performance .......................................................... 28

6. Lessons Learned ............................................................................................................ 31

7. Comments on Issues Raised by Borrower / Implementing Agencies / Partners ........... 32

Annex 1. List of Agencies and Respective Responsibilities ............................................. 33

Annex 2. Project Activities ............................................................................................... 34

Annex 3. Project Costs and Financing .............................................................................. 35

Annex 4. Financial Overview and Analysis ...................................................................... 36

Annex 5. Economic Analysis ............................................................................................ 40

Annex 6. Bank Lending and Implementation Support / Supervision Processes ............... 44

Annex 7. Documents on File ............................................................................................. 46

Annex 8. Stakeholder Workshop Report and Results ....................................................... 47

Annex 9. Summary of Borrower's ICR ............................................................................. 48

Map of Project Area in Lesotho ........................................................................................ 49

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A. Basic Information

Country: Lesotho Project Name: Lesotho Water Sector Improvement Project

(WSIP)

Project ID: P056418 L/C/TF Number(s): IDA-39950

ICR date: 11/30/2011 ICR Type: Core ICR

Lending instrument: APL Borrower: Government of the Kingdom of Lesotho

Original total

commitment:

XDR

9,600,000

Disbursed Amount: XDR 9,548,270 (undisbursed: XDR 51,730)

Revised Amount: XDR

9,600,000

Environmental Category: B

Implementing Agencies: Ministry of Natural Resources, Commissioner of Water (CoW) Water and Sewerage Authority (WASA)

Cofinanciers and Other External Partners: n/a

B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept

Review: 02/08/2001 Effectiveness: 03/07/2005 03/07/2005

Appraisal: 03/16/2004 Restructuring(s): n/a 06/30/2010

Approval: 10/26/2004 Mid-term Review: n/a 05/25/2007

Closing: 06/30/2008 06/30/2011

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Satisfactory

Risk to Development Outcome: Low or Negligible

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately

Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing Agencies: Moderately

Satisfactory

Overall Bank

Performance:

Moderately

Satisfactory Overall Borrower Performance:

Moderately

Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments (if any) Rating

Potential Problem Project at any time (Yes/No): Yes Quality at Entry (QEA): n/a

Problem Project at any time (Yes/No): Yes Quality of Supervision

(QSA): n/a

DO rating before Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

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Original Actual

Sector Code (as % of total Bank financing)

Central government administration 20 20

Water supply 80 80

Theme Code (as % of total Bank financing)

Other urban development 67 67

Participation and civic engagement 33 33

E. Bank Staff

Positions At ICR At Approval

Vice President: Obiageli K. Ezekwesili Callisto E. Madavo

Country Director: Ruth Kagia Ritva S. Reinikka

Sector Director: Jamal Saghir Inger Andersen

Sector Manager: Junaid Kamal Ahmad Jaime M. Biderman

Project Team Leader: Elisabeth Sherwood N. Jane Walker

ICR Team Leader: Kremena Ionkova n/a

ICR Main Author: Louise Croneborg n/a

F. Results Framework Analysis

1. Project Development Objectives (from Project Appraisal Document)

The project development objective of the Water Sector Improvement Project (a two phase APL)

was to support the vision of the Government of Lesotho to secure adequate, sustainable, and clean

water supply and to support adequate sanitation services for consumers living in the Lowlands

areas.

2. This was to be accomplished through: realisation of Lesotho‟s Water Resource Management

Policy of 1999 and related institutional sector reforms; building capacity for coordinated sector

implementation of proposed legal and regulatory utility reforms; providing new management

mechanisms to promote commercial incentives to the main water utility (the Water and Sewerage

Authority, WASA)1; and financing infrastructure for augmenting urban water supply in the

capital, Maseru.

3. The key outcomes were identified as: improved institutional framework and clarified

institutional roles and responsibilities, as well as improved utility performance through a

Performance Agreement with specific audited and publicly available indicators. These

1 In 2010, WASA was corporatised to become the Water and Sewerage Company (WASCo). However, the term

WASA will be used for consistency of the ICR.

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achievements set the stage for phase two of the APL that would focus on augmenting the long-

term bulk water supply for the greater urban areas of Maseru in the Lesotho Lowlands.

4. Revised Project Development Objective: The PDO was not revised.

F(a) PDO Indicator(s)

Indicator Baseline Value Original Target

Values (from

approval documents)

Actual Value Achieved at Completion or Target

Years

Date achieved 03/31/2005 06/30/2008 06/30/2011

Indicator 1 : Framework sector legislation passed and institutional reform implemented

Value n/a New legislation

Communication

Strategy Report

Water and Sanitation Services Policy endorsed by

Cabinet Feb 2007

Water Act passed by National Assembly Dec 2008

Amendment of Lesotho Electricity Authority Act to

include water regulation passed by Parliament

March 2011

Communication Strategy partially completed and

implementation pending

Comments ACHIEVED

The policy and legal frameworks were strengthened considerably during the project, which was

a key outcome sought for APL1 that set the stage for continuous support under APL2.

Indicator 2 : WASA achieves Performance Targets as mandated in the Performance Agreement signed with

GoL

Value n/a Outcome of

Performance

Agreement

Satisfactory outcome

Comments ACHIEVED

WASA performance improved substantially over the course of the project as demonstrated by

meeting targets set in the Performance Agreement, many of which are reflected as Intermediate

Indicators in Section F(b) below.

Indicator 3 : Non-reticulation urban communities establish preferred model of services that can be scaled-up

successfully

Value n/a Reports of monitoring

NGO

6 communities; 77 points

Comments ACHIEVED

Model established and has been scaled-up, as a result of which costs and distance travelled for

water consumers have been reduced; frequency of collecting water has increased with greater

access.

Indicator 4 : People in project areas with access to "Improved Water Sources" (number) - CORE2

Value 171,375 n/a 273,710

Comments WASA increased their household connections from 34,275 to 54,742, which translates into

171,375 and 273,710 people respectively (estimated household size of five).

2 At the time of extending the project‟s closing date (from June 30, 2010 to June 30, 2011), the results indicators were

revised to include CORE indicators.

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F(b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target

Values

(from approval

documents)

Actual Value Achieved at Completion or Target

Years

Date achieved 03/31/2005 06/30/2008 06/30/2011

Indicator 1 : Component 1: Consensus with stakeholders on: revised 1999 Water Sector Strategy, Draft Water

and Sanitation Services legislation, revision of 1978 Water Resources Act

Value Recurrent budget of

CoW and PPSU

funded

Passage through

Parliament of new

enabling legislation

Water and Sanitation Services Policy endorsed by

Cabinet Feb 2007

Water Act passed by National Assembly Dec 2008

Amendment of LEA Act to include regulation of

WS passed by Parliament March 2011

Comments ACHIEVED

Indicator 2 : Component 2 (Technical): New piped household water connections that are resulting from the

project intervention (number) - CORE3

Value n/a 4,000 20,467

Comments ACHIEVED and surpassed

The indicator was changed to Core in 2010.

Indicator 3 : Component 2 (Technical): No of customers with less than 18 hour supply

Value 94,000 76,000 26,000

Comments ACHIEVED and surpassed

Overachieved result relative to target.

Indicator 4 : Component 2 (Technical): Unaccounted for water (UFW)

Value 41% 30% 32%

Comments ALMOST ACHIEVED

The difference between the target and the actual is considered minor. UFW was affected

negatively by the flooding in 2010/2011.

Indicator 5 : Component 2 (Technical): % of biological samples failing

Value 20% 3% 10%

Comments NOT ACHIEVED

Although the actual value at completion would indicate non-achievement of the target, over the

course of the project, the target was met (at 3%) until the final months of the project, when a

sudden spike occurred. By the time of this ICR, WASA has not been able to determine the

reason for this sudden increase. In the opinion of the Engineer on the Bank‟s team, the increase

is likely due to failing measuring equipment. Therefore, even thought this ICR indicates the

indicator was not achieved, this conclusion should be taken with caution.

Indicator 6 : Component 2 (Technical): % effluent samples failing

Value 14% 3% 10%

Comments N/A

This indicator is not applicable since the project has not directly supported sewer treatment.

The indicator should not have been included in the results matrix.

Indicator 7 : Component B (Technical): Water Production Ml/day

Value 40 55 55

Comments ACHIEVED

In 2003, the water production capacity of the Maseru Water Treatment Works increased to 45

Ml/day and WASA‟s production capacity of other facilities of approximately 10 Ml/day meant

the target was achieved.

Indicator 8 : Component 2 (Financial): cash collection ratio

3 The Intermediate Outcome Indicators 2 was originally worded 'No of new connections, cumulative' and was changed

to the Core indicator listed in the table.

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Value 85% 95% 104%

Comments ACHIEVED and surpassed

Indicator 9 : Component 2 (Financial): debts covered

Value 60% 90% 99.46%

Comments ACHIEVED and surpassed

Strict control of expenses has improved results.

Indicator 10 : Component 3: Pilot communities in operation with sustainable water supply facilities

Value None 6 communities with

pilot project in

operation

6 communities with pilot project in operation

Comments ACHIEVED

Indicator 11 : Component 3: Improved community water points constructed or rehabilitated under the project

(number) - CORE4

Value 0 23 77

Comments ACHIEVED and surpassed

Results include substantial reductions in cost and distance travelled for collection and increased

collection times. Estimated total 28,340 users.

The target of 23 was made by WASA in their Performance Agreement.

Indicator 12 : Component 2: Piped household water connections affected by rehabilitation under the project

(number) – CORE

Value 34,275 n/a 54,742

Comments

Indicator 13 : Components 2 and 3: Water utilities that the project is supporting (number) – CORE

Value 0 1 1

Comments ACHIEVED

Indicator 14 : Operating cost coverage ratio in utilities by the project (%) - CORE AFRICA

Value 100 100 102.2%

Comments ACHIEVED

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual Disbursements

(USD millions)

1 01/06/2005 Satisfactory Satisfactory 0.00

2 04/28/2005 Satisfactory Moderately Satisfactory 1.01

3 12/01/2005 Satisfactory Satisfactory 1.16

4 06/19/2006 Satisfactory Satisfactory 1.77

5 12/22/2006 Moderately Unsatisfactory Moderately Unsatisfactory 2.24

6 06/29/2007 Moderately Satisfactory Moderately Unsatisfactory 3.03

7 12/17/2007 Moderately Satisfactory Moderately Satisfactory 4.01

8 05/20/2008 Satisfactory Satisfactory 4.76

9 11/11/2008 Satisfactory Satisfactory 5.35

10 05/22/2009 Satisfactory Satisfactory 6.39

11 11/24/2009 Moderately Satisfactory Moderately Unsatisfactory 9.18

12 05/27/2010 Moderately Satisfactory Moderately Satisfactory 11.63

4 The Intermediate Outcome Indicators 11, 12, 13 and 14 were added to the original results framework as new core

indicators. See Restructuring Paper No 55205-LS for more information.

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13 12/27/2010 Moderately Satisfactory Satisfactory 13.49

14 03/04/2011 Satisfactory Satisfactory 13.49

15 07/13/2011 Satisfactory Satisfactory 13.54

H. Restructuring

Restructuring

Date(s)

Board Approved

PDO Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring in

USD millions

Reason for Restructuring & Key

Changes Made DO IP

06/30/2010 No change in

PDO MS MS 12.41

Extension of closing date to June 30

2011.

Incorporating CORE indicators into

results framework.

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. Sector background. At the time of appraisal, as now, water was one of Lesotho‟s most

abundant natural resources and valuable exports. Through the Lesotho Highlands Water Project

(LHWP), the sale of water to the Republic of South Africa (RSA) provided the equivalent of four

percent of Lesotho‟s annual GDP5. Yet, in the capital Maseru and peri-urban centres in the

Lesotho Lowlands, satisfying water demand of households6 and industries was a challenge.

Shortages were further exacerbated by rapid urbanization and migration (increasing seven percent

annually) and the expanding textile industry7. Raw water for the greater Maseru area was sourced

at a direct intake on the Mohokare/Caledon River with one adjacent water treatment facility.

Another important source was a large off-river storage facility in the Maqalika Reservoir in

Maseru (sourced by the Maqalika tributary) intended as storage for periods of low flows.

