Report No. 1420b-NEP

Nepal: Appraisal of the Second FILE OgPYWate:r Supply and Sewerage Project

April 11, 1977

South Asia Projects DepartmentEnergy and Water Supply Division

FOR OFFICIAL USE ONLY

Docurniet of the World Bank

Thts document has a restrtcted distnbution and may be used by reciptents

only in the pertormance of their offt cal duties Its contents may not

otherwise be dtsclosed without World Bank authorizatiorn

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS(As of March 1, 1977)

Currency Unit = Nepalese Rupee (NRe)NRe 1.00 = 100 PaisaUS$ 1.00 = NRs 12.50,US$ 1 million N NRs 12.5 millionNRe 1.00 = US$0.08NRs I million = US$80,000

MEASURES AND EQUIVALENTS

1 = Liter (1 liter = 0.26 US gallons)1Tcd = Liter per capita per daym3 = Cubic meter or 1,000 liters (1,000 liters = 264 US gallons)m /day Cubic meter per day1/sec = Liter per second (0.035 cubic feet per second)mm Millimeter (0.03937 inch)m Meter (3.28 feet)km Kilometer (0.62 mile)ha = Hectare (10,000 square meters or 2.47 acres)

ABBREVIATIONS AND ACRONYMS

HMG = His Majesty's Government of NepalMWP = Ministry of Water and Power, NepalODM = United Kingdom Ministry of Overseas DevelopmentUNDP = United Nations Development ProgrammeUNICEF = United Nations International Children's Emergency FundWHO World Health OrganizationWSSB = Water Supply and Sewerage Board, NepalWSSD = Water Supply and Sewerage Department of the Ministry of

Water and Power, Nepal

FISCAL YEAR

July 16 to July 15

FOR OFFICIAL USE ONLY

NEPAL

APPRAISAL OFTHE SECOND WATER SUPPLY AND SEWERAGE PROJECT

TABLE OF CONTENTS

Page No.

SUMAARY AND CONCLUSIONS . . . . . ..... . . . . .. . . . .. .- i-iii

-. INTRODUCTION . ....... C ............................ 1

Ii. THE SECTOR ,.. ................................ 2

A. Present Situation ... .. *.................. .....* 2B. Sector Development .. .............................. 3C. Sector Organization ..................... 4

III. THE PROJECT ........ .... ... .............. 6

A. Description of the Project . ....................... 6B. Cost Estimates .................................... 8C. Project Finance ........... ....................... . 10D. Procurement ...... ................................. 10E. Disbursements ..................................... 11F. Design, Construction and Supervision of

Construction .................................... 11G. Land Acquisition and Temporary Access .............. 12H. Impact of the Project on the Urban Poor ....... .... 12I. Environmental Impact ..... ......................... 12

IV. JUSTIFICATION ....... ................................... 12

V. THE BORROWER AND BENEFICIARY ........................... 15

A. The Borrower ...................................... 15B. The Beneficiary ................................... 15C. Organization and Management .... ................... 16D. Management and Accounting Systems .............. ... 16E. Staff ............................................. 16F. Training .......................................... 17G. Audit ... 17H. Project Risks ....... .................... 17

This report was prepared by Messrs. L.V. Smith (Financial Analyst) andT. Skytta (Sanitary Engineer).

document has a restrictod distribution and may be usd by recipients only in the performance[fteir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

-2-

Table of Contents (Continued)

Page No.

VI. FINANCE ................................................ 18

A. General .................................. . .. . 18B. Past Performance and Present Financial Position

(FY1975 and FY1976) .... . ....................... 18

C. Financing Plan .......................... I... 19

D. Present Water Charges .. ..................O. ... 22E. Tariff Study ............................ .... 22F. Future Water and Sewerage Charges ....... ......... 23G. Future Finances .............................. ...... 24H. Performance Monitoring ... 26I. Insurance .............. 696

VII. AGREEMENTS REACHED AND RECOMMENDATIONS . ................ 26

ANNEXES

1. Description of the Project2. Project Cost Estimates3. Estimated Schedule of Disbursements4. Construction Schedule5. Existing Water Supply and Sewerage Facilities6. Population, Water Demand and Production Projections7. Organization Chart of the Water Supply and Sewerage Board8. Income Statements9. Flow of Funds Statements10. Balance Sheets11 Assumptions for Financial Projections12. Schedule of Present Water Charges

MAPS

IBRD - 12629 NEPAL: Existing and Planned Water SuppliesIBRD - 12672 KATHMANDU VALLEY: Existing and Planned Water SuppliesIBRD - 12677 KATHMANDU AND LALITPUR: Existlng and Planned Distribution System.IBRD - 12678 KATHMANDU AND LALITPUR: Existing and Planned Sewerage SystemIBRD - 12679 POKHARA AND BODE/THIMI: Existing and Planned Water SuppliesIBRD - 12680 BIRATNAGAR AND BIRGANJ: Existing and Planned Water Supplies

NEPAL

APPRAISAL OF THESECOND WATER SUPPLY AND SEWERAGE PROJECT

SUMMARY AND CONCLUSIONS

i. This report covers the appraisal of a second project for improvingand exlending water supply and sewerage facilities in Nepal. The first Proj-ect 1/ provides for expansion and improvements to water supply systems forurban and fringe rural areas in the Kathmandu Valley (including Kathmanduthe capital) and Pokhara, a major regional center. A sewerage system forKathmandu and adjacent Lalitpur is also provided. An essential part of thefirst 'roject is the establishing of the Water Supply and Sewerage Board(WSSB), the start of its operations and the training of its staff under tech-nical assistance provided by the United Kingdom Ministry of Overseas Develop-ment (ODM). At the time of appraisal of the first Project the plans for twoother provincial towns, Biratnagar and Birganj, were reviewed but, due tofinancial constraints, were excluded from the Project. Now, His Majesty'sGovernment of Nepal (HMG) has requested a second credit to finance additionalworks to make fuller use of the facilities being constructed under the firstProject and also those works excluded from the first Project. This secondproject includes construction of reservoirs and secondary distribution mainsin Kat'amandu Valley and Pokhara; expansioni and improvement of water supplyfacilities in Biratnagar and Birganj; extensions to sewage collection systemsin Kathmandu and Lalitpur; studies to prepare future schemes for six othertowns in Nepal; a tariff study and traininig of staff. The estimated cost ofthe project is US$11.0 million equivalent (excluding duties and taxes ofUS$0.3 million equivalent) of which about 50% represents foreign exchange. AnIDA CrEdit of US$8.0 million is proposed to cover about 73% of the projectcost excluding duties and taxes. Additional financing of US$4.0 million ispresently under consideration by the Executive Directors to assist in financ-ing an anticipated cost overrun of about US$6.0 million on the first Project.

ii. The project is based on studies for Kathmandu Valley financed bythe United Nations Development Program (UNDP) and for Pokhara, Biratnagar andBirganj financed by HMG all carried out by Binnie and Partners, London. Thesestudies which were completed by 1973 have been reviewed and the cost estimateshave been updated by WSSB for the purpose of project preparation.

iii. The credit would be made to HMG and onlent to WSSB at 9% for a termof 25 years including five years grace on payment of principal and a waiver ofinlerest during these five years. WSSB is a semi-autonomous government entity,set up to carry out the first Project. Although about twelve months behindschedule, the first Project is now well in progress.

1/ Credit 470-NEP signed on May 8, 1974

- ii -

iv- The proposed project has a high priority because of inadequateice to the growing population in the project area and the health hazard-volved in the present systems. The project will continue the rehabiliLa'-:- and extension of existing water supply and sewerage systems to provide ( F

safe and uninterrupted piped water supply for the population in Kathmandu waley, Pokhara, Biratnagar and Birganj, and (2) waterborne sewerage systems forcertain areas of Kathmandu and Lalitpur with modern sewage disposal facilitiesthereby reducing pollution of the Bagmati River. By 1981 on completion of theproposed second project the population served with water within the projectarea will be 590,000. This is an increase of about 200,000 over the pop-ulation that would be served with water on completion of the first Pzro_ecr1978. Additionally over 85,000 people will be served by sewer connectiorsby 1981. The project will also continue to develop WSSB as a viable entitycapable of taking responsibility for water supply and sewerage through-out Nepal.

v. The water supply component of the proposed project includes thedevelopment of tubewells (for Biratnagar and Birganj); a pumping station;transmission and distribution main extensions and replacements; service ressr-voirs; improvements and repairs to existing systems together with serviceconnections and meters. These facilities will be adequate to meet requi-re.ments for water supply in the project area up to about 1985. The seweragecomponent of the project includes about nine km of sewer extensions forKathmandu and Lalitpur. WSSB staff will continue to be trained in administration, accounting, engineering, and operations and maintenance; adequatefacilities, equipment and vehicles are included in the project for this >ur-pose, and ODM technical assistance would be continued.

vi. Of the estimated total project cost of NRs 141.1 million (USSIIJmillion equivalent), NRs 115.8 million (US$9.3 million equivalent) is f-swater supply, NRs 18.1 million (US$1.5 million equivalent) is for sewerageiNRs 4.2 million (US$0.3 million equivalent) is for duties and taxes andNRs 3.0 million (US$0.2 million equivalent) is for tariff and feasibiliLtystudies. The proposed credit will cover the US$5.6 million equivalent f gexchange component of the project cost and US$2.4 million equivalent repfesen-ing 42% of the local costs. The remaining US$3.3 million equivalent will befinanced by HMG as an equity contribution to WSSB.

vii. All contracts will be awarded on the basis of international compe'titive bidding in accordance with IDA guidelines, except for minor civil 1-.--s_and equipment, totalling about US$500,000 equivalent which will be let ac

ing to HMG procedures.

viii. HMG has agreed to levy a sewerage charge equal to 50% of watercharges in FY1978 when the sewerage service comes into use and to increasewater charges in FY1979 in order to meet the required rate of return. ½>-ther tariff increases will be required in later years.

- iii --

ix. The return on combined annually revalued water and sewerage netfixed assets is estimated to vary between 1% and 3% during the project con-struction period of FY1978 to FY1981, increasing to about 4% in FY1984 and6% in FY1987. The rate of return on water only in FY1984 is expected to beabout 6% and on sewerage barely positive.

x. A meaningful internal financial rate of return on the project can-not be calculated since benefits can only be quantified using incrementalsales to metered consumers, and these at present contribute only about 25%of total revenues (though the proportion will gradually increase). However,projected future water charges will be close to or exceed the average incre-mental. cost of water.

xi. The project is suitable for a credit of US$8.0 million equivalent.

NEPAL

APPRAISAL OFTHE SECOND WATER SUPPLY AND SEWERAGE PROJECT

I. INTRODUCTION

1.01 Nepal is a poor country and very little development has taken placein the water and sewerage sector. IDA has made a start in assisting the sec-tor through a first Project (Credit 470-NEP signed on May 8, 1974). ThisProject although small (US$10.4 million) was considered to be appropriate toNepal's implementation capability and financial constraints but was much lessthan had been proposed by the consultants for the project. It provides forbasic extensions and improvements to water sources as well as transmissionand primary distribution facilities. The sewerage component provides for anew trunk sewerage system and sewage treatment facilities. The implementationof the Project is a year behind schedule but all the major contracts are beingawarded and the Project is now proceeding satisfactorily. However, since the1973 appraisal of this project, due to steep worldwide inflation a cost over-run of about US$6.0 million (58% of project cost) is anticipated. His Maj-esty's Government of Nepal (HMG) had considered and rejected the alternativesof either reducing the scope of the Project or financing the cost overrun it-self. The Project was too small to begin with to allow further reduction andprocurement is in an advanced stage; also HMG's capacity to raise resourcesis limited. Additional financing of US$4.0 million is currently under con-sideration by the Executive Directors to assist in financing the cost overrun.HMG has now requested an IDA credit for a second project to help finance cer-tain additional improvements and extensions of water supply and sewerage facil-ities in the Kathmandu Valley, including Kathmandu, Lalitpur and Bode/Thimi andwater supply facilities in Pokhara, a major regional center; in Biratnagar, aregional center in the eastern Terai; and in Birganj, a town astride the mainaccess route from India to Kathmandu. The second project is expected to cost,excluding duties and taxes, NRs 136.9 million (US$11.0 million equivalent).Customs duties and taxes are estimated at NRs 4.2 million (US$C.3 millionequivalent) The proposed credit of US$8.0 million will cover about 73% oftotal oroject costs excluding duties and taxes, the remainder will be financedby HMG as an equity contribution.

1.02 The project is based on the following four studies completed byBinnie & Partners, London in 1973:

(a) A master p:Lan and feasibility studies for water supplyand sewerage for Kathmandu, Lalitpur, Bode/Thimi andBhaktapur financed by UNDP with WHO as executing agency;

(b) Preliminary studies of water supply and sanitation in thevillages of Kathmandu Valley financed by MSG;

(c) A study of the water and sewerage sector in Nepal financedby UNDP; and

- 2 -

(d) Feasibility studies of water supply and sewerage for fiveregional centers, including Pokhara, Biratnagar and Birganj,financed by HMG.