2. The Water and Sewerage Authority (WASA), the main utility, managed some 30,000

connections for a population of 325,000. Tariff levels had failed to keep pace with inflation while

an inadequate network resulted in unconnected customers paying up to 10 times the price of the

formal network. Low revenues hampered the utility‟s financial capacity build capacity in peri-

urban areas. Further, an institutional gap had emerged for new peri-urban areas where neither

WASA nor the Department for Rural Water Supply was clearly responsible for providing

services8. By 2004, greater interagency coordination in the water sector was called for to improve

resource allocation and sector coherence. Roles and responsibilities needed clarification as

service providers varied in governing structures and independence (an institutional overview is

provided in Annex 1). With recurring periods of drought and floods, and limited infrastructure for

abstraction and treatment, the reliability and adequacy of urban water supply services needed

strengthening.

3. Government strategy. Since the late 1980s, the Lesotho Highlands Water Project had

attracted large amounts of investments but also public attention as persistent shortages in the

Lowlands prevailed. The Water Resources Management Policy of 1999 reflected a

comprehensive commitment by the Government of Lesotho (GoL) to address sector performance

issues. Adequate access to water was a critical priority in the GoL‟s Poverty Reduction Strategy

Paper of 2003, its commitment to the 7th Millennium Development Goal

9 and its 2020 vision, in

which 100 percent of the population were to receive access to water.

5 In 2010, the monthly royalties amounted to 50 million Maloti (approx. US$7 m). 6 50% of Lesotho‟s urban population had access to water in 2004. 7 The garment factories were established quickly from foreign direct investment encouraged by the United States‟

African Growth and Opportunity Act (AGOA), and by 2004 had created work for almost 40,000 people. 8 The population new peri-urban area was deemed to be 23 percent larger than the boundaries of WASA in the early

2000s. 9 Reducing by half the proportion of population living without access to safe drinking water and basic sanitation by

2015.

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4. The 1999 Policy was developed through broad public consultations and stipulated wide

reforms:

The establishment of the office of the Commissioner of Water to unify policy, monitoring

and planning functions with a dedicated Policy, Planning and Strategy Unit (PPSU);

Repealing the Water Resources Act of 1978 to fully implement the 1999 Policy and reflect

the principles of Integrated Water Resources Management (IWRM);

Improved service provision and utility performance, through a Performance Agreement

between WASA and the GoL (with publically available audits) and a clear mandate to

recover costs through tariffs; and

A more predictable regulatory regime for water service providers.

5. To implement the institutional reforms envisaged and to address the medium-term goal of

augmenting the water supply for Maseru, IDA assistance was requested. The IDA assistance was

envisaged to reflect the Government priorities, where the policy and legal frameworks, and sector

performance had to be strengthened as a first step (supported under Phase 1 of the APL) followed

by large-scale investments in infrastructure (supported under Phase 2 of the APL).

6. In order to identify the long-term infrastructure investments to be supported under Phase 2,

the GoL commissioned a feasibility study of the Lesotho Lowlands Water Supply Scheme

(LLWSS)10

in 2004. The study identified the long-term solution to be the Metolong Dam and

Water Supply Program (MDWSP). MDWSP is supported under Phase 2 of the APL, currently

under implementation11

.

7. Country Assistance Strategy. The project design was consistent with the 1996 Bank-

approved Country Assistance Strategy (CAS) for Lesotho. CAS objectives included a

comprehensive framework for the environment, fostering labor-intensive growth, and maximizing

the poverty impact of LHWP. The World Bank‟s support to the sector had focused previously on

LHWP (facilitating the agreement between Lesotho and RSA, and providing implementation

advice – as well as financing constituting four percent of LHWP total costs). It was argued that

more proceeds of water sales were needed to improve rural welfare and that the supported

institutions needed strengthening12

. In this context, the preparation of the WSIP during the late

1990s/early 2000s focused on strengthening the sector institutions and addressing the immediate

water needs within Lesotho.

1.2 Original Project Development Objectives (PDO) and Key Indicators

8. The PDO, as worded in the PAD, was to support the vision of the Government of Lesotho to

secure adequate, sustainable, and clean water supply and to support adequate sanitation services

for consumers living in the Lowlands areas. The wording of the PDO in the Developmental

10 The feasibility study was supported by European Development Fund. A separate study financed by the Arab Bank for

Development in Africa (BADEA) was also undertaken in 2003. 11 See www.worldbank.org/metolong 12 Lesotho: Development in a Challenging Environment, F. Hassan and O. Ojo, World Bank Operations Evaluation

Department and African Development Bank Evaluation Department (2002)

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Credit Agreement (DCA), is to secure the supply of adequate clean water and sanitation services

to the population of the Borrower living in the Lowlands areas.

9. The PDO level indicators for WSIP1 were:

Framework sector legislation passed and institutional reform implemented;

WASA achieves Performance Targets as mandated in the Performance Agreement signed

with GoL;

Non-reticulated urban communities establish preferred model of services that can be scaled

up successfully; and

Increased service coverage.

10. To advance into the APL‟s phase 2, a number of policy and legal triggers were to be met. By

the time of Board approval for WSIP2 (May, 2009), six of seven triggers had been met, and the

Board provided a waiver on the final trigger, which at the time was under implemented (i.e.

amendment of the Lesotho Electricity Authority Act No 12 of 2002 to empower LEA to assume

responsibility for regulation of urban water supply services). This requirement was since

completed in March 201113

.

1.2 Revised PDO (as approved by original approving authority) and Key Indicators, and

reasons/justification

11. The PDO for the project was not revised. In June 2010, some of the PDO-level and

intermediate, component-level indicators listed in the PAD‟s Results Framework were aligned

with the newly introduced CORE indicators (see section F footnotes).

12. While the PDO relates to both water supply and sanitation, water supply was supported

through both physical investments and sector and institutional reforms. The support to adequate

sanitation services envisaged under the project (as reflected by component activities and the

indicators to monitor progress in achieving the PDO), included the institutional reform through

updated policy and legal frameworks covering both water and sanitation, as well as targeted

capacity building and improved performance of the utility responsible for sewerage (WASA).

1.4 Main Beneficiaries

13. Main project beneficiaries were the urban water consumers in Maseru (both domestic and

industrial), expected to benefit under the project from improved sector performance, enhanced

water abstraction capacity from the Mohokare River, extended reticulation to the Mazenod and

13 The seven trigger specifications were: i) decision on the long-term option based on detailed technical feasibility

studies, financial and economic analysis, and environment and social impact assessment; (ii) cost centre for

PPSU/CoW created; (iii) publication of revised 2004 Water Sector Policy; (iv) Water and Sanitation Services Act

passed (where the amendment to the Lesotho Electricity Act was needed to give it regulatory responsibility for the

water supply and sewerage services); (v) Water Resources Act of 1978 revised and passed; (vi) WASA meeting 80

percent of the Performance Agreement indicators at level two by March 2007; and (vii) special performance audit made

publicly available for each year of implementation of the Performance Agreement.

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the airport area, and the six pilot community areas under the Community Water Supply

component.

1.5 Original Components

14. The project consisted of three components14

:

15. Component 1 (US$ 3.6 million) - Policy implementation and Capacity Building in the

Ministry of Natural Resources:

a) Enhancing the skills of Ministry of Natural Resources (Commissioner of Water) staff to

formulate adequate policy for the water sector and to supervise implementation of the Water

Policy of 1999.

b) Carrying out a series of studies aimed at establishing policies required to improve the

performance of the Borrower‟s water sector, including the following: (i) formulation of an

adequate communication strategy aimed at reaching out to water users to provide them with

relevant information in an effective manner; (ii) upgrading the legal and regulatory

framework governing water sector operations; (iii) formulation of an adequate water tariffs

structure and an appropriate tariff setting mechanism; and (iv) preparation of a water

resources management plan.

c) Carrying out training activities, including workshops and seminars aimed at enhancing

technical expertise within MNR and WASA.

d) Acquisition of equipment, computers and related software, materials and supplies.

16. Component 2 (US$ 10.0 million) - Augmentation and Extension of Maseru Water Supply:

a) Construction of a new water intake scheme (comprising the intake structure, desilting pumps

and a power supply unit) on the Mohokare River so as to increase the water abstraction rate

to about 0.2 m3 per second;

b) Construction of an additional water treatment plant capable of discharging 20 mega litres per

day (in Maseru);

c) Construction of an additional pumping station and an additional pipeline to deliver water

from Maqalika Water Treatment Plant to the Low and Medium North Reservoirs in Maseru;

d) Construction of new water facilities including a small pump station, a reservoir and a

pipeline as needed to supply water to Mazenod and to the Moshoesho I International Airport

area; and

e) Acquisition of required technical advisory services, equipment, computers and related

software, materials and supplies.

17. Component 3 (US$ 2.0 million) - Maseru Community Water and Sanitation Program:

a) Formulation and implementation of pilot schemes designed to facilitate access to clean water

by underserved populations in selected villages; and

b) Monitoring and evaluation of results achieved under the pilot schemes referred to under

paragraph 1 above.

14 As agreed in the Financing Agreement, Credit No 3995 LSO.

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1.6 Revised Components

18. There was no formal revision of the project’s components. However, in May 2007 and

coinciding with the Mid-term review, the GoL and the Bank agreed to drop the civil works of

Component 2b (the Maqalika Water Treatment Plant, WTW) and Component 2c (the pipeline to

the Low and Medium North Reservoirs). This was because the Government had plans to

construct a treatment plan at a later stage (under the Metolong Dam and Water Supply

Programme) and outside of the project, and also due to cost escalations, making the credit

insufficient to cover the costs of all initially planned activities. These civil works were seen as

duplication of the work that was being developed under the Metolong Dam and Water Supply

Programme.

19. It was not felt that the cancellation of these activities warranted a revision of the components

or adjustments to the PDO or indicators. Despite these activities being dropped, the PDO was

achieved as evidenced by the achievement of the PDO indicators.

1.7 Other significant changes

20. The project’s closing date was extended three times from the planned completion date of

June 30, 2008. The first phase of the APL was originally designed to be implemented over 3

years, from March 2005 to June 2008. The first extension was provided until December 31, 2009

(18 months) to provide more time for the legal and regulatory sector reforms and the

implementation of WASA‟s civil works. A second extension, to June 30, 2010 (six months), was

granted to accommodate the completion of ongoing contracts under Component 2. A third

extension to June 30, 2011 (12 months) was approved mainly to allow the preparation of

additional financing from the Bank to cover cost over-runs (which was sought but later retracted

by the GoL, as the Government decided to fund activities from its own sources). The final

extension also served to allow the Government to comply with the environmental safeguard

requirements and to complete the Maqalika intake financed under the project (whose

commissioning was delayed until mid 2011 by the flood damages and by flaws in the pump

design and installation). In total, the extensions added three years of implementation time to the

project.

21. The Mid-Term Review report of May 2007 deemed that progress was satisfactory and that

restructuring was not necessary. The review raised issues of delays in the reform agenda and the

low rate of disbursement, and agreed to drop Components 2b and 2c.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

22. There was a clear rationale for the Bank‟s intervention under the WSIP and a strong

commitment from the GoL and stakeholders towards the PDO. The design of the project was

based on GoL‟s priorities and a sound sector analysis, technical reviews of alternatives, and

lessons learned. The Bank team provided the required skills during preparation. Financial and

economic analyses were conducted, and safeguards issues were addressed. An adequate

monitoring system and related tools were established.

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23. Preparation took an extended period. The first preparation mission took place in 1998, a time

of civil unrest after elections in February of that year. In 2000, preparation resumed and gradually

gained focus. The three years between concept review (2001) and Board approval (2004) were

utilized to reach agreement on priorities, and for the Water Resources Management Policy of

1999, on which the project builds, to be endorsed within Lesotho.

24. The long period of preparation affected implementation. Notably, the cost estimates done for

the main civil works were outdated by the time of appraisal. Coupled with exogenous factors

(currency depreciation against the United States Dollar and cost escalation as a result of the

extraordinary demand for construction resources in South Africa related to the 2010 World Cup

preparation), this contributed to delays in procurement and insufficient funds to cover original

activities under the project, which however, did not affect the achievement of the PDO.

25. The two-phased APL was the appropriate choice of instrument to address underlying

institutional weaknesses and strengthen policy and legal frameworks, on which the second phase

of the project builds (now under implementation). The APL encouraged long-term planning and

signalled continuous commitment by IDA, and also influenced the decision of other donors to

join the sector under Phase 2. The triggers were adequately designed and provided needed rigor

and incentives within the sector.