Cost estimates in these studies have been reviewed and updated,as necessary, for the second project, by the Water Supply and Sewerage Board(WSSB) with the assistance of Engineering Science Inc. of California, whoare consultants for the implementation of the first project.

1.03 An appraisal mission composed of Messrs. L.V. Smith, FinancialAnalyst, and T. Skytta, Sanitary Engineer, visited Nepal in October 1976,and after a review by the mission the project components were defined and theconstruction program scheduled. This report is based upon the above reports,on information provided by HMG, WSSB, and Engineering Science Inc. and on themission's findings.

II. THE SECTOR

A. Present Situation

2.01 Nepal, with an estimated population of 12.6 million at the end of1975, and an area of 141,000 sq km, is almost rectangular in shape, about800 km long, and lies parallel to the main Himalayan range of mountains. Abouttwo-thirds of the land area is taken up by high mountains and the lower slopes;the remaining one-third--a narrow strip to the south, called the Terai--is theborderline of the Indo Gangetic plains (see Map IBRD 12629).

2.02 About 10% of the population live in the Himalayan region, 50% in thehills of the lower slopes and the remainder in the Terai. The overall growthrate is about 2.2%. Severe pressure on land in the hills has increased south-ward migration and strained the limited utility services, such as water supply,in some of the foothill and Terai towns, where such services are available.

2.03 Though rainfall is generally substantial, varying between 1,000 mmand 1,600 mm a year, it is unevenly distributed with heavy concentrations inthe June to September monsoon season. Five rivers, Kankai Mai, Karnala,Bagmati, Rapti and Babai follow this monsoon regime, but do not go completelydry, as do numerous smaller rivers. The four main rivers in the country, theMahakali, Karnali, Narayani and Sapta Kosi are all snow-fed and have a sus-tained flow. Surface water resources are therefore plentiful.

2.04 In recent years test well drilling has indicated the availability ofgroundwater in limited quantities, both in the hills and in the Terai, as apossible source both for irrigation and community water supplies, but furthertest drilling is needed to confirm the extent of availability. In the longterm, surface water sources will have to be developed.

- 3 -

2.05 At present only about 6% of the people of Nepal living in some 58communities have piped water supplies, and the majority of these live in thelarger urban areas. Apart from a small section of Kathmandu none of thesecommunities have sewage disposal facilities.

B. Sector Development

Urban Water Supply

2.06 Twenty-four urban areas with a 1975 population of 630,000 havewater supply systems serving about 86% of that population. About 20,000house connections including 5,000 metered connections serve a population ofabout 1.60,000 (25% of the urban population). The balance of populationserved use standpipes. The unserved population use, because of greater con-venienc:e, the traditional sources of water (private tubewells, dugwells,rivers and other sources) even though they are of doubtful quality.

2.07 All urban supplies are intermittent due to insufficient source,storage or distribution capacity. Although water treatment is provided inKathmandu and Lalitpur, no supply can be considered to be safe when it reachesthe consumer.

2.08 In the Terai, the towns lying at the foot of the hills use waterfrom pierennial streams and those lying near the Indian border use groundwater.

2.09 Kathmandu uses fully treated surface water which is available inadequate quantities at the sources, but due to large leakage and wastage inthe distribution systems which empties the reservoirs, the supply is availableonly four to six hours a day. In Lalitpur, the supply is from three springssupplemented by a supply from the Bagmati River, but is only sufficient for amainly standpipe supply. Bhaktapur's source, a perennial stream, and thespring supply for Pokhara are inadequate during the dry season. Biratnagarhas a tubewell source constructed in 1965 and Birganj has two tubewells con-structed in 1965 and 1973.

2.10 The first IDA Project construction started in early 1976 and is duefor ccmpletion at the end of 1978 at which time the population served withwater by WSSB will be about 430,000. The only other on-going external assist-ance in the urban water sector is being given by the Federal German Governmentto the central area of Bhaktapur, an attractive tourist center.

Rural Water Supply

2.11 Less than 2% of the rural population have access to piped watersuppl:-es. These were constructed by the Water Supply and Sewerage Department(WSSD) with the assistance of the-United Nations International Children'sEmergency Fund (UNICEF). The Government of India has also assisted both urbanand rural water supplies through the Indian Cooperative Mission. The rest of

- 4 -

the rural population take water from traditional sources which are widelydispersed and often subject to contamination. Due to the distances involved,the amount of water used both for humans and animals is kept to the absoluteminimum.

2.12 Attempts by HMG to start rural water supplies in the Terai have notmet with success. Shortages of suitable drilling rigs and skilled personneland inadequate financial resources have been major constraints.

Sewerage and Drainage

2.13 The only public sewerage system is a small system serving the centerof Kathmandu. In other places, water borne sewerage is rtestricted to hospi-tals, government buildings and new houses with septic tanks. In most towns,the shortage of water and poverty of the majority of the population willprevent the introduction of sewerage systems for some time to come. Thefirst IDA Project is expected to provide a sewerage service to a populationof 50,000 in 1978.

2.14 Due to the concentration of rainfall during the June to Septembermonsoon period, there is a need for drainage systems in the towns but evenwhere these exist, the lack of maintenance causes flooding in the low lyingareas. Only minor drainage work is included in the second project because oflimited funds available, but drainage master plan updating is included sothat future works can be considered.

Water Quality Surveillance

2.15 Only the Kathmandu water supply system is subjected to chemicalquality testing and occasionally to bacteriological tests; in addition, theDepartment of Health carries out some surveillance when cholera or typhoidcases are reported or suspected.

C. Sector Organization

2.16 During the preparation of the first IDA Project the sector organi-zation was examined with a view to creating a corporation for the whole ofNepal as in the telecommunication sector. However, in view of the limitedservice area of the project authority, HMG agreed with IDA that as an interimmeasure a board should be created for the first Project and then as the sectordeveloped and experience was gained, it would be converted into a corporation.A sector report by WHO under the Cooperative Program which, inter alia, willfocus on the long term organizational aspects, is under preparation and isscheduled for completion in mid 1977. Its recommendations will be taken intoaccount during the implementation of the second project but are not expectedto affect the organization of the sector significantly before 1980. For thepurpose of this project the sector organization is satisfactory.

2.17 The three main agencies operating in the sector are:

(i) WSSB under MWP;

(ii) WSSD under MWP;

(iii) Local Deve:Lopment Department (LDD) under TheMinistry of Panchayat.

2.18 The functions of these agencies are described below:

(i) WSSB - This board was formed in 1973 to act as executingagency for the first IDA financed Project for water supplyand sewerage services in Kathmandu, Lalitpur, Bhaktapur,Kirtipur, Bode, Thimi and several villages around these towns,all in the Kathmandu Valley and for Pokhara, a town about200 km to the West. The population within the present servicearea, including Bhaktapur, in 1976 was about 470,000 and some 86%of these were served with water; under 6% however had sewerageservice. WSSB will increase its area of responsibility underthe second project and will eventually become a statewidecorporation;

(ii) WSSD has responsibility for design and construction of watersystems in all urban areas other than the Kathmandu Valleyand Pokhara, serving about 72% of a total population of about0.3 million mostly by public standpipes. It has similar re-sonsibilities for regional and district headquarters and some1,350 medium sized rural communities in the 3,000 to 10,000range with a total population of about 6.4 million. Currentlyonly about 2% of this is actually served. WSSD also operatesurban and rural water supply schemes not taken over by thepanchayats (town councils), some 38 at present. No sewerageschemes are yet in operation. Although WSSD is responsiblefor design and construction of these, due to financial andstaff constraints no progress has yet been made;

(i:Li) LDD - This department was created in 1971 to assist communi-ties of less than 3,000 with public works inrcluding watersupply, and in the long run, sewerage. There are about 2,550such commujnities (gram panchayats) wi,h a population of about5.7 million. To date, some 45 projects have been implementedwith considerable assistance from WHO and UNICEF in settle-ment and rural development projects, benefitting about 60,000people. Some assistance has also been provided by IDA underthe rural development project (Credit 617-NEP);

(iv) Other Agencies - The Department of Irrigation of the Ministryof Agriculture, the Resettlement Department of the Ministryof Forests, the Department of Electricity oF MWP and theDepartment of Health Services cf the Ministry of Health areall marginally involved in the sector, but are expected to

-6-

be increasingly involved in the future, in line with theeconomic development of Nepal. The panchayats have beenresponsible for operating sewerage and sanitation systemsbut have not been able to perform this function satisfac-torily.

2.19 The concept of paying adequate rates for water service has been,until recently, unknown in Nepal. Piped water is wrongly regarded as beingfreely available in unlimited quantities, and wastage is prevalent. As WSSBextends its area of activities in the future and improves service, watercharges will have to be increased in all areas, with a view to providing theservice on a self-supporting basis.

2.20 A long time will be required before WSSB will reach its ultimategoal of taking responsibility for water supply and sewerage services through-out Nepal as there is a general shortage of trained staff at all levels. WSSBwill need technical assistance for a few more years (see para. 5.06) and ispresently obtaining this from the United Kingdom Ministry of Overseas Develop-ment (ODM) in engineering and financial administration.

2.21 The proposed project will have a significant role in shaping thefuture development of WSSB and in helping to establish policies for its soundmanagement. Difficulties will have to be overcome, but as HMG has given prior-ity to the sector by the allocation of a larger share of funds, reasonableprogress may be expected.

III. THE PROJECT

A. Description of the Project

3.01 The proposed project consists of various works in the KathmanduValley, excluding Bhaktapur town, and in the towns of Pokhara, Biratnagar andBirganj. In the Kathmandu Valley and Pokhara, the works are a continuationof the ongoing first water supply and sewerage Project. In Biratnagar andBirganj the proposed project is a first step towards improving and extendingthe existing water supply systems, which for a long time have been inadequatein capacity, extent and quality of services. It is proposed that these twotowns would become part of WSSB's service area in FY1979. With facilitiesto be provided by the project, the systems will be adequate to meet the watersupply requirements in the project areas until various dates between 1983 and1987. The served population in the project area will increase by over 300,000to 710,000 people by 1985, representing 96% of the tota:L population of theselocalities. The provision of sewerage extensions in the congested, populartourist areas of Kathmandu and Lalitpur will improve sanitation and publichealth and reduce the pollution of the Bagmati River (see para. 3.16).

3.02 The ongoing first Project includes the extension and improvement ofwater supply systems in the Kathmandu Valley and Pokhara and the construction

- 7 -

of a new sewerage system for Kathmandu and Lalitpur. The final design andpreparation of tender documents for the Project have been completed exceptfor 1wo tubewell pump houses. The drilling of new tubewells in the valley isunderway and the main supply and construction contracts are being let. TheProject should have been completed in 1977, but due to delays in the earlystages of the implementation of the Project (see para 5.09) the most activeconstruction period will take place from early 1977 till the end of 1978.Ihe i-irst new water sources provided for in the first Project will be avail-able early in 1978 in the Kathmandu Valley (Pharping Springs) and in 1979 inPokhara (Kali Khola Scheme). The contract between WSSB and the consultantsfor the implementation and supervision of the first Project, EngineeringScience Inc., contLnues until early 1979.

3.03 A detailed description of the project components is in Annex 1 andillustrated in Maps IBRD 12672 and 12677 to 12680. A summary is given below.

(a) Water Supply

(i) Kathmandu and Lalitpur: Rehabilitation of four kmof the existing leaky distribution mains in sizes from80 mim to 300 mm along with 5,000 service connectionsas well as a number of standpipes, gatevalves and othersystem facilities and construction of 48 km of new, 80mm to 150 mm, distribution mains;

(ii) Villages in the Kathmandu Valley: New supplies to tenvillages involving the construction of 29 km of pipelinesin sizes 80 mm to 200 mm;

(iii) The town of Bode/Thimi in the Kathmandu Valley: Exten-sion of the distribution system by constructing 6.5 kmof new mains in siies 80 mm to 200 mm and a new servicereservoir of 500 m for replacement of the existing leakingand unsound reservoir;

(iv) Pokhara: Extension of the distribution system by con-structing 11 km of pipelines in sizes 80 mm and 100 mmand a new service reservoir of 500 m for replacementof the existing Bindhabasini reservoir which is dete-riorating badly due to poor foundations;

(v) Biratnagar: The construction of a new tubewell schemeincluding 5wo deep wells with an estimated capacityof 4,200 m /day each; improvements to the existin§well for restoring the design capacity of 3,000 m /day; extension oL the distribution network by con-structing 34 km of pipelines in sizes 50 mm to 350mm; the 5onstruction of an elevated service reservoirof 500 m ; minor buildings such as staff quarters,office and laboratory;

- 8 -

(vi) Birganj: Improvements to the existing wells andextension of the distribution network including 27km of pipelines varying from 50 mm to 25C mm;

(vii) Installation of 27,000 new, metered service con-nections in the four project towns;

(viii) Equipment and tools for maintenance and leak detection,as well as vehicles for operations and office machines.

(b) Sewerage

Extension of the collector sewer network in Kathmandu andLalitpur consisting of nine km of sewer lines in sizes 200 mmto 500 mm.

(c) Consulting Services

Consulting services including updating of water supply andsewerage master plans for the project towns, detailed design,preparation of tender documents, evaluation of bids, super-vision of project implementation, a tariff study and feasibil-ity studies in six provincial towns for future projects.These services will include 138 man-months of foreign con-sultants at an estimated average cost of about US$7,350 perman-month plus US$324,000 for local staff and US$161,700 fortravel and other expenses; a total cost of US$1.5 million.Local consultants are not yet available in Nepal for thistype of work.

(d) Training of Staff

Providing the staff with on-the-job training under thesupervision of the ODM team (see para. 5.07).

B. Cost Estimates

3.04 The estimated costs of the project are summarized below and detailedin Annex 2.

- 9 -

Local Foreign Total Local Foreign Total--- NRs Millions -- US$ Millions ---

Water Supply

Sour,ces 1.2 1.9 3.1 0.1 0.2 0.3Distribution Pipelines 25.4 22.4 47.8 2.0 1.8 3.8Reservoirs 1.7 0.6 2.3 0.2 - 0.2Water Connections 1.5 6.1 7.6 0.1 0.5 0.6Vehicles, Tools & Equipment 0.6 1.4 2.0 0.1 0.1 0.2Staff Quarters, etc. 0.4 0.1 0.5 - - -

Sub-total 30.8 32.5 63.3 2.5 2.6 5.1

Sewerage

Extensions of SewerageSystem 5.7 4.3 10.0 0.5 0.3 0.8

Physical Contingencies 5.8 5.6 11.4 0.4 0.5 0.9

Sub-total 42.3 42.4 84.7 3.4 3.4 6.8

Consulting Services 5.4 12.7 18.1 0.5 1.0 1.5

Land 0.5 - 0.5 - - -

Training 0.1 0.1 - - -

Administration 1.6 - _ 1.6 0.1 - 0.1

Sub-total 49.9 55.1 105.0 4.0 4.4 8.4

Price Contingencies 16.9 15.0 31.9 1.4 1.2 2.6

Tot;al Costs 66.8 70.1 136.9 5.4 5.6 11.0

Duties and Taxes 4.2 - 4.2 0.3 - 0.3

TOTAL PROJECT COSTS 71.0 70.1 14101 5.7 5.6 11.3

3.05 The project is based on feasibility studies prepared some three tofour years ago. The final design of the first Project in the Kathmandu Val-ley and Pokhara has shown the necessity of updating the master plans to re-flect the need for additional reservoir capacity and future development ofthe primary network. Development of new residential areas in Biratnagar andBirganj also necessitates master plan updating and this will include arrange-mentS for water supply for the adjoining villages.

- 10 -

3.06 Of the estimated total costs excluding duties and taxes--NRs 136.9million (US$11.0 million equivalent)--NRs 115.8 million is for water supply,NRs 18.1 million is for sewerage and NRs 3.0 million is for a tariff studyand feasibility studies for future Projects.

3.07 Construction costs are based on unit rates obtained in Nepal fromrecent tenders for the first Project; base costs are at January 1977. Dutiesand taxes, estimated at NRs. 4.2 million, are shown separately in the proj-ect cost estimate.

3.08 The design of the project components is at a preliminary stage butbecause of reasonable construction conditions, moderate physical contingencyprovisions ranging from 10% to 20% have been added to the costs of components.Price contingencies on base line estimates for both local and foreign costshave been included on the basis of the following rates which are satisfactoryfor the expected prices in Nepal:

1977 1978 1979 1980 1981

Equipment 8 8 8 7 7Civil Works 12 12 12 10 10

C. Project Finance

3.09 The proposed IDA Credit of US$8.0 million would finance about 73%of the total cost of the project which is estimated at US$11.0 million equiv-alent excluding duties and taxes. US$5.6 million or 70% of the credit wouldfinance foreign exchange expenditures. The balance of U'S$2.4 million wouldfinance 42% of local currency expenditures. The remaining local costs ofUS$3.0 million equivalent would be financed by HMG in the form of an equitycontribution as would be the US$0.3 million equivalent for duties and taxes.

D. Procurement

3.10 As in the first Project (Credit 470-NEP) all equipment and civilworks contracts will be awarded on the basis of international competitivebidding in accordance with IDA's Guidelines, except for minor contracts for(a) civil works for water supply and sewerage extensions, repairs, improve-ments, house connections and metering, minor buildings and providing electri-city supplies, each individually below US$100,000; and (b) equipment supplieseach below US$50,000, as these would be unattractive or otherwise unsuitablefor international competitive bidding. These minor contracts will be letunder local procurement procedures which are satisfactory. The total of thesecontracts will not exceed US$500,000, and may include works by force account.

3.11 Although there is no manufacturer of pipes in Nepal at present,such a factory could be established. A margin of preference of up to 15% or

- 11 -

customs duty, whichever is lower, is proposed to be granted to local manufac-turers. Similarly a margin of preference of 7.5% is proposed for local civilworks contractors.

E. Disbursements

3.12 The proceeds of the Credit would be disbursed over a five yearperiod with the Credlit closing in June 1982. A quarterly disbursement fore-cast is shown in Annex 3. Disbursements would be made against:

(a) Civil Works (including force account): 100% of foreignexpenditures and 30% of local expenditures.

(b) Equipment and Supplies:

(i) 100% of foreign expenditures for directly importedgoodLs; or

(ii) 100% of local expenditures (ex-factory cost) forlocally manufactured goods; or

(iii) 60% of local expenditures for other goods procuredlocally.

(c) Consulting services: 100% of total expenditures.

Disbursements for Civil Works under force account will be made against astatement of expenditure with the supporting documentation retained by theborrower and held available for inspection during the course of supervisionmissions. Disbursement for all other items will be fully documented.

F. Design, Construction and Supervision of Construction

3.13 WSSB's Project-in-Charge (General Manager) will be responsible forcarrying out the project. As WSSB will not have adequate senior technicalstaff for the expanding operation, consultants would be engaged to prepareupdating of master plans, detailed designs and bid documents, to evaluate bidsand supervise construction. The construction schedule covers a period of aboutfour years and is shown in Annex 4. It is scheduled to be completed in mid-1981. Consultants will also be needed for feasibility studies required forpreparation of future projects (see paragraph 3.03(c)). HMG has agreed thatconsultants acceptable to IDA will be engaged for the project and to carryout feasibility studies; their appointment would be a condition of effective-ness of the credit. A preliminary implementation schedule (see Annex 1,appendix 1) has been established with HMG. The schedule will be revised aftercompLetion of master plan updating.

- 12 -

G. Land Acquisition and Temporary Access

3.14 The total time required for land acquisition is not expected toexceed 18 months. Sites for new wells and a reservoir have to be acquiredand temporary access for pipelines obtained. A detailed timetable for legalactions on land acquisition and temporary access has been established withHMG.

H. Impact of the Project on the Urban Poor

3.15 At the present time standpipes or temporary sources such as streamsand ponds serve the urban poor in the project towns and adjoining semi-urbanvillages. In the Terai towns of Biratnagar and Birganj public and privatehandpumps and open shallow wells are also used. All these sources are subjectto contamination. The first and second projects will ensure a continuousservice and thus improve the supply of potable water through standpipes.The inclusion of new fringe villages in the piped water supply system and anincrease in the number of standpipes within the existing systems will improvehealth standards for an additional population of over 75,000 most of whom arein the category of urban poor. The use of standpipes will be subsidized byHMG (see para. 6.14) and these will gradually replace the unsafe handpumps,shallow wells, streams and ponds as a main source of supply for the urbanpoor.

I. Environmental Impact

3.16 The Bagmati river, the principal water course flowing through theKathmandu Valley, receives most of the liquid wastes and some of the solidwastes of the area. The greatest contamination occurs from sewage flowinginto the river at Bhaktapur, Lalitpur and Kathmandu. The first project pro-vides for the first stage of sewage collection and treatment in two of thesetowns, Kathmandu and Lalitpur. With the extensions of the collection systemsin the second project, sanitary conditions of the area will be further im-proved, pollution of the river reduced and ecological and health benefitsrealized. In other project towns the increased use of water may endanger thequality of water in nearby rivers and sewerage construction would be includedin future projects.

IV. JUSTIFICATION

4.01 Kathmandu, the capital city, and neighboring Lalitpur and Bhaktapur,all in Kathmandu Valley, are the country's most important cities with severaltourist attractions. Pokhara is an important regional center with touristpotential, and Biratnagar and Birganj are two major towns adjacent to theborder with India and astride two of the main communication roads between

- 13 -

India and Nepal. The two latter toTwms, iwnose water supply operations arepresently carried out by the Panchayat and WSSD respectively, were, due tofinar.cial constrairnts, not included in the first: Project. Despite favorableeconomic prospects, the water supply facilities in these cities barely providea six-hour daily supply, and sanitary services are practica'i-y nonexistent.As the water supply is intermittent it cannot be considered safe= Waterbornediseases such as gastro-enteritis, dysentery and typhoid aave a tigh incidence,and the danger of a cholera epidemic lurks in the background. Because of thelack of sewerage facilities, debilitating fecal-borne diseases such as hookwormand roundworm are common. The high priority given to the second project byMTIG is well justified. The existing facilities are described in Annex 5.

4.02 The first IDA financed Project is providlng adequate water sourcesfor l:he areas covered by that project as wellr as distribution systems ands,ewage collection systems and treatment works. The second project will fur-tner expand the water distribution and sewage collection works as well asimprove the water supply facilities and distribution systems in the two addi-tional towns.

4.03 Projections of population and water demanas are showvn in Annex 6.As the water supplies are intermittent at presenit, and 50% to 95% of theserved population in various towns are on standpipe supplies, the consumptionis low, varying from 20 to 70 1/cd. In Biratnagar and Birganj the percentageof the population served is also low--16% and 40% respectively. The rest ofthe population in the towns and almost all in the adjoining villages aredependent on public or private handpumps, ope-n wells, or on other temporarysources which are exposed to contamination. Th' two projects will improvethe water supply conditions in the project areas so that 96% of the populationwill be served by a 24-hour supply by 1985, anrd. the consumption will bebrought up to about 75 1/cd on average.

4.04 The facilities included in theg first Project were for KathmanduVall2y and Pokhara, and were selected from several alternatives as the least-cost solution for meeting the requirements of the Project area. The secondproject is a logical continuation of the first Project and makes fuller use ofthe basic source and distribution facilities being constructed under the firstproject. The facilities in the second project for Biratnagar and Birganj areselected on the least-cost solution basi-s and fore the first stage of watersupply development in those towns.

4.05 A meaningful internal financial rate of return on the project cannotbe calculated since benefits can only be quantified using incremental. sales tometered consumers, and these at present contribute only about 25% of total re-venues (though the proportion will gradually increase). Calculations of the.average incremental cost (AIC) of supplying 1,000 liters of water and collect-ing and treating 1,000 liters of sewage have been made using the capital costsof the first and second projects with some additional expenditure on sewagecollectors plus operating costs in relation to the additional units of waterConsumption and sewage flows generated by thoss e.xpenditures. These AICs(at 1975/76 levels) are compared with pr-esent an/d 'uture tariffs as follows:

- 14 -

Water Sewerage DeflatorPer 1,000 liters of water used

NRs NRs 6%

Average incremental cost (AIC) 1.62 1.95 Nil

Metered tariff for consumption inexcess of 10,000 liters - current .80 - Nil

Present value of proposed seweragecharge for FY1978 - 93.36 (0.40) /a 1.12

Present value of expected tarifffor FY79 1.34 (1.60) 0.67 (0.80) 1.19

Present value of probable tarifffor FY1981 1.80 (2.40) 0.90 (1.20) 1.34

Present value of probable tarifffor FY1983 2.41 (3.60) [.20 (1.80) 1.50

/a Actual values in parenthesis

The present value of the expected water charge for FY1979 is close to theAIC and in FY1981 the present value of the probable tariff is in excess ofthe AIC, however for sewerage the charge is very much lower. The sewerageservice is new and several years will elapse before the use of the servicebuilds up sufficiently for the AIC and the charge to come close together,but even then it is likely that the charge will still fall short of theAIC. All charges are subject to further review after completion of thetariff study (see para 6.09) and this study will seek tc show how to bringthe sewerage charge closer to the sewerage AIC.