26. The project achieved its PDO but took twice as long to be implemented than initially

planned. The policy and institutional changes, in particular, provisioned under Component 1

required extended time for consensus building within the Government and among agencies. This,

shortcoming, however, is minor and does not make the design inconsistent with Government‟s

and Bank‟s continuing development priorities in Lesotho.

27. Lessons learned from earlier operations in Africa that influenced project design. Lessons

reflected in the project design included the need for strong sector leadership, performance

monitoring, stakeholder consultation and applying an integrated approach to water resources

management. Particular attention was given to performance monitoring following a clear and

measurable results framework embodied into the Performance Agreement which was

incorporated in the design and as a results indicator (for example, agreement on tariff revisions

provided the funds necessary to strengthen the utility‟s financial sustainability). Above all, the

project design reflected adequately the experience from other countries, that successful

institutional reforms herald successful sector performance.

28. Risks and their mitigation. A number of risks and their mitigation were identified at the

project preparation stage. These included the need for strong political support for and mandate of

the newly established CoW; inaction with respect to WASA‟s Performance Agreement and

setting tariff levels, and failure to agree on long term regulatory and management option for

sustainable operations and to safeguard investments. Most of these risks did not materialize or

were successfully mitigated. An additional risk, which was not mitigated sufficiently at appraisal,

was the lack of capacity and experience within implementation agencies in procurement and

financial management. This brought challenges during implementation but did not impact the

achievement of the PDO.

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2.2 Implementation

29. Project restructuring. The project was not formally restructured until the final third

extension of Closing Date which was considered a restructuring under new Bank procedures.

Earlier in the project, however, two of the initially planned activities under Component 2 were

dropped at the time of the mid-term review due to inadequate project funds combined with the

Government‟s ability to finance them from other sources and a re-assessment of medium and long

term investment needs. The PDO was not compromised as a result and results indicators were

reached.

30. Midterm review (MTR). The MTR took place in May 2007, a year later than originally

planned. The ICR finds that the project team made adequate recommendations for the remaining

time in implementation. As only 21 percent of the loan was disbursed at the time of the MTR, a

key recommendation focused on measures to speed-up the procurement of investment activities

under Components 2 and 3 of the project. Following the MTR, disbursements continued to pick

up gradually throughout the life of the project and implementation improved due to accumulated

experience of the project staff and enhanced supervision by the Bank team, especially in terms of

procurement.

31. The main factors contributing to overall successful results and achievement of the PDO

include:

Substantial relevancy of project design and implementation (discussed further below);

Demonstrated long-term commitment of the sector agencies for implementing the planned

institutional reforms and infrastructure expansion;

Ability to advocate and build consensus for the implementation of institutional, policy and

legal reforms envisaged;

A strong government and donor commitment to the water sector in Lesotho; and

The ability and determination of WASA to rapidly expand and improve urban water services.

32. The main factors that gave rise to challenges and delays include:

The depreciation of the US dollar during project implementation, partially after the mid-term

review, reducing the value of the credit;

The real costs for the project‟s civil works, which were higher than expected. The prices for

construction in Southern Africa escalated rapidly as the preparations for the 2010 Soccer

World Cup in South Africa were in full swing and had significant market impact;

The complexity of procurement processes and managing (sometimes underperforming)

contracts, both creating delays in implementation. Since 2007, much greater attention and

support was given from the Bank which led to better results.

Retaining qualified and experienced staff is a challenge in Lesotho and it negatively affected

the project. This was further convoluted by lengthy administrative procedures within the

ministries which contributed to reoccurring issues with recruiting and maintaining sufficient

staff.

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Reoccurring droughts and floods in 2003, 2007 and 2010/2011 had direct and at times

destructive impact on the infrastructure managed by WASA. The most recent impact on

water supply during the extreme weather events of December 2010 and January 2011 cost an

estimated 40 million Maloti to the country15

- much of which is needed to rehabilitate urban

water supply. The infrastructure supported by the project was badly affected: for example,

flood water in the discharge channel downstream of the Maqalika Dam began flooding into

the Maqalika pump station room, causing the pumps to stop and the raw water mains to the

water treatment started to fail. The flooding along the Mohokare River also tore out

foundation infrastructure of the project financed Maqalika pump station intake requiring

substantial reconstruction and strengthening.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

33. M&E Design. The project was monitored using two key M&E tools: i) the Results

Framework as set out in the PAD, and ii) the Performance Agreement between GoL and WASA.

Many of the indicators listed in the Results Framework were the same as those tracked in the

Performance Agreement. The Bank consistently monitored WASA‟s performance under the

Performance Agreement during implementation. The original Results Framework included key

indicators directly attributable to the project (such as number of standposts and consensus on

updated legal instruments), but it did not include indicators for all activities (such as estimated

number of people served by the pilot Community Water Supply scheme).

34. M&E Implementation and Utilisation. M&E was rated Satisfactory in the last ISR (June

2011). Throughout implementation, the utilisation of M&E tools revealed that the Performance

Agreement was a dynamic monitoring as well as a management tool for WASA. The Agreement

set tangible goals and targets for staff, monitored change in services over time and enabled the

utility to quickly react to any negative forewarnings. The indicators were used consistently across

the sector. The periodic quarterly reporting to IDA and the annual independent audit with public

disclosure created an effective evaluation instrument that allowed for a dialogue between

agencies and between the client and the Bank. WASA chose to continue to utilize the

Performance Agreements after its initial three year period and continues to use it today, which

manifests its value as a management and M&E tool.

2.4 Safeguard and Fiduciary Compliance was rated Satisfactory in the latest ISR (June 2011).

At appraisal, three safeguard operational policies were triggered:

35. Environmental Assessment, OP4.01. The project was classified as a Category B project. An

Environmental Assessment and EMPs were developed for the Maqalika Intake Pump Station, the

Mazenod expansion system and the Pilot Community Water Supply Systems, as well as for the

envisioned but later cancelled Water Treatment Plant and expansion of pump, pipeline and supply

to the Low and Medium North Reservoir. The safeguards documents were of satisfactory quality,

approved and publically disclosed.

15 Post Disaster Needs Assessment at a Glance - Extreme Weather Events in Lesotho December 2010 to February

2011, the World Bank (2011).

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36. Involuntary Resettlement, OP4.12. No resettlement was anticipated, but a Policy Framework

for Land Acquisition and Compensation (PFLAC) was prepared by WASA for the anticipated but

later cancelled Water Treatment Plant at Maqalika. No resettlement took place and no RAP was

required.

37. Projects on International Waterways OP7.50. The project increased abstraction from the

Mohokare River, which forms part of an international border between Lesotho and RSA, and is a

tributary in the Orange-Senque River system shared by the two countries as well as Botswana and

Namibia. All riparians ratified the SADC Protocol on Shared Watercourses, were notified of the

proposed project through the SADC Water Sector Coordinating Unit and gave their no objection.

38. Compliance. In October 2009, the Bank supervision team expressed a concern about the

project‟s compliance with environmental safeguards. Civil works had begun before WASA had

secured an environmental specialist to oversee, monitor, and mitigate impacts in line with EMPs

(retaining environmental specialists was a challenge, as many were being recruited by more

attractive options in Lesotho). The Bank supervision team, which did not consistently include a

safeguard specialist, had visited construction sites and had not identified any gross environmental

or social impact. Nevertheless, the letter of environmental safeguards required had not been

followed and some the civil works contracts had not mentioned the EMPs. In order to assess and

mitigate any environmental impacts, IDA and the Government agreed that WASA would

undertake four post-construction audits, which were completed in December 2010. The impacts

identified by the audits were not deemed high, and remedial actions included re-vegetating

cleared ground, reinstating damage to storm water drains, removing rubble, and stabilising soils.

By March 2011, an independent audit confirmed that the mitigation measures had been

successfully completed. The Bank Environmental Specialist reviewed the audits, visited the civil

works sites and agreed with the assessment. Further, the Bank team emphasised the importance of

WASA‟s continuous oversight and management of the contractors and importance of securing

required environmental licenses. As a result, WASA is currently developing a standard template

for EMPs.

39. Fiduciary compliance. FM was rated moderately satisfactory in the latest ISR (June 2011).

Although the FM arrangements and systems at entry were assessed to satisfy the Bank minimum

requirements, during implementation the project faced challenges. These included delays in

submission of the financial monitoring reports and, in several instances, financial reports

contained errors that ultimately necessitated detailed reconciliation processes that required an

inordinate amount of project and Bank time. The observed weaknesses, although consistently

noted by the TTL and FM specialist on the Bank team, especially during the later years remained

problematic until project end.

40. Procurement was rated moderately satisfactory in the latest ISR (June 2011). Project‟s

procurement processes improved over the course of the project. Early on, there was insufficient

understanding among the client agencies of the Bank procurement guidelines; the support

provided by the Bank team was also inadequate. These led to delays which persisted throughout

the life of the project. Difficulties stemmed also from sometimes underperforming consultants

and contractors, which required tight contract management and supervision. Despite increased

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capacity in the later years following more intense involvement of the Bank team, challenges

related to the difficult coordination between the engineering and procurement staff on the project

teams remained.

2.5 Post-completion Operation/Next Phase

41. Transition into WSIP2 and support for the Metolong Dam and Water Supply Program.

The first phase of the APL was designed to strengthen the policy and legal frameworks as well as

sector management and performance, and address some short- and medium-term water sector

challenges in the greater Maseru area. This set the foundation for the continued support

addressing the long-term solution for providing water supply in the Lowlands (i.e., the Metolong

Dam and Water Supply Program, MDWSP) under Phase 2, which is under implementation

Currently, the Bank continues to engage and support the water sector in Lesotho through close

collaboration with the GoL, CoW, WASA, LEWA, and the Metolong Authority.

42. The MDWSP is a multi-donor infrastructure improvement program to support continued

economic growth and provide water to the capital Maseru and surrounding urban areas. The

US$370 million program will supply 75,000 m3 of additional treated water per day, provide safe,

clean water to 80 percent of people living in Maseru and surrounding towns, and meet domestic

and industrial water requirements for the greater Maseru area until 205016

.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

43. The objective of the project, its design and implementation were relevant.

44. The project objectives are highly relevant. At the time of this ICR, they remain consistent

with the country‟s priorities and Bank‟s country and sector strategies for reliable provision of

water supply to the Lowlands of Lesotho, while addressing abstraction, storage and transmission

capacity of water as well as the institutional and financial sustainability and management

autonomy of the sector agencies and the utility WASA. This is demonstrated by the continuous

large-scale investments in the sector under the MDWSP, supported by 10 donors including the

Bank.

45. The project design and implementation are relevant to achieve the PDO. The project design

remained relevant throughout the implementation and also at the time of this ICR. The WSIP was

explicitly designed as a two-part APL to first address underlying institutional weaknesses and

16 WSIP2 was approved in May 2009 (US$25 million) and consists of three components: a comprehensive

Environmental and Social Program of the MDWSP (including interventions such as the Comprehensive Resettlement

and Compensation Action Plan, Environmental Flow Requirements, and a Cultural Heritage and Development

Management Plan); the construction the conveyance pipeline to the town of Teyateyaneng as part of the wider

conveyance system of the MDWSP; and institutional support to CoW, WASA and LEWA to continue strengthening

capacity, coordination and regulation of the sector. On November 10, 2011, Additional Financing (US$13 million) was

approved by the Bank to support cost escalations, design studies for the tertiary lines for the MDWSP conveyance

system and the development of an Hydraulic Model for the greater Maseru area.

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improve urban service delivery under Phase 1, and to then provide direct support for increased

water supply under Phase 2. Reforms under Phase 1 were intended to set the stage for Phase 2

and were successfully implemented and the PDO was achieved.

46. There were minor shortcomings (related to cost estimates, required time for implementation

of the institutional reforms, and fiduciary capacity at the implementation agencies) but these were

not inconsistent with the current development priorities of GoL and the Bank.

3.2 Achievement of Project Development Objectives (PDO)

47. The project is rated Satisfactory in terms of achieving the PDO. This is demonstrated by

successfully addressing sector institutional weaknesses intended for Phase 1 of the APL setting

the stage for Phase 2 APL, and evidenced by the achievement of the key performance indicators.