4.06 WSSB will be committed to setting tariffs that will progressivelystrengthen its financial position (see para. 6.17), but the substantive justi-fication for the project does not rest primarily on the financial forecastsbut rather on the fact that a modest level of water supply is provided parti-cularly for the urban poor, in the most economic manner, and that the healthhazards of not doing so are serious. Moreover, Nepal's tourism potential isone of the valuable assets of the country but to be exploitable requires thatreasonably safe health conditions prevail. Other benefits of the projectaffect the general quality of life and include health, social and environ-mental improvements and the ending of further deterioration to the existinginstallations all of which are difficult to quantify. The second projectwill also support the favorable economic prospects for the project area (seepara. 4.01). The average incremental cost for water is about NRs 1.60 per1,000 liters. With the tariff increase expected for FY1979, consumers withmetered connections will pay about this rate for the consumption in excess

- 15 -

of 10,000 liters per month and the first 10,000 liters per month (see para6.111) will be charged at a lower "lifeline rate." 1/ This would promoteefficient resource allocation.

4.07 Further benefits will arise from the continued development ofWSSB as a satisfactory institution to operate the facilities provided bythe ?roject, to carry out its objectives, and to extend its expertise andservices into additional areas of Nepal.

V. THE BORROWER AND THE BENEFICIARY

A. The Borrower

5.01 HMG, the Borrower, will onlend the proceeds of the credit to WSSB.(See para. 6.06.)

B. The Beneficiary

5.02 WSSB, the Beneficiary, was created in 1973 by an order of HMG underthe Development Board Act 1956, to carry out the first Project. The ordergave WSSB adequate powers to take over and operate the assets of the exist-ing water supply and sewerage systems in the Kathmandu Valley and Pokharato develop them and to maintain its own funds and accounts and make its ownrules with the approval of HMG. Adequate rules have been made as follows:

(a) Financial Procedure Rules 1973;

(b) Employees Management Rules 1973;

(c) Water Regulations 1974;

(d) Provident Fund Rules 1975;

(e) Water Service Tariff Charge Rules 1975; and

(f) Sewerage and Sewage Disposal Rules 1976;

5.03 The Board of WSSB has seven members under the chairmanship of theSecr-etary, MWP. The other six are the Project-in-Charge of WSSB who is thesecretary, the Chief Engineer of WSSD and representatives of the NationalPlanning Commission Secretariat, and of the Ministries of Finance, Healthand Panchayat.

1/ "lifeline rate" means a subsidized rate for the minimum amount ofwater required by an average family to maintain a healthy and pro-ductive life.,

- 16 -

C. Organization and Management

5.04 The chief executive officer of WSSB is the Project-in-Charge towhom the Board has delegated most of its powers so that he may have thefreedom of action to ensure that WSSB operates effectively. The two topexecutives next to the Project-in-Charge are the Manager-Engineering and theManager-Finance and Administration. The former assisted by a chief of designand construction and a chief of operations, will be responsible for completingthe first Project, carrying out the second project and operating and maintain-ing the systems. The latter, assisted by a chief of finance and a chief ofadministration is responsible for collecting the revenue, keeping the accountsand general administration. Division engineers with line responsibility tothe Manager-Engineering will represent WSSB in Biratnagar, Birganj and Pokhara.The organization chart for WSSB is shown at Annex 7. Th-is represents the pres-ent organizational structure with the addition of the two new project areasof Biratnagar and Birganj. The performance of WSSB in imaplementing the firstProject has not been as good as had been expected at the time of appraisalparticularly on the letting of contracts and the Project is now about 12 monthsbehind schedule. However all the major contracts are being let and no furtherdelays are anticipated.

D. Management and Accounting Systems

5.05 Systems have been designed by the consultants for the first Projectfor long range planning, budgetary controls and reporting procedures and alsofor accounting based upon accrual principles. The latter entail a completechange of accounting philosophy from that of the traditional government cashaccounting to an appropriate system of public utility accrual accounting withseparate accounts for water and sewerage. Progress has been slower than wasanticipated at the time of appraisal of the first Project and WSSB requiresassistance to complete the introduction of, and training in the operation of,these systems. HMG has agreed that WSSB will arrange for the necessary train-ing. A new billing and collection system has also been introduced and thisis being operated satisfactorily.

E. Staff

5.06 The staff of WSSB has been built up to a satisfactory level andthe position of Project-in-Charge is filled by a person with acceptablequalifications. Arrangements have been made by HMG with ODM for technicalassistance in the fields of engineering, finance, leak detection, metering,water production and laboratory work. The ODM team has been working withWSSB since the middle of 1974 with excellent results. HMG has agreed thatsuch technical assistance should continue with the exception of leak detec-tion and metering where the experts' contracts are due to terminate and localstaff are sufficiently trained, but with the addition of a trainer in water

- 17 -

supply system operation and maintenance. I-ZiG has also agreed that it willcontinue to fill the position of Project-in-Charge wich a person of suchqualifications and experience as are appropriate to such position andacceptable to IDA.

F. Training

5.07 There are no facilities for professional training in engineeringor accountancy in Nepal. Such studies are pursued abroad, mainly in India,by scholarships or with the aid of bilat:eral or multilateral agencies. Postgraduate training has also to be obtained abroad and four engineers have com-pleted or are undertaking appropriate training. EMG has agreed that similartraining should continue and that finance staff should also be included.Local technical institutions provide training at the sub-professional levelfor supervisors and surveyors. The teclnical assistance staff, particularlythe designated trainer, will supplement the institutional training by on-the-job training. HMG has agreed that WSSB will institute a program of overseas,local and on-the-job training.

G. Audit

5.08 The audit is presently being carried out by a professional account-ant appointed by the Auditor-General and is paid for by WSSB. The scope ofthe audit is inadequate both in content and in depth and after discussionswith the Auditor-General considerable improvement is expected. HMG has agreedthat an auditor satisfactory to IDA will be appointed and that audited finan-cial statements would be submitted to IDA within six months of the end of theperiod audited.

H. Project Risks

5.09) There is adequate provision in the second project for engineeringconsultants to carry out detailed design, to prepare and evaluate bid docu-ments and to supervise construction of the project components. However, WSSBis still a comparatively new organization and in ti-e early stages of the im-plementation of the first project there has been some delay in the letting ofcontracts. This is due in part to the complexity of these contracts, but alsodue to the very much higher than expected bid prices. However the Board iscontinuing to gain experience and has adopted a timetable system for bid let-tingi to eliminate as many delays as possible. It is expected that future bidinvitations should attract more competitive offers than in the past, particu-larly from India, as the two new project areas are on the Indian border.

5.10 The financial requirements of WSSB over the project period callfor very high tariff increases in order to meet a comparatively low rate ofreturn covenant and political and social pressures may make this difficult

- 18 -

to achieve. However a tariff study is planned as part of the second projectand this will recommend tariffs that will maximize revenues and at the sametime give the lower income groups the benefit of the new and improved servicesand should assist WSSB and HMG in making tariff decisions (see para. 6.09).

5.11 In order to maintain its role in the long process of institutionbuilding, IDA should continue its financial participation and accept therisks of dealing with a somewhat inexperienced institution with a lower thanaverage financial performance target. Supervision missions will be alert tothe problems and will recommend steps during project implementation to correctany situation before it seriously affects the project.

VI. FINANCE

A. General

6.01 An examination of the financial statements of WSSB and its pre-decessor in the project area is limited to historical accounts synthesizedby consultants in 1973 and unaudited accounts for FY1974--a period prior tothe creation of WSSB--plus audited accounts for FY1975 and FY1976, the firsttwo years of WSSB's operations. Proforma income statements, flow of fundsstatements and balance sheets are shown in Annexes 8, 9 and 10 and the assump-tions for these are shown in Annex 11.

B. Past Performance and Present Financial Position (FY1975 and FY1976)

6.02 The audited statement of accounts for FY1975, the first year ofWSSB's operations, shows that income covered all cash operating costs as wellas part of the provision for depreciation. No target rate of return on aver-age net fixed assets in operations was covenanted for FY1975 and the actualrate of return was negative. The resulting potential cash flow problems wererelieved, however, by the fact that HM4G provided its full 25% equity contribu-tion towards the first Project expenditures in the year, whereas the actualProject expenditures were much lower, i.e. NRs 7.0 million actual instead ofthe estimated NRs 15.2 million. The portion of the HMG equity contributionnot used for the Project was taken for working capital. Such use of thesefunds is acceptable as a temporary measure but in the long run, working cap-ital should be provided from WSSB's own resources or additionally by HMG.Informal assurances have been given by HMG that any equity contribution fundsused as working capital would be replaced by additional equity contributionswhen required for project purposes.

6.03 The audited statements for FY1976 show a somewhat better financialperformance than in FY1975 with a revenue surplus of NRs 300,000. The ratecovenant under Credit 470-NEP required WSSB to meet a 1% rate of return and

- 19 -

this was nearly achieved. The improveinent was brought about by a 60% tariffincrease made in FY1975, the full year's benefit of which was only receivedin FY1976.

6.C4 The financial position of WSSB at the end of FY1976 was as follows(see Annexes 8, 9 and 10 for fuller details).

NRs Millions

ASSETS LIABILITIES

Net: Assets 41.48 Equity 63.58Work in Progress 23.99 Debt 13.91

Current AssetsCash 8.01Receivables 1.57Other 3.58

13.16

Less: CurrentLiabilities 1.14 12.02

Tol:al Assets 77.49 Total Liabilities 77.49

Debt/Equity Ratio 18/82Receivables to Billings 37%Current Ratio 11.5 times

While the position shown above (after only two years' operations) cannot betaken as the basis for making any profound judgement, WSSB's financial positionwa3 nevertheless reasonably satisfactory. At the end of FY1976 WSSB had a lowdebt/equity ratio--giving a margin for further borrowing--and receivables at37Z of billings, half of which were due from HMG for standpipes. WSSB pro-poses to take steps to reduce these to not more than 25%.

C. Financing Plan

6.05 WSSB's capital investment and working capital requirements duringthe period FY1978 to FY1981 along with the sources from which they would bemet are summarized below:

- 20 -

US$NRs Equivalent Percentage000's 000's

APPLICATION OF FUNDS

Proiect

First Project (Balance) 49,340 3,950 15First Project (Cost Overrun) 75,390 6,030 23Second Project 135,130 10,810 41Duties and Taxes 4,200 330 1Studies for a third Project 1,750 140 1

Subtotal 265,810 21,260 81

Other

Start of Third Project 30,000 2,400 9Other Work by WSSB 11,000 880 4Increase in Working CaDital 19,490 1,560 6

Total Application of Funds 326,300 26,100 100

SOURCES OF FUNDS

Internal Cash Generation 45,120 3,610 14Less: Debt Service 23,080 1,850 7Net Cash Generation 22,040 1,760 7

Borrowing

First IDA Credit (Balance) 41,880 3,350 13Supplemental Financing 50,000 4,000 15Proposed IDA Credit 100,000 8,000 31HMG Loan for Start of Third

Project 21,000 1,680 6

HMG Equity Contributions /a

First Project (Balance) 3,500 280 1First Project (Cost overrun) 26,180 2,100 8Second Project 37,500 3,000 11Duties and Taxes 4,200 330 1Start of Third Project 9,000 720 3Other Work 11,000 880 4

Total Sources of Funds 326,300 26,100 100

/a The value of the Biratnagar and Birganj assets amounting to NRs 6.73million to be vested in WSSB in FY1979 (see para. 6.20) is not includedin the financing plan.

- 21 -

The proposed IDA credit of US$8.0 million equ±vl- Ient wlll prov-.ide aDout 31%and the balance of the first IDA credit w:ith the suLpplemental financing, about28% of the financing required during the project period. HMG will provideabout US$9.0 million equivalent which is about 34% of the financing required.This includes about US$5.7 million equiva'Lent in Che form of equity contri-butions. US$1,7 million equivalent in the foru; of- a loan, and US$0.7 millionequivalent in the form of an equity contrlbution for the start of a thirdproject. Other work amounting to about US$0.9 million will be carried outby WSSB with HMG equity contributions. Internal cash generation amountingto about US$1.8 million equivalent will be required almost entirely for useas working capital.

6.06 HMG proposed, as in the first Project, to onlend the proceeds ofthe credit at 6% foIr 25 years but not to charge :nterest for t1he first fiveyears rn order to reduce some of the intial f n.nuacua bur den on l SS How-ever, the financial projections indicate that 'WSSB coulI'd mai-ntain interestpayments based upon a rate of 9%, which is about the current Bank Group lend-ing rate. The decision of HMG to waive interest for the first f ive years isacceptable and will assist WSSB by reducing the drain on its operating reve-nues during the period when the new project works are under construction oronly partially productive. It will also alleviaze any potential cash flowproo1 enMs because, despite the projected large tevifnf icreases there wouldbe inadequate cash to pay this interest. Capita:lization of' interest durirgconstruction (even when actually payable) is not practiced in Nepal and isnot pr-oposed for the waived interest referred t.o above nor is it proposed toadd this to the amounts onlent to WSSB due to the difficulty that would arisein sustaining the slubsequent higher level of debt service. T'.L view of theex;pected li4fe of the facilities to be built, a 25 year onlending term for thecredic is considered reasonable. During the second project period FY1978 toFY198L }H{G is expected to contribute an average of about NRs 22.8 million ayear, compared with NRs 10.5 million annually during the first three years ofWSSB's operations. HMG, as part of its program to maximize the generation oflocal resources, has changed its policy on the vailring of customs duty andtaxes on projects, and these will be charged in future and become part of theproject cost. However HMG has given informal assurances that it intends tomake add.tional equity contributions to reimburse WSSE for any duties and taxespaid. EMG has agreed to provide all funds required to complete the secondprojezt, and to onlend the proposed IDA credit to WSSB for 25 years at 9%with a five year grace period on amortization and no payment of interest inthe first five years (7.2% equivalent over the 25 years). The execution of asubsidiary loan agreement between HMG and WSSB to cover the onlending of theIDA credit on terms acceptable to IDA would be a condition of effectivenesso: the credit.