48. The PDO mentions both water supply and sanitation services. Looking at the project

components and activities (see Annex 2 for details), water supply clearly had the primary focus of

the project, while improved sanitation was to be achieved through an enhanced institutional

framework, improved access to water supply, and greater efficiency of the utility.

49. The main achievements of the project granting a satisfactory rating include:

The two phased APL of WSIP facilitated the implementation of the Water Policy of

1999, which envisaged a number of institutional reforms necessary for creating the enabling

environment to secure adequate and sustainable long-term water supply. The APL has

allowed a sequencing of investments and brought to the forefront efforts to strengthen the

sector institutional, legal and policy frameworks. At the onset of the APL, it was clear that

the Government of Lesotho could not address and secure the long-term water needs of the

urban and lowland areas unless the way the sector was governed and coordinated was

improved. Phase 1 of WSIP provided assistance in this regard and thereby helped set the

foundation for the pursuant interventions that have focused more on the physical

infrastructures needed to supply adequate and sustainable water supply services under the

MDWSP. In addition, within the framework of the APL, the Bank has been able to

strengthen confidence in the sector. Today, the MDWSP is a US$400 million program that

has the support of ten additional financiers that, to a great extent, have relied on the

groundwork provided by the Bank since the beginning of WSIP1.

Under Phase 1 of the APL, the office of the Commissioner of Water was

successfully established and today plays a critical role in coordinating and providing

strategic, planning and policy leadership in the sector.

Both the Law and Policy for water were updated and endorsed by Parliament

reflecting the political commitment necessary to support an effective sector.

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The water utility WASA was corporatized achieving greater autonomy, while

regulation is done by the Lesotho Electricity and Water Authority.

The Performance Agreement agreed between WASA and the Government proved to

be a very successful managerial tool in Lesotho, with the help of which most technical and

financial parameters of WASA improved leading to improved service delivery. In particular,

the operating profit and the high collection ratio, both maintained by the utility in all years

of the project, have clearly placed WASA on a sustainability path.

The infrastructure interventions have both increased the water abstraction capacity

for Maseru as well as critical sections of the reticulation system (including pipeline and

reservoir tanks for the Mazenod area) to previously unserved areas. The pipelines and

standposts constructed in remote peri-urban communities previously unserved, were a

success due to the efficiencies experienced in delivery and collection. The intial number of

envisaged standposts was increased to 77 and today this method of delivery is being applied

in other areas17

.

The targets of all but one indicator (intermediate indicator #5 measuring the percent

of failing biological samples) were achieved or surpassed as presented in Section F above.

Even though the actual value of intermediate indicator #5 was not achieved at the time of

project completion, in fact, over the course of the project, the target was met (at 3%). A

sudden spike in the value of the indicator took place in the final months of the project. By

the time of this ICR, WASA has not been able to determine the reason for this increase. In

the opinion of the Engineer on the Bank‟s team, the increase is likely due to failing

measuring equipment. Therefore, even thought the ICR indicates that the indicator was not

achieved, this conclusion should be taken with caution.

50. Result chain presentation of achievement of PDO. Since the various project components

and activities were the responsibility of different agencies, the discussion on the PDO

achievement and any shortcomings below is presented along two “results chains” – one that looks

at the institutional performance and the other at improved service delivery.

51. Activities under Component 1 focused on institutional strengthening and were

comprehensive in nature. Collectively, they helped promote positive changes needed to reform

and improve the sector. Today, the increased confidence in the sector has attracted substantial

funding from outside donors. What was not anticipated at the onset of the project was the time

required to ensure political support for the envisaged institutional reforms and the time required

17 Other donors (BADEA and the EU in particular) financed extensive increase in the reticulation system, including

household connections. The project contributed with the Mazenod pipeline and reservoir tank, the Maqalika raw water

intake pump, and community standposts. The equipment supported under the project includes bulk water metering

equipment, power equalizing equipment and management tools such as GIS. The community standposts in the 6 areas

involved extending the piped system from which today individual household connections can be installed.

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for building the capacity necessary to implement them. Despite taking longer than originally

designed, the project laid the foundation for continued support under WSIP2 and through the

expanded donor support for the sector.

52. The project supported the establishment of the office and sector leadership of CoW, as

outlined in the Policy of 1999. The project‟s long-term support helped anchor the office‟s role

and ability to coordinate sector agencies and success in enabling further politically endorsed

reforms, such as updating the Water Supply and Sanitation Services Policy in 2007 to incorporate

IWRM principles (informed by the IWRM Strategy) and the Water Act in 2008 (which helped

clarify roles and responsibilities). Today, CoW routinely brings together sector stakeholders for

dialogue and consultations with the aim of applying an integrated approach to water resources

management to accommodate the challenges of cross cutting issues, fragmented sector agencies

and multiple governance structures.

53. With regard to improving the performance of the main water utility, WASA, the Legal and

Regulatory Reform assignment helped articulate how greater autonomy could be obtained and

how WASA became fully corporatized as WASA in August 2010 through the Water and

Sewerage Company (Proprietary) Limited (Establishment and Vesting) Act. With greater

independence, the study on tariffs assisted in establishing the indexation of tariffs with inflation,

in turn helping the utility achieve cost recovery. In terms of human resources, the Staff Training

Policy assisted the utility in linking performance with a new salary scale. Perhaps most

importantly, the Performance Agreement between the GoL and WASA, has been especially

important in providing a focus for the organisation. With set targets and annual independent

public audits, the Agreement became a powerful management tool that not only helped track

progress but also improved the decision-making process so as to identify priority areas for

attention. Over the course of the project, many of the targets were met or progress towards highly

ambitious targets was achieved. The original Performance Agreement was planned for only three

years, but the GoL and WASA established a follow-up Performance Agreement of another three

years outside the project (the Project only funded the audits thereafter). With the amendment of

the Lesotho Electricity Authority Act to include regulation of water sector services in 2011,

monitoring utility performance becomes an even more structured routine. Between 2004 and

2011, WASA has increased its service coverage with piped connections from 34,275 to 54,742.

54. The second result chain evaluates whether the project‟s infrastructure interventions (in

conjunction with improved institutional capacity) helped improve service delivery18

. Firstly, the

construction of the Maqalika raw water intake pump station has increased the capacity to store

water. The pump can abstract water from the Mohokare River upstream of the existing primary

intakes and transfer water into the Maqalika Reservoir. This complex acts as a buffer to be used

to capture inflow from the tributaries as well as banked water releases from the LHWP during

periods of drought or when the main intake cannot meet demand pressures. The pump station was

commissioned in 2011 after a long series of issues with the quality of design, and the impact on

this complex of „buffer‟-infrastructures is yet to be assessed fully. Secondly, the expansion of the

18 See map for locations of infrastructure interventions.

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reticulation system to Mazenod and the airport area through installing pipelines and the

construction of a concrete reservoir tank in Mazenod to store and regulate water, has increased

the number of water user access to treated and piped water. In September 2011, WASA had

received 1,120 applications for individual household connections. Thirdly, the infrastructures

under the Maseru Community Water and Sanitation Programme were a pilot project to reach

water consumers in newly established peri-urban, often poor, areas. The activity involved

expanding the reticulation system and installing pre-paid water standposts in six previously

unserved areas (Ha Pena Pena, Ha Shelile, Ha Tsolo, Ha Lesia and Ha Tikoe/Likotse and

Khubelu). At project closing, 77 standposts had been installed, serving some 28,340 people. The

intervention has been highly successful; consumers pay the lowest band tariff and experience

shorter distances and time needed for collecting water. The method has been expanded to other

unserved areas, and WASA is also seeing an increased number of requests for individual

household connections in these peri-urban areas where households are willing to pay for the

installation of those connections. In addition to the three large interventions, WASA was

supported through equipment ranging from advanced IT equipment (GIS tools to map the

reticulation systems to enhance operation and maintenance, to financial management systems to

track consumer payments), to power correction and district metering equipment. The common

experience with these have been the need to have long-term capacity building within the agency

to manage these tools, as well as close monitoring of the quality of technical equipment and

consultancy support provided. Overall, the three areas of physical interventions have supported

the GoL in realising its vision. Alongside these activities, the utility has been addressing the

needs in other urban areas and constructed an additional water treatment facility in the area of Ha

Thetsane. With the construction of the MDWSP starting, the capacity of the sector in

coordinating and planning water production will be essential in further realising the GoL‟s vision.

3.3 Efficiency

55. The methodology for estimating the economic internal rate of return (IRR) and net present

value (NPV) are not the same in this ICR as that used for the economic analysis in the project‟s

PAD. At that time, a detailed financial analysis had been undertaken of the financial effects of the

project investments on WASA. The IRR was calculated based on the FIRR, with the effect of

taxes being removed.

56. For estimating the benefits for the wider economy and population, a different economic

analysis methodology was applied at the time of this ICR. Therefore, the change in

methodologies between the economic analysis in the PAD and this ICR means that the results

IRR and NPV are not directly comparable.

57. The assessment of the project‟s efficiency reveals that the project surpasses the benchmark

for economic efficiency. The analysis evaluates the economic impact of infrastructure

investments under Components 2 (construction of a new water intake infrastructure and

construction of new water supply facilities to deliver water to Mazenod and the airport areas) and

Component 3 (construction of community stand posts designed to facilitate access to clean water

by previously un-served population in peri-urban areas). The cost-benefit analysis estimates the

economic effectiveness of the project by calculating the present value of cost and benefit streams

and by determining the project‟s internal rate of return.

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58. Based on the assumptions (see Annex 5), the estimated economic internal rate of return of

the project is 20.42 percent. At 10 percent assumed opportunity cost of capital, the net present

value of the benefit streams is US$8.1 million. The benefit-to-cost ratio is 1.74.

59. The above analysis does not take into consideration benefits under Component 1 (policy

implementation and capacity building) because it was not possible to quantify their value.

3.4 Justification of Overall Outcome Rating

60. The overall outcome is rated satisfactory because: (i) the project‟s objective is highly

relevant, and the project‟s design and implementation are relevant, as described above; (ii) the

project fully achieved its objective as evidenced by the approved Phase 2 of the APL and

evidenced by the results indicators; and (iii) efficiency was achieved. Some indicative results are

the enhanced enabling environment (e.g. CoW has gained support and relevance in coordinating

sector agencies; the Lesotho‟s Water and Sanitation Services Policy of 2007 and Water Resources

Act of 2008 strengthened the management of the water sector); improved service delivery (e.g.

the number of households with less than 18 hours supply fell from 94,000 to 26,000; the increase

in number of people with improved access to water from 174,155 to 273,710); the utility was

placed on a sustainable path (e.g. tariff adjustments based on inflation and cost increases; better

customer management).

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

61. Access to water is defined as the availability to have a minimum of 20 litres of water per

person per day from an “improved”19

source that is within one kilometre of the user‟s residence.

This should correspond to no more than 30 minutes hauling round trip. In 2005, 50 percent of

Lesotho‟s urban population had access to improved water sources respectively20

. This was below

the Sub-Saharan averages at the time. In 2008, 85 percent of the Basotho people had access to

improved water source in 2008 (97 percent in the urban areas and 81 percent in rural areas)21

.

While this increase cannot be attributed to this project alone, the project has undoubtedly

contributed to this achievement.

62. Similarly, the improvement and expansion of public water supply have impacted urban life

and livelihoods. Development data indicate that, for example, key health indicators improved

19 The criterion describes an “improved” water sources as facilities protected from outside contamination, in particular

from contamination with faecal matter. These include household connections, public stand pipes, boreholes, protected

dug wells, protected springs, and rainwater collections. Unimproved water sources include unprotected wells,

unprotected springs, vendor-provided water, bottled water (unless water for other uses is available from an improved

source) and tanker truck-provided water. 20 UN MDG Indicators/JMP. 21 The Joint Monitoring Program (JMP) is a WHO-UNICEF Programme that has been officially entrusted with tracking

and reporting on global access to improved water and sanitation services (WSS) with respect to the target fixed by the

Millennium Development Goals.

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over the project period. The mortality rate of under-five year old children is closely correlated

with access to clean and sufficient water as well as the improved health of mothers. Since 2005,

the level of child mortality in Lesotho fell from 113.7 per every 1,000 births to 83.5 in 2008 – an

outcome to which the project has contributed.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

63. No comprehensive assessment of public perceptions of the project was undertaken. However,

a detailed survey of the Community Water Supply System Program under Component 3 was done

by WASA in September 2010. The survey showed that:

The prepaid standposts significantly improved access to water in terms of reducing the

distance travelled to collect water (the proportion of respondents travelling less than 150 m to

obtain potable water increased from 38 to 85 percent, and those travelling more than 150 m

decreased by 47 percentage points);

The increased access resulted in an increased daily frequency that households collect water

(the number of respondents collecting more than three times a day increased by 11 percentage

points); and

The cost of collecting water decreased in the pilot communities (before the standposts, 61

percent of surveyed respondents spent two Maloti per day or more on water and after

construction 76 percent spent one Loti or less per day to purchase water despite purchasing

more water).

4. Assessment of Risk to Development Outcome

64. Risk to development outcomes is rated low or negligible. The risks of undoing the achieved

results and outcomes is rated low or negligible for the following reasons:

The Water and Sanitation Policy of 2007 and the Water Resources Act of 2008 are fully

endorsed instruments for the sector;

The office of the Commissioner of Water is functional, plays a coordinating role and provides

policy and legal guidance for the sector;

The Performance Agreement is still used by WASA;

Support to institutional strengthening remains an important focus under WSIP2;

WASA continues to receive applications for individual household connections from the

expanded reticulation system;

The reticulation system that enabled the installation of standposts are also capable of

supplying to future household connections, and is thus a platform for serving greater numbers

of the urban populations;

The capacity of the Maqalika intake pump station will play an important function as part of

the buffer infrastructure to meet water needs in periods of low river flow;

Support to WASA has continued under WSIP2 and its financial performance is still

monitored; and

WASA is as of 2012 regulated by LEWA.

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65. Particular attention has been given to the financial sustainability of WASA. Management

instruments, such as the Financial Model, the Performance Agreement and the regulation by

LEWA provide mechanisms to monitor, prioritise and ensure financial sustainability of the utility.

Annex 4 provides a detailed analysis of WASA‟s major operation and financial patterns,

concluding that:

Water production increased by almost 30 percent until 2009/2010, but fell in 2011 due to the

decline in household and industry (textile) demand;

Consequently, annual water sales gradually increased until 2006/07 but remained constant

until 2009/10 before falling in 2010/11. This reflects the significant decrease in industrial

(textile) demand combined with gradual increases in most years in household demand, as

WASA expanded its reticulation network, particularly in and around Maseru. This affected

revenues.

Unaccounted-for-water (UFW) appears to have increased over the life of the project, from an

estimated 25 percent in 2003/04 to 35 percent in 2009/10. The baseline was a rough estimate

when the utility lacked the metering equipment, both at the site of production and within the

system, to measure UFW fully. The project supported installation of this equipment and

hence there is now greater awareness of the losses. Furthermore, the losses are directly linked

the time and human resources need to find the leakges and fix them. WASA is still trying to

determine the cause of the worsening UFW indicator towards the end of the project period.

WASA maintained an operating profit (i.e., excluding depreciation and financing costs) in all

years of the project, recording an operating ratio (operating revenue/operating costs) of at

least 104 percent in all years. Incorporating depreciation and financing costs, WASA was

able to generate a net profit in all years except 2007/08 and 2008/09. After that point,

inflation-based and a structural tariff increase compensated in part for falling industrial

demand and assisted WASA to cover costs.

WASA‟s collection ratio has remained at over 95 percent in most years. WASA management

has consistently recognised that, even if the formal profit-and-loss results are positive, the

utility had to be able to meet its expenses with cash revenues, and has been diligent in

collecting billings and pursuing past due.

The utility plans to continue to use the Financial Model after the project end as a successful

management and planning tool.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

66. (a) Quality at entry: The Bank performance during identification, preparation and

appraisal of the project is rated moderately satisfactory. The Bank identified, facilitated the

preparation of, and appraised the operation so as to achieve the PDO, in a manner consistent with

the Bank‟s fiduciary role. In particular:

The project was consistent with the Governments‟ development priorities (see section 1.1);

The design responded comprehensively to the immediate needs of the sector – from

institutional reform to enhancing supply capacity and efficiency;

Most risks were identified and mitigation measures proposed;

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WSIP1 was the first project supporting the domestic water supply sector in many years and

the seemingly long time required for preparation and implementation was closely linked to

ensuring that the necessary institutional changes were endorsed;

Lessons learned from previous engagement in Lesotho and from similar projects in the region

were considered in the design (see section 2.1); and

The Bank was successful in mobilising confidence among political decision makers and

donors so as to attract support for reforms and further improve sector capacity.

67. However, the rating is less than fully satisfactory because (i) cost estimates prepared at the

early stages of preparation were not updated at appraisal and as a result were underestimated; (ii)

the policy and institutional changes provisioned under Component 1 required extended time for

consensus building, which later necessitated extending the project‟s Closing date; and (iii) risks

related to the level of institutional and project implementation capacity in Lesotho were not

sufficiently mitigated at appraisal. Overall, however, these shortcomings are minor and do not

make the design inconsistent with continuous GoL‟s or Bank‟s priorities; as such, the project

design is relevant to achieve the PDO.

68. (b) Quality of Supervision: Bank performance during supervision is rated satisfactory

because the Bank team proactively identified and resolved challenges during implementation so

that the PDO could be successfully achieved. In addition, this was done in observance with the

Bank‟s fiduciary role.

69. In particular, the team demonstrated detailed and high quality monitoring of the technical

and engineering aspects of the civil works, including consistent, frequent and flexible technical

support to the client. Support in the areas of financial management and procurement intensified

after 2007 when it became obvious that project capacity in these areas lagged behind. In the area

of safeguard compliance, the Bank team responded adequately by identifying deficiencies and

proposing solutions acceptable to the Bank and client. During supervision, the Bank monitored

closely the agreed M&E framework.

70. Overall, 14 missions took place during the life of the project, representing an average of two

to three missions per year, which is higher than the Bank standard average of two missions per

year. Most of the Missions were also carried out together with the missions for WSIP2. This

ensured continuity, reduced the burden on the Government and implementing agencies, and

reinforced the benefits of the APL. There was a high level of continuity in the project team,

which included the necessary skills to cover the relevant supervision topics. There were two

TTLs between identification and project closure. The Performance Agreement was closely

monitored during supervision, with several of the project supported investments linked and

included in the Agreement. Progress on the Performance Agreement was consistently reported on

in the ISRs.

71. Supervision missions were carried out as planned and were mainly focused on (i) project

impact assessment and its evolution towards achieving the PDO, by monitoring (the levels of key

performance indicators; (ii) implementation of the project components; (iii) the execution of the

Performance Agreement; and (iv) fiduciary and safeguard compliance. In addition, Bank missions

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were systematically coordinated with other donors and focused on achieving the triggers for the

phase 2 APL, which were met permitting the second stage of the project to commence.

72. Justification of rating for overall Bank performance. The ICR rates the overall

performance of the Bank as moderately satisfactory. In line with the harmonized criteria for ICR

and IEG evaluations, the rating of overall Bank performance is based on the ratings for each of

the two dimensions: (i) Bank performance in ensuring quality at entry; and (ii) the quality of

supervision. As per the criteria, if Bank performance is rated moderately satisfactory on one

dimension and satisfactory on the other, the overall Bank performance is rated moderately

satisfactory, which is the case of this ICR.

5.2 Borrower Performance

73. (a) Government and Implementing Agency or Agencies Performance: Overall Borrower

performance is rated moderately satisfactory. In line with the harmonized criteria for ICR and

IEG evaluations, the rating of overall Borrower performance is based on the ratings for each of

the two dimensions: (i) Government performance; and (ii) implementation agencies‟ performance.

As per the criteria, if performance is rated moderately satisfactory on one dimension and

satisfactory on the other, the overall Borrower performance is rated moderately satisfactory,

which is the case of this ICR.

74. Both implementing agencies22

faced procurement, financial management capacity and

overall implementation constraints. Both agencies faced challenges which gave rise to moderately

satisfactory and even moderately unsatisfactory IP ratings at several occasions during

implementation. Challenges related to their ability to reconcile the interim unaudited financial

reports as well as overall financial management; procurement capacity and general unfamiliarity

with Bank guidelines and processes; lack of coordination between technical and procurement

staff as well as weak contract management capacity; an oversight to include the EMPs into

bidding documents, which later necessitated post-completion of works audits and mitigation

measures; and finally their ability to maintain sufficient staff throughout the life of the project.

Despite these challenges, the implementing agencies were committed to the project and the PDO,

and in the case of WASA fully embraced the Performance Agreement instrument, which became

the main factor for its success. As project implementation advanced and the implementation

agencies gained experience with Bank practices, the agencies delivered on their respective roles,

which allowed full disbursement of the loan and successful achievement of the PDO.

75. The Government‟s performance is rated satisfactory because the project was high in the

country‟s priorities for the water and sanitation sector and the Government remained strongly

committed to achieve the PDO. Overall, the Government equipped the implementing agencies

with the necessary tools in terms of political support and empowerment to implement the project

and complied with its commitments as per the Loan Agreement. Notably, all triggers for the stage

2 APL were successfully met and the Government proceeded with that much larger in scale sector

22 COW at the MNR for Component 1 and WASA for Component 2 and 3.

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investment. In addition, the Government agreed to and implemented politically difficult increases

in the water tariff, confirming its commitments to the sector. The Performance Agreement

between the Government and the utility was implemented successfully and remains in use even

after the project has come to an end.

6. Lessons Learned

76. The main lessons learned are:

The Performance Agreement, though not as successful in other countries, turned out to be

a success in Lesotho due to three main reasons. Primarily, the strong leadership of the

utility and larger Government endorsed the Performance Agreement and used it

consistently as a management tool to track progress of interventions and provide focused

goals. Secondly, in cases where ongoing tracking of targets indicated problems or

shortcomings, management used the Performance Agreement very successfully to design

needed remedial actions. Finally, the Agreement provided an effective tool in

communicating with external agencies, and was seen as introducing rigor to the sector,

which facilitated further donor support. Many of the investments financed by the project

were directly linked to targets in the Agreement, and the Bank team used it in its

supervision and ISR reporting. The main lesson learned is, that, despite accumulated

experience elsewhere, Performance Agreements may be a successful tool if strong

government commitment is in place.

Procurement and Management of Contracts. The geographic and economic context of

small countries like Lesotho, necessitate further attention to contract management issues.

Where markets are limited, attracting high quality and accurately priced bids is a

challenge. In Lesotho, such challenges included overpriced and sometimes

underperforming contracts. Targeted and intensified support and capacity building to

government agencies on issues related to cost estimates, procurement, and contract

management is therefore even more important where the consulting and contracting

industries may be distorted due to market size.

Retention of qualified staff. Small countries surrounded by competitive neighbours (like

Lesotho) are further constrained by serious staff retention challenges and limited ability

to compete with private sector agencies abroad. In this respect, highly tailored support

under Bank financing is necessary, including adapting project design, providing

continuous training and bringing specialised skills. Mitigation measures should be

proposed at project design stage.

Ensuring successful sector reforms involves three key phases: i) the adoption of adequate

sector policies; ii) the instrumentation in the form of legislation, regulation, hardware,

software, trained staff, and incentives and sanctions for the sector to perform well; and

iii) the consistent implementation of the sector policies with strong and continuous

political support. In Lesotho, the Government chose to reform the sector

comprehensively along the phases above. This approach attracted strong donor support

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and continuous involvement in the sector. The main lesson learned is that governments

and the Bank should strive to perceive sector reform agendas that are comprehensive in

terms of policy, legal and regulatory environment, and have ensured stakeholders‟

support, all of which is prerequisite for success.

7. Comments on Issues Raised by Borrower / Implementing Agencies / Partners

77. Annex 7 and 8 provide a summary overview of the comments received during the ICR

workshop organised together with the implementing agencies and the Bank in Maseru, Lesotho

on September 30, 2011. The client prepared and submitted a detailed completion report for the

project. The report clearly identified the challenges faced with respect to procurement, contract

management and cost escalations. The client‟s completion report also resonates with the Bank‟s

appreciation of the Performance Agreement between the GoL and the utility WASA as a

powerful management tool that helped focus and achieve improvements in service delivery.

Further, the value of the establishment of the office of CoW is also highlighted as a significant

achievement to strengthen the coordinated performance of the water sector.