6D07 The need for carrying out minor capital w'o-,s outside the scope ofthe project might arise during the course of the construction of the project.TrJ avoid the overburdening of WSSB's implementationr and financial capacity,W4G has agreed that the value of such works in any year un.il completion ofthe project would nLot exceed NRs 6.25 million (CS$$3.5 .million equivalent)witout adequate strengthening of the project organmiation of WSSB.

- 22 -

D. Present Water Charges

6.08 The present charges for water, which are detailed in Annex 12, wereintroduced in 1975. The flat rate charge varies according to the size of thesupply pipe and the number of taps, and is heavily biased in favor of thesmaller consumers. The metered charge is at the rate of NRe 0.50 per 1,000liters for the first 10,000 liters per month (US$0.15 per 1,000 US gallons)and NRe 0.80 per 1,000 liters (US$0.24 per 1,000 US gallons) for all consump-tion over 10,000 liters, with a minimum charge according to the size of thesupply pipe. This compares to a charge of US$0.25 per 1,000 US gallons forall consumption in Lahore, Pakistan and for domestic consumption in Chittagong,Bangladesh. Standpipes are charged to HMG at the rate of NRs 100.00 perstandpipe per month. There is an additional fee for late payment.

E. Tariff Study

6.09 A tariff study was proposed in the first Project and UNDP offeredfinancing for this. The study was not implemented following the curtailmentof UNDP funds and it is now included in this project. The objective of thepresent tariff is to allow WSSB to earn sufficient revenues to cover itsoperating costs and to produce a positive rate of return on average net fixedassets in operation while at the same time enabling the lower income groupsto obtain minimum services at a "lifeline rate." As the tariff is based uponvery limited information and experience, a tariff and connection charge studyis scheduled to be completed by the end of 1977 when more adequate data ondemand should be available. The study will include the following:

(a) a review of all types of water and sewerage facilitiesavailable and the extent to which these are used;

(b) the ability of consumers to pay for the services;

(c) an analysis of incremental system costs and the rela-tionship between these and the charges;

(d) the effect of metering in relationship to present andfuture tariffs and the use of alternative methods toreduce wastage;

(e) the effect of water and sewerage connection charges onthe rate of new connections and the introduction of easypayment terms;

(f) a review of the charges for standpipes and alternativesto these, e.g., bucket sales;

- 23 -

(g) alternative methods of charging for the sewerage services,e.g., general taxation or property tax;

(h) the tariff structure to be used with the possibility ofintroducing a more graduated tariff; and

(i) annual asset revaluation and its implications for thetariff.

MMG has agreed that consultants acceptable to IDA will be employed for thisstudy .

6.10 Because of a water shortage, new connections have been kept to aminimum in the past but when the water from the first Project begins to flowin early 1978 it will be possible to increase the rate of new connections.The tariff study will assist in providirng a basis for making proper connec-tions at a reasonable cost by early 1978. Sewer connection charges will alsobe studied at the same time. As the second project develops WSSB will intro-duce a house connection program which will enable the more affluent of thepresent standpipe users--55% of the population use standpipes--to take indi-vidual house connections, thus freeing the use of standpipes for the urbanpoor who cannot afford a house connection.

F. Future Water and Sewerage Charges

General

6.11 The consultants for the first Project had considered that a familywould be prepared to spend 5% of its income on water and sewerage services.With an average of about eight persons in each family and water usage of about40 I/cd the monthly consumption of a family on a separate metered connectionwould be about 10,000 liters. At the present minimum monthly charge of NRs5.0C (equivalent of metered water charges for the first 10,000 liters permonth), plus a potential sewer surcharge of 50%, the annual charge for a familywould be about NRs 90.00. This is appropriate to an annual family income ofNRs 1,800 which is about the average for the lowest urban income group. Thusit would be appropriate for future tariff increases to be imposed mainly uponwater consumption in excess of the monthly minimum of 10,000 liters. Theseaspects will be reviewed during the tariff study.

Water Charges

6.12 Large increases in water charges will be required in the comingyears, the first being in FY1979 and FY1980 when the Pharping Springs waterbeg-ns to flow into the system and improves the service. This increase willprobably average about 100% (the metered tariff would be about US$0.48 per1,000 US gallons) and further increases of about 50% will probably be requiredevery two or three years thereafter.

- 24 -

Sewerage Charges

6.13 The new sewerage system is expected to be in partial operation inFY1978 and a sewerage charge tentatively fixed at 50% of water charges, pend-ing the outcome of the tariff study, will be levied in that year. HMG hasagreed that in FY1978 it will ensure that WSSB levies a sewerage charge at alevel not less than 50% of water charges and carries out a water and sewerconnection survey.

Standpipe Charges

6.14 It is proposed to meter standpipes within the next two years tocheck the consumption of water and this may show a need for a variation inthe monthly charge. This will be studied as part of the tariff study (seepara. 6.09). Otherwise, no change is proposed at this time. HIG has agreedto continue to pay the monthly charge for all standpipes.

Metering

6.15 HMG commenced the metering of connections in FY1971 with the objec-tive of reducing waste of water. By the end of FY1975 some 2,000 connectionsout of a total of some 17,000 had been metered. With the delivery of metersunder the first Project, the metering of connections is now proceeding at afaster rate--over 2,000 in the second half of FY1976 and WSSB plans to increasethis to 10,000 in FY1977. The metering program will be reviewed when thetariff study mentioned in para. 6.09 is carried out.

G. Future Finances

6.16 The financial forecasts for WSSB's operations for the period FY1977to FY1984 are given in Annexes 8, 9 and 10 and the assumptions for theseare shown in Annex 11. A summary of the projections is shown below:

1977 1978 1979 1981 1984

Total Revenues NRs Millions 5.23 6.51 15.84 30.48 62.68Net Income (before interest) It 0.70 0.25 5.60 11.64 30.01Operating Ratio % 63.00 65.00 38.00 29.00 22.00Rate of Return % 1.50 0.33 3.53 3.16 4.36Debt/Equity % 39.00 55.00 54.00 51.00 44.00Current Ratio (times) 14.00 10.00 4.00 4.00 4.00Debt Service Coverage (times) 0.00 0.00 0.00 1.36 1.74Contribution to Investment % 3.00 2.00 12.00 8.00 20.00Receivables to Billings % 35.00 30.00 25.00 25.00 25.00

The projections show that during the period FY1977 to FY1984 water connectionswill increase by 170% from 24,750 to 67,310, sewer connections will increase

- 25 -

by nearly 500% from 3,000 to 17,000 and water consumption will increase by180% from 7.68 million m3 to 21.36 million ra3. During the same period therewill be an increase in total revenues from NRs 5.23 million in FY1977 to NRs62.68 million in FY1984. Net income before interest will improve in the sameperioDd from NRs 0.70 million to NRs 30.01 million. The annual rate of returnon average revalued 1/ net fixed assets in operation is expected to reach 4%overall in FY1984; this is made up of 6% on water supply assets and a barelypositive rate on sewerage assets. The unit cost of the sewerage service ishigh in relation to the income reasonably recoverable so that this serviceis much less financially viable than the water supply service. The overallrate of return, although low, will only be obtained by large increases in thecharges for the water service and by the imposition of an entirely new chargefor the sewerage service. Receivables are expected to reduce to a level of25% of billings. WSSB will seek to improve on this but the level is con-sidered to be prudent for projection purposes.

6.17 Under the first Project WSSB was required to achieve an 8% rate ofreturn by 1987, however, due to the large project cost increases that targetcannot now be met. It is therefore recommended that the covenant be slightlymodifiecl and -DIG has agreed that it will adjust and maintain WSSB's rates andcharges for water and sewerage services to provide revenues sufficient to meet,as aE miniimum, all operating costs and depreciation up to FY1978, and to producean annual rate of return on the average of revalued net fixed assets of atleast 2% in FY1979 to FY1982, 3% in FY1983, 4% in FY1984, rising to atleast 6% in FY1987 and. thereafter. This will provide sufficient revenues inFY1984 t-O meet all operating costs and debt service and to meet 20% of invest-ment which in the circumstances of Nepal isi a satisfactory performance. Onthe booi value of assets the equivalent rate of return would be 7-1/2% inFY1987.

6.18 The financial position of WSSB should be satisfactory during theproject construction period FY1978 to FY1981. At the end of this perioddebIt is forecast to be 51% of equity and this would leave an adequate marginfor further borrowing. The current ratio at about 4 times would be more thanadequate and WSSB is expected to have satisfactory liquidity.

6.19 HIMG has agreed that no further debt will be incurred by WSSB withoutIDA approval, unless net revenues for the previous year provide debt servicecoverage of at least 1.5 times maximum interest and amortization payments inany future year. This will be adequate.

6.20 HMG intends that WSSB shall take over the water supply assets andliabilities in Biratnagar and Birganj at the beginning of FY1979. In view ofWSSB's limited resources the net value of these assets and liabilities will betreated as a contribution by IR4G to the equity of WSSB. HI4G has agreed that

1/ Assets revalued on the basis of the Nepal Rastra Bank consumers' priceIrdex for Kathmandu

- 26 -

all assets and liabilities of the water supply systems to be taken over inBiratnagar and Birganj in FY1979 will be vested free of debt in WSSB and aschedule of the main assets to be transferred to the Board would be publishedin the Nepal Gazette before July 15, 1978. HMG has also agreed that theKathmandu sewers still in the ownership of the Town Panchayat will be simi-larly vested in WSSB free of debt.

H. Performance Monitoring

6.21 WSSB is such a new organization that there :is insufficient informa-tion on financial performance upon which to base a sound judgement. The firstyears' financial statements indicate a reasonable level of performance al-though the progress on system implementation and training has not reached thelevel expected at the time of appraisal of the first Project (see para 5.05).It will be necessary, therefore, to monitor closely the future performance ofWSSB and a project implementation schedule and a list of key indicators formonitoring purposes is set out in Annex 1, Appendices I and 2.

I. Insurance

6.22 Materials for the project will be insured. WSSB is owned by HMGand other risks are not covered by insurance. The insurance market in Nepalis not broadly based but HMG has agreed that provision for insurance, satis-factory to IDA will be made.

VII. AGREEMENT REACHED AND RECOMMENDATIONS

7.01 During negotiations agreement was reached with HMG on the followingprincipal points:

(a) HMG will provide the funds required to complete the projectand will onlend the proceeds of the IDA crediit to WSSB for25 years at 9% with a five year grace period on amortizationand no payment of interest in the first five years (para. 6.06);

(b) A tariff study will be carried out by the end of 1977(para. 6.09);

(c) A sewerage charge of 50% of water charges will start and awater and sewer connection survey will be carried out inFY1978 (para. 6.13);

(d) An annual rate of return on the average value of net fixedassets operated by WSSB will be achieved at a rate of atleast 2% in FY1979 to FY1982, 3% in FY1983, 4% in FY1984and increasing to at least 6% in FY1987 (para. 6.17); and

- 27 -

(e) WSSB will take over the water supply assets and liabilitiesin Biratnagar and Birganj in FY1979, free of debt (para. 6.20).

7.02 Conditions of effectiveness for the credit are as follows:

(i) Effectiveness of the agreement amending Development CreditAgreement 470-NEP to finance the cost overrun on the firstProject (para. 1.01);

(ii) WSSB having employed consultants to carry out the project(para. 3.13); and

(iii) The execution of a subsidiary loan agreement between HKG and WSSB(para. 6.06).

7.03 The proposed project constitutes a suitable basis for an IDA credit ofUS$8.0 million on the standard terms.

ANNEX IPage 1

NEPAL

APPRAISAL OFTHE SECOND WATER SUPPLY AND SEWERAGE PROJECT

Description of the Project

Introdaction

1. The proposed project consists of various works in the KathmanduValley and in the towns of Pokhara, Biratnagar and Birganj. In the KathmanduValley and Pokhara, the works are a continuation of the ongoing first watersupply and sewerage project. In Biratnagar and Birganj, the proposed projectis a first step to improving and extending the existing water supply systems,which for a long time have been inadequate in capacity, extent and quality ofservices.