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Annex 1. List of Agencies and Respective Responsibilities

The Ministry of Natural Resources (MoNR) - administers the Water Resources Act of

2008, is responsible for implementing the Water Resources Management Policy of 1999

and the Water and Sanitation Services Policy of 2007, and sets tariffs for water provision.

The Commissioner of Water (CoW) - responsible for policy and planning functions,

sector coordination and associated issues, with a dedicated Policy, Planning and Strategy

Unit (PPSU).

The Water and Sewerage Authority (WASA) - the utility responsible for urban water

supply and sanitation services, established in 1991 and reported to the Ministry of Natural

Resources (MoNR) until corporatized in 2010 to become The Water and Sewerage

Company (WASA).

The Lesotho Electricity Authority (LEA) – the regulator responsible for electricity

services that gained responsibility to regulate water services in 2010 by becoming The

Lesotho Electricity and Water Authority (LEWA).

The Department of Rural Water Supply (DRWS) - responsible for water supply and

sanitation services in areas that are classified as rural, which in some cases include peri-

urban areas.

The Department for Water Affairs (DWA) - the government department within MoNR

responsible for water rights and technical issues of water resource management.

The Lesotho Highlands Development Authority (LHDA) - agency managing the part of

the Lesotho Highlands Water Project23

within Lesotho, including construction, operations

and maintenance of all dams and other infrastructure as well as environmental and social

program activities.

23 The Lesotho Highlands Water Project is a large scale water transfer and hydropower project in the upper Senqu

(Orange) River basin implemented by governments of Lesotho and South Africa. From the two larger dams, Katse and

Mohale, water is transferred through tunnels to the Muela dam and then further to the Ash River to primarily provide

the transfer and sale of water to the Gauteng region of South Africa. Phase 1 of the LHWP was supported by the World

Bank among other financiers.

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Annex 2. Project Activities

Project Components & Activities

Component 1 (US$ 3.6 million) Policy implementation & Capacity Building in the Ministry of Natural Resources

TA:

Financial Management

Advisor

Procurement Specialist

Umbrella Consultant

DWA Water Resources

Support Consultancy

Policy specialist

Communication Strategy

Training:

Procurement, Financial

Management, M&E,

Project Management etc.

Studies:

Drought Management Study

IWRM Study

Water Resources Management Policy (update)

Tariff Study

Institutional & Regulatory Framework

Water Supply & Sanitation Services

Legal & Regulatory Framework for Water Sector

(update)

Metolong ESIA

Metolong ESIA (review)

Other:

Special Performance Audit

Mid-Term Review Consultant

Furniture, IT equipment,

software

Water Quality Equipment

River Flow Measurement

Equipment

Component 2 (US$ 10.0 million) Augmentation & Extension of Maseru Water Supply

Project implementation

support

Procurement Advisor

Environmental

Assistance

Consultancy

Post-Construction

Environmental &

Social Audits

WASA financial

management and IT

Performance Agreement

(& audits)

Financial System

Design Support

Financial System

Review

Implementation of

Billing & Collection

Support

Opera II & III (&

upgrade)

District Metering, Phase

II & III

Planned Preventative

Maintenance Software

Design of GIS

GIS Licensing &

Equipment

WASA human resources

development and

management

Human Resources

Support Consultancy

Job Evaluations

Energy Management Plan

Management

Development Contract

WASA operations and

infrastructure

Design & Supervision of

Maqalika Raw Water Pump

Maqalika Raw Water

Pumping System

Mazenod Pipeline &

Reservoir

Design of Planned

Preventative Maintenance

Design of District Metering,

Phase I

Design of Mazenod

Reservoir, Supervision

Design & Supervision of

Planned Preventative

Maintenance

Water Modeling

Data Loggers

Leak Detection Equipment

Bulk Meters

Power Factor Correction

Equipment & Demand

Limiting Equipment

Billing and Collections

System

Vehicles

Component 3 (US$ 2.0 million) Maseru Community Water & Sanitation Program

WASA human resources development and

management

Community Liaison, Lot I

WASA operations and infrastructure

Design & Supervision of Community Water Supply

Community Water Supply, Lot I & Lot II

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Annex 3. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate

(USD millions)

Actual/Latest

Estimate

(USD millions)

Percentage of

Appraisal

Policy implementation and capacity building in the ministry of Natural Resources.

3.5 2.7 77%

Augmentation and extension of Maseru Water Supply. 9.1 12.3 135%

Maseru Community Water and Sanitation Program. 1.8 2.7 150%

Total Baseline Cost 14.4 17.7 123%

Physical Contingencies 0.8

Price Contingencies 0.4

Total Project Costs 15.6 17.7 113%

Total Financing Required 15.6 17.7 113%

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal

Estimate

(USD millions)

Actual/Latest

Estimate

(USD millions)

Percentage of

Appraisal

Borrower Co-financing 1.5 3.0 200%

International Development Association

(IDA) Credit 14.1 14.7 104%

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Annex 4. Financial Overview and Analysis

1. The continued financial sustainability of the Lesotho water utility, while not an explicit

objective of the project, was considered at length during the preparation and implementation of

the project, with key performance indicators included in the monitoring and evaluation

framework to track the financial performance of WASA, a legal covenant to ensure that WASA

did not become over-indebted, and a Performance Agreement between the utility and the

government that specified financial commitments on each side, including timely payment of

government consumption and the pass-through of inflation into tariffs annually.

2. As part of the attention to financial sustainability, a detailed financial model was

developed for WASA during project preparation that incorporated all key operational parameters.

WASA maintained the financial model throughout the life of the project, updating it according to

actual performance, and using its projections as part of the annual budget- and tariff-setting

process. The model, because it provided an easy-to-access and comprehensive overview of

WASA‟s operations and finances, became an important part of WASA‟s discussions with the

World Bank supervision team and, equally importantly, with other outside investors and donors,

enabling a significant level of trust in the utility, which in turn facilitated concessional financing

for additional investments in infrastructure repairs and network expansion.

3. The 2004 Project Appraisal Document provided an overview of the projections from the

financial model. The assumptions behind the model were conservative, envisioning relatively low

increases in water sales, a slight decrease in unaccounted-for-water, a collection ratio of at least

90 percent, and tariff increases consistent with domestic inflation. The model also envisaged

more substantial increases in production efficiency due to less expensive water abstraction and

treatment.

4. WASA‟s bottom-line financial results since project appraisal are, perhaps surprisingly,

reasonably close to the original projections of the model, in particular with respect to operational

revenues. However, several key assumptions did not hold true. In particular, while WASA was

able to increase water production capacity, which was badly needed, production costs remained

high. Unaccounted-for-water did not decrease over the life of the project, and instead increased

slightly. It is thought that this is mostly due to better measurements on the consumption side, but

was compounded by delays in the installation of such equipment. Now that district meters have

been installed in all major distribution areas and an action plan prepared to identify and repair

leaks, it is expected that UFW will decrease to below 30 percent. On the other hand, WASA‟s

financial results were assisted not only by annual inflation-indexed tariff increases, but by two

structural tariff increases that allowed WASA to continue to cover its operating expenses and debt

costs – 12 percent in 2008, and 4 percent in 2010.

5. The following highlights WASA‟s major operational and financial patterns over the

course of the project.

Records indicate a significant increase in water production – from 13.6 million m3 annually

in 2003/04, to 17.6 million m3 in 2009/10, or a nearly 30 percent increase. Production

decreased in 2010/11 to 15.4 million m3, reflecting a fall in demand from both industry and

households.

Annual water sales showed a gradual increase between 2003/04 and 2006/07, from 10.2

million m3 to 11.7 million m3. However, demand remained constant between 2007/08 and

2009/10, and then fell to 10.8 million m3 for 2010/11. This reflects a significant decrease in

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industrial (textile) demand after 2007/08 combined with gradual increases in most years in

household demand, as WASA expanded its network, particularly in and around Maseru. Note

that industrial consumption fell by 27 percent between 2008 and 2011, seriously affecting

WASA‟s income, as revenues are highly dependent on industrial consumption and tariffs.

Given the above increases in production and mostly flat demand, unaccounted-for-water

appears to have increased over the life of the project, from an estimated 25 percent in 2003/04

to 35 percent in 2009/10. Estimated UFW decreased to 30 percent for 2010/11. Given that

most other indicators of WASA‟s performance have been positive (reports of leakage and

customer satisfaction, in particular), WASA is still trying to determine the cause of the

worsening UFW indicator. Production meters, in particular, may be becoming less reliable,

showing higher production than actual.

WASA maintained an operating profit (i.e., excluding depreciation and financing costs) in all

years of the project, recording an operating ratio (operating revenue/operating costs) of at

least 104 percent in all years. Incorporating depreciation and financing costs, WASA was

able to generate a net profit in all years except 2007/08 and 2008/09. After that point,

inflation-based and structural tariff increases compensated in part for falling industrial

demand and assisted WASA to cover all costs.

WASA‟s collection ratio has remained between 90 and 100 percent throughout the project

period, with a collection ratio of over 95 percent in most years. WASA management has

consistently recognised that, even if the formal profit-and-loss results are positive, the utility

had to be able to meet its expenses with cash revenues, and has been diligent in collecting

billings and pursuing past dues.

6. In 2008/09, the government set new tariffs for WASA based on the recommendations of

a project-financed study, maintaining the progressive tariff structure as before, but allowing a

structural increase of 12 percent. The resulting household and industrial tariffs were set as

follows:

2008/09

Household Tariffs (monthly consumption):

Band A < 5 m3 M 2.4/m

3 (approximately US$ 0.32 at M 7.5/$1)

Band B 5 < x < 10 m3 M 3.5/m

3 (US$ 0.47)

Band C 10 < x < 15 m3 M 6.15/m

3 (US$ 0.82)

Band D > 15 m3 M 8.48/m

3 (US$ 1.13)

Industrial Tariffs: M 5.93 M/m3 (US$ 0.89)

Standposts: M 2.97/m3 (US$ 0.40)

In addition, monthly standing charges were set at M 13.40 (US$ 1.79) for households

consuming within Band A, M 22.41 (US$ 3.29) for households within all other bands,

and M 149.26 (US$ 19.90) for industrial and commercial consumers.

7. Tariffs for the 2011/12 fiscal year, following the above-mentioned inflation and structural

adjustments, are as follows:

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2011/12

Household Tariffs (monthly consumption):

Band A < 5 m3 M 3.05/m

3 (approximately US$ 0.41 at M 7.5/$1)

Band B 5 < x < 10 m3 M 5.16/m

3 (US$ 0.69)

Band C 10 < x < 15 m3 M 9.07/m

3 (US$ 1.21)

Band D > 15 m3 M 12.16/m

3 (US$ 1.67)

Industrial Tariffs: M 8.25 M/m3 (US$ 1.10)

Standposts: M 4.14/m3 (US$ 0.55)

Monthly standing charges are as follows: M 18.64 (US$ 2.49) for households consuming

within Band A, M 31.19 (US$ 4.16) for households within all other bands, and M 207.70

(US$ 27.69) for industrial and commercial consumers.

8. The tariff structure in Lesotho reflects an understanding that, in an environment of poor

infrastructure and expensive treatment options, full cost recovery and, where possible, the

generation of funds for debt service for network improvements and expansion, is of primary

importance. This is reflected in the tariff levels, which, although higher than water tariffs

elsewhere in the region, allow WASA to maintain adequate service to customers and undertake

expansion, and the highly progressive structure of the tariff, which combines a lifeline tariff for

low-consuming, poorer households (in particular, for households that access water from public

standposts) with very small consumption bands for households, encouraging judicious use of

water in a water stressed environment.

9. Despite the progressive structure and regular tariff reviews, average income from water

sales only just covers full operating costs, and in some years not even that. (In those years, other

income has allowed the operating ratio to remain above 100 percent.) The large majority of

consumers are in the lowest consumption bands, where water use is highly subsidised. In fact,

only tariffs at the highest household consumption band meet the average cost of water production.

Industrial tariffs are actually slightly subsidised, compared to the average cost of water

production, although given their very high consumption rates and the relatively low delivery costs

to industrial areas (in contrast to the relatively sprawling overall network of Maseru), industrial

tariffs most likely do meet their marginal costs. Given falling industrial usage over the last several

years and the increasing costs of operating and maintaining an expanding network, consideration

will need to be given to (i) improving efficiency through both controls on general operating and

administrative costs and reduction in unaccounted-for-water and (ii) revisiting the tariff structure

given evolving network needs. These should be considered in the context of the expected

implementation of regulatory oversight by the Lesotho Electricity and Water Authority (LEWA)

in 2012.