2. The project components are based on various master plans preparedby the British consultants, Binnie & Partners, in 1973. The master plansfor Kathmandu Valley and Pokhara were updated by Engineering Science Inc.,U.S.A., in late 1974 prior to commencemenit of the final engineering designfor the first project. These master plans generally cover the period through1985 cr 1987 and since they are already three to four years old, there is aneed to update the plans before the final design of project components. Somechanges proposed by WSSB have been taken into account already in the prepara-tion cf the proposed project. The various project components for each ofthe fcur areas are described below and shown on Maps IBRD 12672 and 12677to 12680.

Kathmandu Valley

3. The first Project provides for basic extensions and improvementsto water sources as well as transmission and primary distribution facilitiesin the Kathmandu Valley and these are expected to be sufficient till 1987.Theref'ore, the proposed project includes mainly secondary distribution mainswhich will enable WSSB to extend its services to larger areas and improvesanitation conditions in the area. The rehabilitation of existing leakydistr:'bution mains and services will be continued in this project. Theneed for this has been brought to light by the work of the leak detectionteams under the first Project.

4. Since there will be better information available after implementa-tion of the first Project on quantities of water produced and consumed, itis proposed, that the basic water supply projections would be updated. Alsothe configuration of the primary network over a longer period and the neces-sity of new reservoir capacity must be reviewed when updating the masterplan. Special attention will also be given to future arrangements for watersupply services in semi-urban villages in the valley area.

ANNEX 1Page 2

5. The sewerage component in the first project provides for a newtrunk sewer system and sewage treatment facilities which are expected to besufficient beyond 1985. Therefore, the proposed project includes only ex-tensions to collection systems in the northern part of Kathmandu and incentral Lalitpur. The updating of the sewerage master plan will includeextensions to sewage treatment plants and the trunk sewer system.

6. Bhaktapur, which has its own supply system, is not included in theproposed project, since the Federal German Government through bilateral aidis carrying out water supply works in the town. Bhaktapur, however, will beincluded in the updating of the master plans.

7. The following components are included in the proposed project.Water Supply (Maps, IBRD 12672, 12677 and 12679).

(a) Rehabilitation of Existing Distribution Mains,: WSSB has beenworking on leak detection since the arrival oif the ODM expertand this has pinpointed the poor state of some pipelines andthe low quality of materials and workmanship used on serviceconnections which is causing the high rate of water leakage.Of the pipelines investigated so far, about 10 km need replace-ment and WSSB proposes to include four km of the most urgentreplacement pipelines ranging from 80 mm to 300 mm in diameterin this project. It is also planned that 5000 service connec-tions, 400 standpipes, 500 gate valves and 150 washouts andair valves will be repaired or replaced simultaneously. Thetotal value of this is NRs 6.16 million.

(b) New Secondary Mains in Kathmandu and Lalitpur: WSSB hasprepared a proposal for extensions of secondary distributionmains to meet the increasing demand for new services forwhich the number of outstanding applications is at present1,500. The program provides for construction of about 48km of pipelines from 80 mm to 150 mm in size. A sum ofabout NRs 15.72 million is provided in the project.

(c) Water supply to villages in the fringe areas of Kathmanduand Lalitpur: Altogether 10 new villages with an estimatedtotal population of 40,000 are proposed for connecting tothe water supply system. Six of these, namely, Edol,Dhapakhel, Hari Siddhi, Sano Gaon, Tikathali-Datti andOchu form one system along the new distribution main whichwill consist of a link between the Muldole scheme and theLalitpur network being constructed in the first project.Two villages, Bungamati and Khokana, will obtajin waterfrom the Pharping transmission line and two others, Pangaand Kirtipur, from the new main connecting the transmissionlines of the Doodpokhari and Lokhot schemes. New lines,ranging from 80 mm to 200 mm in size, will have a totallength of 29 km and will cost NRs 6.02 million. Suppliesin the early years will be mainly through standpipes.

ANNEX 1Page 3

(d) Distribution Network Extension in Bode/Thimi: The newlyconstructed well in Bode will provide ample water and theextension of the distribution system with replacement ofsome old, badly leaking mains is very necessary. The workwill involve the construction of 6.5 km of mains, varying insizes from 80 mm to 200 mm and the total cost will be NRs 1.80million. Standpipe supplies will be supplemented by meteredconnections in the proposed project.

(e) Service Reservoir: The existing leaking reservoi5 at Bode willbe replaced with a new service reservoir of 500 m . This willprobably be constructed near the site of the existing one andthe cost will be NRs 0.70 million.

Sewerage (Map IBRD 12678).

(f) The proposed sewerage component consists of extensions ofcollector sewers in the most densely populated core areasof Kathmandu and Lalitpur. Sewers vary from 200 mm to 500 mmin size and have a total length of nine km. Total construc-tion cost is estimated to be NRs 9.96 million. The work willalso include minor drainage works related to the constructionof sewer lines in four separate localities.

8. WSSB proposes to construct a new service reservoir, 2,000 m involume, at Bansbari, adjacent to the transmission line of the Bir Dhara Scheme.The e3timated cost is NRs 2.26 million. It has not yet been shown that thisreservoir is absolutely necessary for the operation of the particular supplyzone and this will be subject to justification when updating the master planfor water supply. The construction cost of the reservoir is not included inthe project cost because of limited funds available, but if the constructionis justified a corresponding reduction could be made in the allocation offunds to network extensions.

9. The supply capacity of the system in the Kat mandu Valley, aftercompletion of the first Project will be about 71,000 m /day which is estimatedto be sufficient3 till 1987. Eotal storage capacity after the first Projectwill be 11,000 m to 17,000 m depending on whether the existing Maharajgunjand Mahankal Chaur reservoirs can be kept in operation after recent repairwork. This will give a total reservoir volume of at least 20% and 17% of themaximum day demand in 1980 and 1985 respectively, which is considered to besufficient in a system where over 60% of supply is by gravity.

10. The extended distribution system will serve more than 36,000 waterconnections and 1,400 standpipes. The total number of sewer connections isexpected to be about 11,000.

ANNEX 1Page 4

Pokhara

11. The first Project provides for increasing the water sources andreinforcing the primary network in the core area of Pokhara. WSSB proposesto extend the secondary transmission network, since sources are estimated tobe sufficient almost up to 1985 and has prepared a program consisting of twopriority categories. Production meters will be installed in the transmissionlines in the first Project and on the basis of improved data the water supplyprojections will be updated and recommendation for future sources made. Con-figurations of the network will be reviewed in line with the latest developmentof the town and corresponding modifications to the sewerage master plan willbe made.

12. The following components are included in the proposed project (Map,IBRD 12679):

(a) Extension of the Secondary Distribution Network: The projectcovers only the first priority of WSSB's proposal consistingof 11 km of pipelines of 80 mm and 100 mm. The total construc-tion cost is estimated at NRs 2.72 million. The demand fornew services is high and the number of outstanding serviceapplications is 700.

(b) Bindhabasini Reservoir: Since the repair of the existingreservoir is beyond reasonable cost, it is proposed that anew service reservoir will be constructed3at the same site.The reservoir will have a volume of 500 m and the esti-mated construction cost is NRs 0.70 million. The existingreservoir will be demolished.

13. The total volume of service reservoirs in Pokhara will be 950 mafter completion of the proposed project which will be less than 15% of thepeak-day demand after 1981. The necessity for additional storage capacitywill be studied in more detail while updating the water supply master plan.

14. The extended distribution system will serve about 3,000 water con-nections and about 200 standpipes.

Biratnagar

15. The scope of the project will provide for increased source capacity,reinforcement and extension of the distribution system, as well as generalimprovements to water supply operations. The planned time for takeover ofoperations by WSSB is July 1978. It has been established that some develop-ments have taken place in the town of Biratnagar since the water supply masterplan was prepared. Therefore, the plan must be updated before commencing thefinal design of the project components in respect of extent and configurationof the supply network, basic projections and the location and dimensioning ofnew wells. In particular, groundwater investigations should be institutedimmediately after Credit approval. Corresponding modifications to thesewerage master plan will also be made.

ANNEX 1Page 5

16. The following components are included in the project (Map, IBRD12680).

(a) Improvements to the Existing Tubewell Scheme: The existingpumphouse will be lodified to improve ventilation, a new

pumpset of 3,000 m /day will be supplied and installedwith spares, and a new chlorination station with a storewill be constructed. The estimated cost is NRS 0.31 million.

(b) New Tubewell Scheme: The consultants recommended the drillingof two new tubewells near the old airfield, but the locationof the wells will be finally decided on the basis of furtherinvestigations when updating the master plan. The preliminarilydesigned scheme fill consist of two tubewells with submersiblepumps of 4,200 m /day each, pumphouses for wells, 700 m oftransmission pipes 250 mm in size and a chlorination stationwith store. The estimated cost is NRs 1.69 million.

(c) Extension of Distribution Network: The proposal is based onthe consultant's plan and consists of about 24 km of pipelinesin diameters of 100 mm to 350 mm and 10 km of pipes for sec-ondary mains sizes 50 mm and 80 mm. The cost estimate for thisis NRs 9.23 million. The demand for new water services ishigh and the number of outstanding applications is 500 atpresent.

I'd) Water Tower: An elevated water tank of 500 m is proposedfor construction at the new tubewell site. The cost estimateis NRs 0.92 million.

(e) Staff Quarters and Other Buildings: It is proposed to erectpump operators' quarters at the new tubewell site andreconstruct quarters at the existing tubewell site. WSSBalso proposes to construct a building for a laboratory andan office. The total cost provided in the project islimited to NRs 0.45 million.

17. After cSmpletion of the project the total production capacity willbe about 11,400 m /day. This is expected to meet the peak-day demand till 1983if th,- projections fol ow the predicted high assumption. Total reservoircapacity will be 950 m which is small when compared with the projected peak-day demand beyond 1980. In order to minimize the risk of discontinuationof supply in case of pump break-down, necessary spares are provided in theproject. Additional storage capacity should be considered for future phasesin orler to meet a reasonable standard of supply in case of electricityfailure.

18. The system is estimated to serve over 3,500 service connections and200 standpipes.

ANNEX IPage 6

Birgani

19. The project includes improvements to the existing tubewell schemesand extensions to the distribution system. The planned time for takeover ofwater supply operations by WSSB is July 1978. During the visit to Birganj,the mission identified new developments which have taken place since themaster plan was prepared. The town Panchayat is planning extensions of resi-dential areas at present and the water supply master plan must be updatedbefore commencing the final design of the project components. Necessarymodifications to the sewerage master plan will also be made.

20. The following components are included in the project proposal (Map,IBRD 12680):

(a) Improvements to the Existing Tubewell Schemes: Consultantshave recommended some modifications and extensions which willimprove the operational efficiency and soundness of the tube-wells. The following items are included in the project:

(i) Adarsa Nagar; chlorination station and store;

(ii) Birganj; overhauling of the existing pump and supplyof spares, modification of the pumphouse ventilation,chlorination station and store, ground reservoir of500 m for chlorination 3and storage, and a deliverypump station of 6,000 m /day. The estimated cost ofthe above improvements is NRs 1.13 million.

(b) Extension of Distribution Network: The proposal is based onthe consultant's plan and consists of about six km of distri-bution mains from 100 mm to 250 mm and 21 km of pipes forsecondary lines varying in size from 50 mm to 80 mm. Thecost estimate for this is NRs 6.08 million. The number ofoutstanding service applications is only 50 but the newdevelopment areas presently being planned are expectedto be fully built-up in 3 to 5 years and demand for newservices will increase.

21. WSSB proposes the construction of staff quarters and a laboratorybuilding at an estimated cost of NRs 0.44 million. Since facilities inBirganj are reasonably sufficient when compared with, for instance, Biratnagar,these are proposed for inclusion in a future project and no provision is madenow.

22. The existing production capacity is expected to mSet the peak-daydemand till 1987. Total reservoir capacity will be 1,400 m which will beover 15% of the peak-day demand.

ANNEX 1Page 7

23. The extended system is estimated to serve about 2,700 connectionsand about 150 standpipes.

Land Acquisition

24. The project includes a provision for crop compensation and acquisi-tion of new well sites in Biratnagar at a cost of NRs 0.45 million. The re-servo:Lrs in Pokhara and Bode are expected to be constructed at the existingsites.

VehicLes, Tools and Equipment

25. WSSB will need more operational vehicles as it expands its functions.Six trucks, four jeep-type vehicles, 10 motorcycles and 50 bicycles are in-cluded in the project. Tools and equipment such as pipe cutters, tappingmachines, pipe testing equipment, waste detection equipment, office machines,etc. are also included in the project. A provision of NRs 2.00 million ismade for these items and the details will be decided when updating the masterplans.