10. The following table summarises key operational and financial data for WASA over the

course of the project.

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WASA Operational and Financial Overview 2003/04 – 2010/11

(Maloti, unless otherwise noted)

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

Water Production (m3) 13,636,163 14,998,798 15,254,216 16,199,114 15,526,700 16,580,808 17,592,939 15,421,281

Water Sales (m3) 10,205,870 11,213,684 10,974,530 11,733,660 11,414,426 11,394,265 11,386,336 10,788,833

of which, Domestic 3,520,598 3,460,518 3,514,376 3,381,673 3,862,369 4,259,317 4,099,445

of which, Industry 4,398,484 4,082,253 4,610,327 4,611,128 4,205,502 3,634,183 3,355,692

UFW 25% 25% 28% 28% 26% 31% 35% 30%

Domestic sales, % of total 31% 32% 30% 30% 34% 37% 38%

Industry sales, % of total 39% 37% 39% 40% 37% 32% 31%

Customers 38,597 41,177 43,887 41,36124 44,005 48,301 52,732

of which, Domestic 34,831 37,194 39,725 38,444 41,370 45,697 50,101

of which, Industry 195 197 204 168 158 143 142

Operating Income 50,852,196 61,672,396 65,705,857 73,830,534 77,666,24 100,999,943 105,270,361 115,038,439

percentage increase 21.28% 6.54% 12.37% 5.20% 30.04% 4.23% 9.28%

Operating Expenditures 39,004,073 47,446,777 55,472,181 61,037,344 75,005,608 96,874,979 94,998,046 101,515,606

percentage increase 21.65% 16.91% 10.03% 22.88% 29.16% -1.94% 6.86%

Operating Profit/Loss 11,848,123 14,225,619 10,233,676 12,793,190 2,660,637 4,124,964 10,272,315 13,522,833

Operating Ratio 130% 130% 118% 121% 104% 104% 111% 113%

Depreciation 8,529,802 10,083,811 9,225,240 10,678,141 9,771,452 10,331,191 11,955,045 11,863,291

Operating Profit after Depreciation25 3,318,321 4,141,808 1,008,436 2,115,049 (7,110,815) (6,206,227) (1,682,730) 1,659,542

Interest Income 5,370,287 5,516,498 4,114,422 9,009,916 9,945,903 15,485,338 14,380,332 7,169,976

Provisions for Doubtful Debt 1,715,097 2,709,085 10,570 4,064,406 3,706,052 9,559,552 2,827,439 4,153,709

Interest Expense 4,166,931 1,561,146 2,115,768 2,537,492 2,879,556 3,541,479 2,947,435 3,514,981

Net Profit/Loss 2,806,580 5,388,075 2,996,520 4,523,067 (3,750,520) (3,821,920) 6,922,728 1,160,828

24 Decline in household customers due to a comprehensive database review of past-due and closed accounts, resulting in removal of closed accounts from the customer database 25 Revenues over expenses (including depreciation).

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Annex 5. Economic Analysis

This economic analysis evaluates the economic impact of improvements under the Lesotho Water

Sector Improvement Project. Specifically, the analysis evaluates the economic impact of

infrastructure investments under Components 2 (construction of a new water intake infrastructure

and construction of new water supply facilities to deliver water to Mazenod and the international

airport) and 3 (construction of community standposts designed to facilitate access to clean water

by underserved population in several villages).

The cost-benefit analysis estimates the economic effectiveness of the project by calculating the

present value of cost and benefit streams and by determining the internal rate of return of the

project.

Cost-Benefit Analysis Methodology

The methodology applied is not the same as that used for the economic analysis used in the

Project‟s PAD. At that time, a detailed financial analysis had been undertaken of the financial

effects of the project investments on WASA, for the economic analysis. The IRR was calculated

based on the FIRR, with the effect of taxes being removed. On reviewing the methodology in

preparation for the ex-post economic analysis, it was determined that this would not be the

appropriate methodology as it does not take into account at all the economic benefits that accrue

to the larger population. Hence, the earlier methodology assumed that all benefits are

incorporated within the tariff charged by the utility, which is not the case.

Because of the change in methodologies between the economic analysis in the PAD and this ICR,

the results IRR and NPV are not directly comparable.

The analysis relies on the methodology and data developed by the World Health Organization26

,

which includes the following benefits for water and sanitation interventions: 1) avoided direct

health expenditures due to decrease in illness; 2) income gained as a result of decrease in illness

related absenteeism in working age population; 3) income gained as a result of decrease in child

illness-related absenteeism among caretakers of targeted children population; 4) opportunity cost

of school absenteeism among the targeted school age population; 5) estimated value of loss-of-

life avoided as a result of improvements; and 6) estimated value of time savings resulting from

improved convenience of access to water.

The analysis assumes that the time period in which the benefits of the project will occur is 20

years. Although the 20-year time horizon is a reasonable approach for stand post investments

(component 3), it can be argued that the investments implemented under component 2 have much

longer potential benefit time horizon and therefore their estimated benefit streams included in the

analysis could be extended beyond 20 years. This assumption has a significant effect on the

results. Since the project implementation costs are given, the longer the assumed time horizon of

the project is, the larger the magnitude of incremental benefits will be, and, all other things being

equal, the higher the internal rate of return that will result. However, to remain conservative in

26 Hutton, G. and L. Haller, “Evaluation of the Costs and Benefits of Water and Sanitation Improvements at the Global

Level”, WHO, 2004.

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41

our estimates, all benefit streams of infrastructure investments are limited to 20 years for the

purposes of this analysis.

The primary analytical challenge of this type of cost-benefit evaluation is to estimate the expected

benefits that will likely occur in the future as a result of project implementation. The expected

benefits of the project are assumed to be the amount of economic costs that will likely be avoided

as a result of the project implementation. Calculation of these benefits involves the examination

of statistical and economic data of past costs from water, sanitation and hygiene (WSH) related

illnesses, the estimation of the likely frequency and severity of potential future occurrence of

WSH illness incidence in targeted population, the estimation of future economic costs of these

incidences, and the estimation of the share of these costs that are likely to be avoided as a direct

consequence of the project implementation and water supply improvements.

It is important to emphasize that besides direct preventable economic losses considered in this

analysis, there are many other potential benefits that are not factored into the cost benefit

calculation described here. For instance, improved water supply can have a significant economic

benefit for various industries and encourage additional investments and economic growth. The

real benefits accruing to the population may also not be solely financial or economic in nature.

For instance, improved water supply provides comfort and improves general welfare of the

population. Unfortunately, these benefits cannot be included in the cost-benefit analyses. This is

either because estimating such benefits is impossible because of the unavailability of the data or

because it is impossible to quantify the value of these benefits. Therefore, the estimated benefits

of the project described in this analysis can be considered conservative, and we can reasonably

assume that the value of actual benefits will be larger.

Estimated Project Costs

The project costs include infrastructure investment costs and annual operating costs. Total

investment costs for the three project components equal $8.8 million. Annual operating costs (at

2.5% of investment costs per year) are about $2.1 million (discounted present value) over the next

20 years.

Estimated Project Benefits

The following sections describe the nature and amount of each estimated benefit of the project.

Direct Health Expenditure Avoided. The calculation of this benefit is based on the WHO‟s

estimated burden of environmental diseases and, more specifically, the estimated share of

diseases that can be attributed to water, sanitation and hygiene (WSH) risks. The burden of

diseases attributable to lack of adequate WSH services (at 13% of the total diseases) combined

Project Costs

Maqalika Raw Water Pump Station 5,321,246 $ Mazenod Water Supply 2,241,387 $ Community Standpipes 1,230,982 $ Present Value of Annual O&M Costs 2,097,581 $

TOTAL 10,891,195 $

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with the WHO‟s estimated monthly health expenditures per household and estimated WSH-

related disease reduction rates as a result of investments (25% reduction for water supply-related

investments and 31% reduction for water quality improvement-related investments)27

, results in

the total benefit of about $397 thousand in this category in discounted present value terms.

Income Gained due to Avoided Days Lost from Work. This benefit is calculated based on the

estimated total incidence of sickness per person times the working age population targeted by the

project. The total estimated incidence of sickness is then adjusted to WSH related incidents only

based on the burden of disease mentioned above, and the project intervention is projected to

prevent about 31% of the WSH-related incidence of sickness. Two days per incident according

to WHO study, combined with the opportunity cost of time (minimum wage) estimate for

working adults, results in about $98 thousand benefit in this category in present value terms.

Days of School Absenteeism Avoided. This benefit uses the same assumptions as the previous

benefit for estimating the total avoided incidence of WSH-related sickness in targeted school age

population . After applying the number of absent days per episode of sickness – three days per

incident for school-aged population based on WHO data - together with the estimated opportunity

cost of time of school-age target population (valued at minimum wage rate according to the Who

study), the result is $148 thousand benefit in discounted present value terms.

Income Gained due to Avoided Days Lost from Work as a Result of Child Illness. The

calculation methodology for this benefit is similar to the above two categories, in that it is based

on the total incidence of sickness in targeted population (children 0-59 months old), which is then

adjusted to WSH-related incidence only. According to the WHO study, the duration of illness in

this target population is five days, which, combined with the opportunity cost of time for the

caretakers, is used to calculate the benefit. Taking into consideration the likelihood that not all

caretakers in the targeted population may be productively employed, opportunity costs were

estimated at 50% of the adult population‟s opportunity cost of time (minimum wages), per the

WHO methodology. The final result is about $123 thousand total benefit in discounted present

value terms.

Value of Loss-of-Life Avoided. The measurement of burden of WSH-related diseases relies on

the concept of the disability-adjusted life year (DALY). The DALY is a measure of overall

disease burden, expressed as the number of years lost due to ill-health, disability, or early death.

WHO estimates that 4 DALYs are lost per 1,000 population per year because of the lack of water

and sanitation services in Lesotho. When this rate is applied to the targeted population of the

project the result is the estimated productive years lost in the targeted population because of the

lack of adequate WSH services. Applying the estimated rates of avoided DALYs lost as a result

of project intervention results, times the minimum income per year in Lesotho, results in about

$849 thousand as the value of total avoided DALYs in target population in present value terms.

Convenience Time Savings. The final benefit quantified for the cost-benefit analysis is the

convenience time saving as a result of improved water access. Time savings occur as a result of,

27 Annette Prüss-Üstün, Robert Bos, Fiona Gore, Jamie Bartram, “Safer Water, Better Health: Costs, Benefits and

Sustainability of Interventions to Protect and Promote Health”, WHO 2004, p.17

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for example, closer access to standpipes and shorter waiting times at public water supply sources.

These time savings potentially translate to more productive activities or more leisure time. The

value of convenience time savings is estimated by assuming a daily time saving per individual for

improved access to water facilities, and then multiplying these by the estimated opportunity cost

of time (the minimum wage). The 2004 WHO study estimates that time saved per day due to less

distant water supply facilities and less waiting time is about 30 minutes per person for improved

external access (standpipes) and 90 minutes for piped connections. Applying this time saving

estimates to the targeted working age population numbers estimates the total number of

productive days losses avoided per year because of water access improvements. The latter

estimate is in turn multiplied by the opportunity cost of time (minimum wage) to derive the total

benefit of about $17.4 million in this category in discounted present value terms.

The following table summarizes annual values of the above project benefits as well present values

of these benefit streams over the durations of different intervention options:

Cost-Benefit Analysis Results

Based on the assumptions, project costs and benefits discussed above, the estimated economic

internal rates of return of the project is 20.42%. At 10% assumed opportunity cost of capital, the

net present value of the benefit streams is $8.1 million. The benefit-to-cost ratio is 1.74.

The result indicates that the project surpasses the benchmark for economic efficiency.

Net Present Value of Project Benefits $8,098,559

Project Internal Rate of Return 20.42%

Project Benefit-to-Cost Ratio 1.74

Project Benefits,

Present Value

Avoided Health Expenditure 397,329 $

Avoided Income Loss (Working Adult) 98,622 $

Avoided School Absenteeism 147,933 $

Avoided Income Loss (Caretakers for Sick Child) 123,278 $

Avoided Loss of Life 848,883 $

Convenience Time Saving 17,373,708 $

TOTAL 18,989,754 $

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Annex 6. Bank Lending and Implementation Support / Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/

Specialty

Lending

N. Jane Walker Lead Water & Sanitation Specialist AFTU1 Task Team Leader

Andrew Macoun Lead Water & Sanitation Specialist AFTU1 Engineering

Devendra Bajgain Operations Analyst AFTU1 Operations Quality

Sarah Keener Senior Social Development Specialist AFTS2 Social Assessment

Alexander McPhail Lead Water & Sanitation Specialist AFTU2 Economist

Edeltraut Gilgan-Hunt Environmental Specialist AFTS2 Environmental Safeguards

Subhash Dhingra Consultant n/a Procurement

Iraj Talai Lead Financial Management Specialist AFTFM Financial Management

Modupe Adebowale Senior Finance Officer LOAG2 Financial/Disbursements

T. M‟poy Kamulayi Lead Counsel LEGAF Legal

Belinda Lorraine Asaam Program Assistant AFTU1 Program Support

Supervision/ICR

Elisabeth Sherwood Senior Financial Specialist AFTUW Task Team Leader

Kremena Ionkova Senior Urban Development Specialist AFTUW Task Team Leader

Marcus J. Wishart Sr Water Resources Spec. AFTWR Engineering

Louise Croneborg Water Resources Management Specialist AFTWR ICR Main Author

Henri A. Aka Procurement Officer SASHN Procurement

Belinda Lorraine Asaam Program Assistant AFTUW Program Support

Devendra Bajgain Operations Officer AFTUW Operations Quality

Joseph Byamugisha Financial Officer AFTFM Financial Management

Theresa Marissa J. Gamulo Procurement Analyst AFTUW Procurement

Lungiswa Thandiwe Gxaba Sr Environmental Spec. AFTEN Environmental Safeguards

Wedex Ilunga Senior Procurement Specialist AFTPC Procurement

Abdelmonem Osman Kardash Environmental Spec. AFTEN Technical Specialist

Andrew Macoun Consultant AFTWR Engineering

Midori Makino Lead Evaluation Officer IEGPS Financial Analysis

Edmund Motlatsi Motseki Operations Officer AFMLS Operational Support

Jonathan Nyamukapa Sr Financial Management Specialist AFTFM Financial Management

Likeleli Theresia Rasethuntsa Team Assistant AFMLS Program Support

Kristine Schwebach Operations Analyst AFTCS Social Assessment

Chitambala John Sikazwe Procurement Specialist AFTPC Procurement

Joao Tinga Financial Management Analyst AFTFM Financial Management

David Weston Consultant AFTWR Utility Specialist

Amer Dastgir Junior Professional Associate AFTWU Operations

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(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel

and consultant costs)

Lending

FY98 48.38

FY99 22.88

FY00 11.87 52.70

FY01 23.97 204.99

FY02 21.47 209.60

FY03 16.83 120.32

FY04 31.67 172.88

FY05 19.97 82.16

FY06 0.00

FY07 0.00

FY08 0.00

Total: 913.91

Supervision/ICR

FY98 0.00

FY99 0.00

FY00 0.00

FY01 0.00

FY02 0.00

FY03 0.00

FY04 0.00

FY05 5.79 57.34

FY06 23.83 148.44

FY07 42.00 247.93

FY08 32.86 145.26

FY09 20.63 142.62

FY10 23.06 152.93

FY11 29.62 105.05

Total: 999.57

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Annex 7. Documents on File

The following key documents are on file and provide more details and background information

about the Project and its progress, achievements and shortcomings:

WASA Annual Report (2011)

Performance Agreement (2005)

Performance Agreement (2009)

Independent Audit of Performance Agreement, Phase 1 (2009)

WSIP1: WASA Survey to determine the impact of prepaid standpipes installation (2010)

WSIP1: Borrower ICR (2011)

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Annex 8. Stakeholder Workshop Report and Results

An ICR workshop was organised at the Commissioner of Water‟s office in Maseru Lesotho on

September 30, 2011 with all relevant agencies present. The ICR main author led the discussion

together with contributions of the Bank team (including the Task Team Leader for WSIP1, the

Task Team Leader for WSIP2, the Senior Engineer and the Jr Professional Associate on the Bank

team). The table below outlines the main workshop discussions.

Issue

Institutional reform including the establishment of CoW essential to promote change.

The institutional reforms met significant resistance and the Bank Support was essential

It was essential that the WB maintain communication with the political level in Lesotho.

CoW has experienced a specific problem with trained staff being attracted to better paid jobs

For WASA where problems of procurement have occurred, a key lesson is to take up references before appointing. In

addition, WASA should be prepared to revoke the Contract at an early stage if the contract is not being properly

executed.

The problems with the Mazenod contract were due mainly to poor contractors and Consultants. The contracts for the

Community projects were successful.

On the prepaid standposts, it was considered that the quality of the equipment had a considerable bearing on the success

of the project.

On IT contracts, support was not good and on future contracts special attention should be paid to the tender documents

to ensure that good quality support would be available. This was particularly important to WASA as their IT was quite

weak initially.

It was imperative to train on IT at the outset to a much greater degree than hitherto.

The Performance Agreement provided a focus on key activities, gave credibility to WASA as it performed well and

was independently audited.

The estimates for the equipment and services to be funded under the Performance Agreement should have been revised

immediately prior to implementation as they were some 2-3 years out of date at the outset of the project.

The Performance Agreement led to WASA becoming capable to continuing the development of key IT such as GIS.

At one stage procurement was delayed by some 6 months during a WB IT upgrade.

Lessons learned. Time: The original credit time was too optimistic. The principal reason was the time necessary to

build the capacity necessary to execute the work; there was simply not enough staff who were able to carry out the

work. In addition, the quality of the consultants, suppliers and contractors was very variable which exacerbated the

situation. Future projects should assess staff capacity at the outset to avoid setting too ambitious targets.

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Annex 9. Summary of Borrower's ICR

In summary, the GoL’s ICR highlights the following lessons learnt:

It is beneficial for the procurement process to start during the preparatory phase (e.g.

advertising the expressions of interest) so that when the project becomes effective everything

is already moving.

It is essential to provide procurement training for all the staff which will be involved in the

project so that they can have ownership of all the processes followed in procurement.

There has to be an arrangement made to enable the engaged procurement specialists to impart

the required skills to an organisation‟s employees like WASA finally did.

Proper market cost analysis during project appraisal could help in preparing realistic estimates.

For Component I majority of the consultants were selected using Quality cost Based method,

which allows competition even though it takes longer. For Component II mostly Consultant‟s

Qualification Selection method was used. That might have been the reason for the high prices

since competition was reduced.

During evaluation of bids/proposals evaluators should be conversant with the assignment to

avoid future problems, disputes with the contractors/consultants and increasing unforeseen

costs.

It is advisable to have qualified procurement and financial management experts in place for the

whole duration of the project especially if the staff is not qualified in this area.

Contract administration and project management are very crucial. Therefore the staff which

will be responsible for managing contracts should be well trained before they can undertake

such assignments.

Relevant stakeholders should be involved from the design stage up to the end of the contract

for common understanding.

The EIAs should be undertaken prior to the construction.

EMPs should be incorporated into the contractor‟s and supervision contracts to ensure

enforcement of their implementation.

The World Bank’s performance was assessed as follows:

“As indicated in the mid-term review report WASA did not receive the necessary support from

IDA in procurement in the early months of the project. Both executing agencies received the

needed support from IDA as the project continued. There have been good relations with the Task

Team Leaders and the Procurement and Financial Management Specialist as well. There has been

proper guidance throughout even during the project extensions and reallocation of funds. There

were no remarkable problems that rose from IDA‟s side during project implementation.”

For the future, the ICR identified the following priorities:

“The Performance Agreement has been a good start and will continue to be implemented by

WASA to continually measure its performance. In addition, Lesotho Electricity and (Water)

Authority will monitor WASA‟s performance from the last part of 2011/2012 financial year.

Hence, this will help WASA maintain and also improve the set standard. Hopefully, this will help

improve WASA‟s financial performance and sustainability since supportive measures such as

human resource capacity building have been put in place.

The availability of the legislations that have been developed under this Project is enabling the

Office of the Commissioner of Water to carry out its mandate more efficiently and to continue to

guide the whole water sector to be in a position to obtain funding for its programmes.”

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Mazenod

Ha Lechesa

Orlando

Taung

Ha Paki

Ha Nkhoakhoa

Ha Matala

Ha Phakala Tsane

ThabongKatlehong

Old Europa

Sebaboleng

Naleli

Berea

Bobojane

Ha SeoliLithoteng

HaMapetla

Ha Tseka

Ha Ramorakane

Ha Ts’iame

Ha Ramatsa

Linakotseng

Ha Ramakhetheng

Ha Mapholo

Ha Malefane

Ha Jimisi

Ha Motloeloa

Ha Mosalla

Liboping

Motse-Mocha

Ha Teko

Lekotsi

Lepolesa

Qoaling

Qoaling

Matukeng

Mohokare/Ha Setho

Ha Hlalele

Ha Ramokhele

Ha Takalimane

Ha Nko

Ramokholokotha

Masianokeng

Masianokeng

Ha Mpesi

Ha BosotoHa Nelese

Ha Keiso

Ha Motsoeneng

Ha Mamakanakisi

MontimposoLowerThamae

UpperThamae

Ha Tsui

Shalabeng

Abia

Libataolong

Ha Makhoathi

Ha Leqela

Baruting

Lekhalong

Marabeng

Koalabata

MaboteLitsukulung

Sekamaneng

Maqalika Mafikeng

Ha Foso

Ha Shelite

HaTikoe

Ha Tsolo

Ha Lesia

Khubelu

Ha Penapana

MASERU

S O U T HA F R I C A

MaqalikaReservoir

MaseruBridge

S O U T HA F R I C A

MaqalikaIntake Pump

Mazenod

Ha Lechesa

Orlando

Taung

Ha Paki

Ha Nkhoakhoa

Ha Matala

Ha Phakala Tsane

ThabongKatlehong

Old Europa

MaseruBridge Sebaboleng

Naleli

Berea

Bobojane

Ha SeoliLithoteng

HaMapetla

Ha Tseka

Ha Ramorakane

Ha Ts’iame

Ha Ramatsa

Linakotseng

Ha Ramakhetheng

Ha Mapholo

Ha Malefane

Ha Jimisi

Ha Motloeloa

Ha Mosalla

Liboping

Motse-Mocha

Ha Teko

Lekotsi

Lepolesa

Qoaling

Qoaling

Matukeng

Mohokare/Ha Setho

Ha Hlalele

Ha Ramokhele

Ha Takalimane

Ha Nko

Ramokholokotha

Masianokeng

Masianokeng

Ha Mpesi

Ha BosotoHa Nelese

Ha Keiso

Ha Motsoeneng

Ha Mamakanakisi

MontimposoLowerThamae

UpperThamae

Ha Tsui

Shalabeng

Abia

Libataolong

Ha Makhoathi

Ha Leqela

Baruting

Lekhalong

Marabeng

Koalabata

MaboteLitsukulung

Sekamaneng

Maqalika Mafikeng

Ha Foso

Ha Shelite

HaTikoe

Ha Tsolo

Ha Lesia

Khubelu

Ha Penapana

MASERU

MaqalikaIntake Pump

S O U T HA F R I C A

S O U T HA F R I C A

MaqalikaReservoir

27.36 ° E

27.36 ° E

27.42 ° E

27.42 ° E

27.48 ° E

27.48 ° E

27.54 ° E

27.54 ° E

27.60 ° E

27.60 ° E

-29.40 ° S-29.40 ° S

-29.34 ° S-29.34 ° S

-29.28 ° S -29.28 ° S

LESOTHOS O U T HA F R I C A

SWAZILAND

BOTSWANA

NAM

IBIA MOZAMBIQUE

LESOTHOS O U T HA F R I C A

I N D I A N

O C E A N

SWAZILAND

BOTSWANA

NAM

IBIA MOZAMBIQUE

Area of Map

IBRD 38954

NOVEMBER 2011

PROJECT VILLAGES

MAIN TOWNS/VILLAGES

NATIONAL CAPITAL

PAVED ROADS

GRAVEL ROADS

INTERNATIONAL BOUNDARIES

CONSTITUENCY COUNCIL BOUNDARIES

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

LESOTHOWSIP 1 PROJECT