Water Connections

26. The expected total number of house service connections will be about45,000 by the end of FY1981 in the towns and villages included in the Project.All of these connections are expected to be metered. The first Project pro-vides for domestic water meters and materials for 13,000 connections. Aprovision of NRs 7.63 million is made in the proposed project for meters andfittings for an additional 27,000 connections. About 1,000 existing, meteredconnections, 40% of the total, are in good condition and do not require re-placement. The balance of about 4,000 connections will be provided from WSSB'sown resources by 1981.

T rai_ing

27. The training of the technical staff will mainly be carried out byon-the-job training under the supervision of the ODM team. This appliesespecially to plant, pump station and reservoir operators who will be trainedin operating the treatment plants and distribution facilities. WSSB is ob-taining, in addition to the water production superintendent, a chemist-bacteriologist from ODM. It has also been decided that WSSB should apply fora trainer in distribution operations and maintenance from ODM, since thecontracts of the metering and leak detection experts will expire in 1977.During the first Project the above ODM team has successfully trained WSSB'soperational staff in metering and rehabilitation of service connections anddistribution mains as well as in waste-prevention. This staff will be usedduring the second project in developing the same activities in the new projectareas under the supervision of the trainer from ODM. A provision of NRs 0.1mill:Lon is made in the project for the supply of necessary materials such astextbooks and films. The vehicles and equipment as detailed in paragraph 25will also be used, in part, for training purposes.

ANNEX IPage 8

Consulting Services

28. The consulting services include updating of master plans for variousproject towns, detailed design of the project components, preparation oftender documents and supervision of the construction work. The provision forupdating the master plans including groundwater investigations in Biratnagaris NRs 8.86 million and for detailed design and supervision NRs 6.26 million.Broad outlines of the consulting services are described in the paragraphsabove, town by town. It is proposed that WSSB's staff will be responsiblefor a part of the final design which is still to be decided. A provisionof NRs 1.25 million is included in the project for a tariff study which isdescribed in paragraph 6.09 of the main report. Consulting services includealso the preparation of Feasibility Studies for six provincial towns expectedto be as follows: Hetauda, Dharan, Janakpur, Nepalganj, Bhairawa and Butwal.The total population of these towns is about 170,000, Dharan being the biggestwith a population of over 40,000. The provision for feasibility studies is NRs1.75 million.

Construction of the Project

29. Cost estimates are based on unit rates obtained from the recenttenders for the first Project. Estimates were prepared by WSSB and reviewedby the mission. The base cost is at January 1977. Designs are only at apreliminary stage but as construction conditions are reasonable, moderatephysical contingencies have been used as follows; pipelines 10% to 20%,source works 20%, reservoirs 15% to 20% and equipment supplies 10%. Costestimates will be revised in the course of master plan updating.

30. Most of the contracts will be subject to international competitivebidding. The installation of water and sewer connections and minor drainageworks may be carried out by force account as part of the project. The costestimates are detailed in Annex 2 and the construction schedule is shown inAnnex 4. The main actions and target dates are presented in the implementa-tion schedule in Appendix 1 and monitoring indicators in Appendix 2.

ANNEX 1Appendix 1Page 1

NEPAL

APPRAISAL OF

THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

Project Implementation Schedule

ImplementationACTION BY DATE

1. Agreed During Negotiations

(a) Employment of consultants etc. for:

(i) master plan updating and second project

(ii) feasibility studies

(iii) tariff study (see Attachment 1)

(b) Land acquisition timetable (see Attachment 2)

(c) Timetable for bid document preparation, review,advertising and letting (see Attachment 3)

2. Pro_ject Implementation

(a) Agree sewage charge WSSB/Bank 6/15/77

(b) Application to obtain a technical assistancelaboratory expert by December 1977 WSSB 6/30/77

(c) Application to obtain a technical assistancesystem operations and maintenance trainer byDecember 1977 " "

(d) Introduce sewage charge 7/16/77

(e) Start water and sewage connection survey "

(f) Subsidiary loan agreement signed (condition forcredit effectiveness) WSSB/HMG 7/31/77

(g) Arrangements made for continuation of technicalassistance financial advice WSSB 8/31/77

ANNEX 1Appendix 1Page 2

ImplementationACTION BY DATE

(h) Agree planning and design schedule WSSB/Bank 9/30/77

(i) Propose a program of overseas, local and inhousetraining to the Bank WSSB "

(j) Arrangements made for start of technical assistancelaboratory expert "

(k) Arrangements made for start of technical assistancewater systems operations and maintenance trainer "

(1) Agreement on revised construction schedule WSSB/Bank 10/31/77

(m) Proposals for tariff for FY1979 to the Bank WSSB 4/15/78

ANNEX 1Appendix 1Attachment 1

NEPAL

APPRAISAL OF

THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

Timetable for Consulting Action

BY DATE

1. Propose shortlist of consultants to Bank WSSB 3/31/77

2. Draft: Terms of Reference and Notice of Invitation to

consultants for:

(i) Master plan updating and second project

(ii) Feasibility studies

(iii) Tariff study

Sent to Bank for review WSSB 4/15/77

3. Invit:e consultants to make proposals WSSB 4/30/77

4. Receive proposals WSSB 5/31/77

5. Submit recommendation to Bank WSSB 6/21/77

6. Appo:int consultants WSSB 7/31/77

ANNEX 1Appendix 1Attachment 2

NEPAL

APPRAISAL OF

THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

TimzEtable for Land Acquisition

A. Purchase of Land

Access to site for Gazetteinvestigations notice

1. New well sites in Biratnagar 9/77 4/78

B. Temporary Access

Survey of land Notice onowners compensation

2. Kathmandu Valley(i) Water mains 9/77 4/78(ii) Sewer lines 3/78 10/78

3. PokharaWater mains 9/77 4/78

4. BiratnagarWater mains 9/77 4/78

5. BirganjWater mains 9/77 4/78

ANNEX 1Appendix 1Attachment 3

NEPAL

APPRAISAL OF

THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

Timetable for Bid Letting

BidDocumentsReview Advertising Bids Close Letting

Meters, connections and fittings 4/77 5/77 7/77 8/77

Biratnagar wells drilling 4/78 5/78 9/78 10/78

Screens and casing supply 5/78 6/78 9/78 10/78

Pumps and chIorinators civil works 5/78 6/78 10/78 11/78

Pumps and chlorinators supply 5/78 6/78 10/78 11/78

Pipes distribution supply 6/78 7/78 11/78 12/78

Vehicles, etc.. 6/78 7/78 11/78 12/78

Reservoirs 9/78 10/78 2/79 3/79

Pipes distrilbution lay 1/79 2/79 6/79 7/79

Buildings 4/79 5/79 9/79 10/79

Sewer civil works and pipes 12/78 1/79 6/79 7/79

NEPALAPPRAISAL OF THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

MNITOROIG INDICATORS

YEAR TO JULY 15 1Q75 1976 1977 1978 1979 1980 1981 19sa 1983 1984POPULATION AND POPULATI-- 8ERVED

POPULATIONmooofs 495,0' i469,00 484,00 499,00 680,00 701.00 723,OU 827,00 $51,00 875,00POPUJ.TION WITr WATER-oOO'S 398,25 1104,34 432,27 439,47 519,14 960,76 S90,87 653,83 693,89 734,65POPULATION SERVED- SEW.-OOO'S 127 .00 27 00 27 .00 42. 50 56 .00 67 .50 77 .00 91 .00 97 .50 102 .00% WITH WATER 87.93 A6,21 89,31 8a,07 79,29 79,99 81,72 79 06 81,54 83,98X SCRVED SY STAND-POSTS 694,30 14,69 51,60 46,80 41,99 42,54 4t,63 40.12 39,81 39,52X SERVED SEWERAGE 5. 93 5 .76 5 .58 8 .52 8 .24 9 .63 1 0.65 11 .00 11 .46 1 .66DEMAND

CONNECTIONSe WATER - OOO'S 18,15 18,99 ? 24,79 29,99 39,17 45,80 50,46 56,04 61,60 67,31CONNECTIONS-SEWER-OOO'S 3 0(0 3,00 3,00 5O00 7,00 9,00 11.o0 15,00 15,00 17,00CONSUMPTION.MILLToN 3 b6o2 6,22 7,68 8,99 12.22 14,25 15,53 17,34 19,66 21,36CONSUMPTION/CONN/ MS/MONTH 27,62 27,34 2, 85 29S01 26,00 29,81 29,64 25,78 26,60 26,44X UNACCOUNTED FOR WATER 900,00 0, 00 90,00 '47,00 45,00 40,00 38,00 36,00 34.00 32,00PRODUCTIONoMILLION M3 12,03 12,43 15,36 16,96 22,22 23,75 25 ,05 2796 29,79 31,41PER CAPITA PRODUCTIONULCD 82.77 A4,25 97,34 10o9.74 lt2,93 116,o2 116.13 117,17 117,62 117,09

ADMINISTRATION

EMPLOYEES PER iOO0 CONNECT 30;3( 33,91 31,72 30,55 29.087 29,611 29,13 29,98 29,06 28,23

COSTS

EXCHANGE RATE i¶S8 u 10toI0 12,90 12,50 12,50 12,50 12,q9 12,50 12,50 12,50 12,50_ATII4 CO0T$*14ILLION 1,A7 3,s0 3416 f.4 6,06 7,19 9,02 9,55 11,81 1CO@T UUS SoNN!CTtON/MONTH o,aJ 0 o,18 0, oq4 1[83 1,086 1,I 1,11 1,29 1,35REVENUESS. ccc...

OPERATING REVENUFS.M?LLZON ?,23 4,24 5s23 4,51 15,84 18,89 30,47 34,11 54,58 62,68AVERAGE REVENUPS US$/-'M3 o,04 0,O ,Os 0,08 0010 0,11 0.16 0,16 0,22 0,23 .S INCREASE IN TARIFFS 47,69 7,47 18,04 111,17 4,76 58.21 0,48 46,44 6,48

FINAJCIAL RATIOS

X RATE Ot RETURN "2,3() 0,73 1,49 0,33 3,93 1,78 3,15 2,43 4,75 4,36S OPERATING RATIO BEFORE DEP. 83,89 95,99 62,73 64,94 38,26 38,98 29,59 28,96 21,65 21,7"DEBT SERVICE RATTI 0.00 0.00 0.0 0 .00 0 .00 3,13 1.36 1,58 1,62 1,74X RECEIVABLES TO BILLING 42,89 36,93 35,00 30,00 25,00 25,00 25,00 25,00 25,00 25,00X DEBT/(DE9T+FQUITY) 14,P5 17,99 39,50 94,97 514.29 91,64 I1,42 47,58 45,76 44,07CURRENT RATIO (TnEM) 29,35 11.S4 14,22 10,32 3,64 3,00 3 .67 2,54 2,03 3,56

ANNEX 2

NT E P A L

APPRAISAL OF

THE SECOND WATER SUPt1PLY AllD SERAGE PROJECT

ProJect Cost &stiJsates

Local Costs, in 1is x 10 3 Foreign Costs, in NLs x 10 3Total TotalLocal Foreign

Years to July 15 1978 1979 1980 1981 Costs 1978 1979 1980 1981 Costs Total

WATER SUPPLYSources 60 1,130 - - 1,190 272 1 670 - - 1,942 3,132Distribution Pipelines - 2,656 13,284 9,426 25,366 - 11,779 7,068 3,5L2 22,359 47,725Reservoirs - 508 848 338 1 694 - 252 377 - 689 2,323Water Connect:Lons 305 458 458 305 1,526 1,220 3,052 1,831 - 6,103 7,629Vehicles, Too:Ls & Equipment - 421 180 - 60i - 841 562 - 1,403 2,004Staff Quarters, etc. - - 284 L21 405 - - 32 13 45 450

Sub-total 365 5,173 15,054 10,190 30,782 1,492 17,594 9,870 3,525 32,481 63,263

SEWERAGEExtension of Sewerage Networkin Kathiandu *ind Lalitpur - 284 2,837 2,552 5,673 - 644 3,004 643 4,291 9,964

PHYSICAL CONTINGENCIES 59 879 2,813 2,110 -5,861 225 2,703 1,915 788 5,631 11,492

Sub-Total 424 6,336 20,704 14,852 42,316 1,717 20,941 14,789 4,956 42,403 84,719

C'.S=ING SERVICES 1,087 1,903 1,631 816 5,437 2,538 4,441 3,806 1,903 12,688 18,L25

LAND - 450 - - 450 - - - - Iso

TRAICNG - 25 50 25 100 _ _ _ _ 100

WSSB's ADMIDTSIRATION 290 375 435 500 1,600 - - _ _ 1,600

Sub-total 1,801 9,o89 22,820 16,193 49,903 4,255 25,382 18,595 6,859 55,091 104,994

PRICE COTIDIGEDCIES 184 1,933 7,515 7,238 16,870 436 5,399 6,123 3,066 15,024 31,894

Total Project Costs (excludingDaties and Taxes) 1,985 11,022 30,355 23,L31 66,773 b4691 30,781 24,713 9,925 70,115 136-9388

buties and Taxes 176 1,203 1,702 1,111 4,192 - - I _ _ 4,192

t0TAL P10JET COSTS (inclu&dngButies and Taxes) 2,161 12,225 32,03 24,542 70,965 -4,691 30,781 24,718 9,925 70,115 1_1,0_0

ANNEX 3

NEPAL

APPRAISAL OFTHE SECOND WATER SUPPLY AND SEWERAGE PROJECT

Estimated Schedule of Disbursements

IDA Cumulative DisbursementsFiscal Year at end of Quarterand Quarter US$ 000 Percentage

1978First 100 1.2Second 200 2.5Third 300 3.7Fourth 500 6.2

1979First 1,000 12.5Second 1,500 18.7Third 2,000 25.0Fourth 3,000 37.5

1980First 4,000 50.0Second 5,000 62.5Third 5,500 68.7Fourth 6,000 75.0

1981First 6,500 81.2Second 7,000 87.5Third 7,300 91.2Fourth 7,600 95.0

1982First 7,700 96.2Second 7,800 97.5Third 7,900 98.7Fourth 8,000 100.0

NEPALAPPRAISAL OF THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

CONSTRUCTION SCHEDULE

. _ _ _ FY 1977 FY 1978 FY 1979 FY 1980 FY 1981 FY1982PROJECT COMPONENTS 1977 1978 1979 1980 1991

| CivilWorks:CsorinatinnStatiollF PumpHuwTh A -1 Ti I l i Of N --.|__ ...........77. .. N. I. ... j L-- IM .As MI J -I I I I 01NI DI M I JI JAI SI I1N

WATER SUPPLY

Su,ppy of Well Screes nd Csig PipesSu,p .f We P-p, Chlo-o Equip-er. Ts-

1misonad Sir,Pping SPares . ... .. .

Pipin,C' Chlorin-tior Ta-kic and min m_ji.t-i _ ciov - igsqi pamphoase.

-~~~~~~~~ ~ ~ ~ ~ ~ Conserunsiend Aciite @oecOr 0c Sodeihimi

Pokh-ra and Bira-nasan

Sopply of Pipes and firrieq...........

-Pipelayng

-Supply nf Mnrsr andfing

Vehicle, Ugoipnrtn -d Tnols. . .... r

C--tCosrcin of ssuff q-a-srs offic and

SEWERAGES-Wneg Enstn-ons in t airiid.i -nd L,alirpo.. .. .

CONSULTING SERVICES

F-oibililn Studi- and Tarff Reody

LANS ACQUISITION

ACTIVITIESCOTA S.. … Socomons.prepaT- a-ion CONTRCTS'-

Eeedteing -

-nieyneOar solE Sopply C-nre-cr

World uefa -18731

ANNEX 5Page 1

NEPAL

APPRAISAL OFTHE SECOND WATER SUPPLY AND SEWERAGE PRCOJECT

Existing Water Supply and Sewerage Facilities

1. General data and existing water supply and sewerage systems for each

of the project towns are described below. The locations of the towns areshown on the Map IBRD 12629.

Kathmandu, Lalitpur and Bode/Thimi (Kathmandu Valley)

WATER SUPPLY (Maps, IBRD 12672, 12677 and 12679)

2. Kathmandu Valley water supply systems include the towns of Kathmanduand Lalitpur, the adjoining village Panchayats and some semi-urban villages inthe fringe areas of these towns. The Bode/Thimi area, including Nagadesh villageand the town of Bhaktapur, are also in the Kathmandu Valley and have theirown supply systems.

3. The valley is a roughly circular basin of a total catchment of 607square km. Kathmandu and Lalitpur towns lie west of center, by the Bagmati,the main river of the valley. Bode/Thimi and Bhaktapur are about six andnine kilometers respectively, east of Kathmandu.

4. Water supply to the towns and villages of Kathrnandu Valley is fromperennial springs, run of the river abstractions and welLs. Kathmandu is1,280 m above sea level, and the surrounding hills rise t:o about 2,000 mwith a maximum height of 2,760 m. Snow storage does not occur in significantquantities, and the June/September monsoon provides most of the 1,740 mm meanannual rainfall. Due to the monsoon regime there is a long recession inspring flows leading to a minimum flow in April and May of the followingyear. Groundwater development in the valley, for public purposes, hasearlier been unsuccessful, but on the basis of hydrogeological studies inrecent years this source is being explored further.

5. Kathmandu, Lalitpur, Bhaktapur and Bode/Thimi in the valley aresupplied with water from seven schemes with fourteen sources at present.Details are as follows:

(a) run-of-the-river abstraction from two spring-fed streamssupplies the Bir Dhara scheme serving north Kathmandu;

(b) run-of-the-river abstraction from five spring-fed streamssupplies the Tri Bhim Dhara scheme serving northwest Kathmandu;

ANNEX 5Page 2

(c) a spring supplies the Lokhot scheme serving Kirtipur andthe Rabi Bhawan area of southern Kathmandu;

(d) three spring-fed streams discharging through the trailraceof a hydroelectric power statiLon supply the Sundarijalscheme serving northeast Kathmandu;

(e) a spring supplies the Doodpokhari scheme serving Lalitpur;

(f) run-of-the-river abstraction from the Bagmati River suppliesthe Sundarighat scheme serving Lalitpur; and

(g) a single spring-fed stream, the Mahadev Khola scheme, suppliesBhaktapur.

In addition to these sources the ongoing first Project is providing new tubewellsat Bode, Bansbari and Balaju and spring and tubewell sources at Pharping.WSSB has also recently constructed a small spring scheme at Muldole.

6. From hydrological studies made for over a year and analysis ofscanty records, the consultants have estimated the yield from the existingwater sources. The estimated water production from each of the sources isalso shown bracketed in the following table. This is based on treatmentplant or pipeline capacity when the daily flow is either the minimum averagefor the year or that exceeded for 85% of the time.

Daily minimum flow in Daily flow exceedsAverage One Year 50% of 75% 85% ofYear in Ten Time of Time Time-------…/sec-----------------

A. Springs & StreamsBir Dhara Scheme (23) (23)Intake No. 1 10 7 53 24 16Intake No. 2 23 15 120 53 37

Tri Bhim Dhara Scheme 35 (32) 23 181 80 56 (52)Lokhot " 6 ( 6) 5 9 7 6 ( 6)Sundarijal " 208 (203) 162 949 410 336 (205)Doodpokhari "? 23 (21) 21 44 29 25 (23)Mahadev Khola " 29 (29) 19 100 69 46 (46)

B. Bagmati River /aSundarighat " 9) - 9 ( 9)

Total for Kathmandu Valley 334 (323) 531 (364)

/a No reliable flow records.

ANNEX 5Page 3

Water Production, Transmission and Reservoirs

t. Except for the one scheme at Sundarighat which is based upon a riversource and which requires pumping, all other schemes are based upon springsources and provide gravity supplies. Description of the various schemes isas follows:

(a) Bir Dhara Scheme

Intake No. I on th1e spring-fed Mahadev Khola consists of a smallmasonry dam and irtake cLkilŽei A cast iron pipeline 8.4 km long and 125and 200 mm in duameter 1-i" ib59, conveys raw water from this intake to theMaharajgunj treatiaent' Ve and reservoir serving north Kathmandu. Both theintake chamber and pipeliae, which has five break-pressure tanks, are leakingbadly. Intake No. 2 on the spring-fed Bishnumati Khol is similar to intakeNo. 1. The raw water is cornveyed by a 1.4 km spun iron pipeline of 150 mmdiameter laid in a second stage built in 1960, and connected to break pressuretank No. 4. A nepw transLission pipeline, 6.4 km long and 200 mm in diameter,was constructed in 1975 to convey additional water available at the source.Maharajgunj water treatment plant, built in 1961, is of conventional designwith lime and alum dosing, flocculation, sedimentation, filtration and chlori-nation. The desian has se- eral unsatisfactory features, and there is roomfor improvement in the operation of the plant which is carried out byuntrained staff. The rated output of the plant is 31.4 1/sec. The consul-tants have listed extensive remedial work to increase plant efficiency, but areof the opinion that the piaat should be replaced with a new plant sited atBansbari. Minor improvemenits are to be implemented in the first Project. Theraw water from both Ih:ulas !/ is typical of most of the surface waters in thevalley; polluted and s_. eftil low concentrations of dissolved salts andincreased turbidity and color during the monsoon. Situated 3near the plant isthe service reservoir with an effective capacity of 4,890 m and top waterlevel (TWL) 1,328.5 m. The single-compartment, 80-year old reservoir has aleakage of about 3 1/sec. As it is in continuous service and interruptionsto supply cannot be tolerated at this time, WSSB has proposed to include a newreservoir at Bansbari in the proposed project. On completion of this projectthe question of abandoning >1aharajgunj plant will be decided.

(b) Tri Bhim Dhara Schemtn

With the difference that it has three more spring sources and wasfirst built in 1930, this scheme is similar in concept and in the same poorcondition as the Bir Dhara scheme. Raw water from three intakes at Allye,Boude and Bnriive, on .ni ag-fed tributaries of the Bishnumati Khola, isconveyed to the Balaju water treatment plant by a poorly laid, badly main-tained and unprotected steel and cast iron pipeline system totalling 11.5km of diameters varying from 100 to 300 mm. Two other pipelines, of 6.7km and 7.4 km, also convey raw water to Balaju from intakes on spring-fed

1/ Streams.

ANNEX 5Page 4

tributaries of the IColpu Khola at Chahare and Panchmane. The Chahare pipe-line is of cast iron throughout, 125 and 150 mm in diameter. Though it isalso poorly laid and in need of maintenance it is, by comparison, in a reason-able condition. The Panchmane pipeline, partly of 125 and 150 mm diametercast iron, and partly of 150 mm diameter asbestos, is also in a poor condi-tion. Balaju water treatment plant, completed in 1960, designed to treatwater from the five sources and rated at 126 1/sec, has some design deficien-cies. There is room for improvement in the operation of the plant and as atMaharajgunj, the plant is operated by untrained staff. Raw water quality isalmost similar to that of the Bir Dhara scheme and the treatment processincludes dosing with alum and lime, flocculation, sedimentation, rapid-gravityfiltration, and chlorination. The consu'Ltants'proposals for correcting thedesign deficiencies and training of plant operators have been accepted by WSSBand improvements are to be implemented in the first Project. Bal ju servicereservoir supplying northwest Kathmandu has a capacity of 3,690 m and aTWL 1,352.4 m, which is higher than the Maharajgunj service reservoir by 23.9m. Leakage from the reservoir is negligible, but appreciable quantities arelost from the adjoining supply pipework.

(c) Lokhot Scheme

Limestone springs at Lokhot, to the southwest of Kathmandu, supplythe villages of Kirtipur and Rabi Bhawan, an elevated area in Kathmandu, and anumber of communities living on the transmission pipeline. From a small col-lecting chamber a 4.1 km galvanized iron 100 mm diameter pipeline suppliesKirtipur and continues as a 75 mm diameter pipeline for another 3.4 km tosupply Rabi Bhawan. Some parts of the pipeline are damaged and it is oftenbroken by local farmers. The water is of good quality, non-corrosive and onlyrequ-res disinfection. The 100 mm pipeline has a capacity of 8 1/sec, and the75 mm pipeline has a capacity of 6 1/sec, equal to the annual average minimumflow from the springs. There is no service reservoir or chlorination. WSSBhas accepted the consultant's recommendations to make improvements to thesource and provide for chlorination.

(d) Sundarijal Scheme

The headwaters of the Bagmati River and two tributaries are storedin a pond, and released to generate hydroelectric power at Sundarijal hydro-electric power plant on the northeast rim of the valley. Water from the tail-race is led to a balancing reservoir for treatment in the adjacent Sundarijalwater treatment plant. The quality of the raw water is almost similar tothat of the Bir Dhara sources. Sundarijal water treatment plant, completed:in 1966, is rated to treat about 227 l/sec. At the present time output isabout 203 I/sec in dry weather and 205 1/sec for 85% of the time. The plantis conservatively designed with prelimirnary sedimentation, aeration, dosingwith alum and lime, vertical flow sedimentation, rapid-gravity filtration andchlorination. The plant is in good condition and some minor improvements and

ANNEX 5Page 5

a major modification have been recommended by the consultants to increasethe capacity of the plant to 248 1/sec, equivalent to the carrying capacityof the transmission pipeline. WSSB has accepted for inclusion in the firstProject some of the minor improvements which should increase output slightly,and also improve the quality of the treated water. An 8.5 km cast irontransmission pipeline, 500 mm diameter, conveys treated,water from theSundarijal plant to Mahankal Chaur reservoir of 4,640 m- serving northeastKathmandu. The pipeline is generally in good condition and with proposedimprovements, which includes stabilization of the treated water, should remainfree from corrosion. Mahankal Chaur service reservoir with TWL 1,338.1 m wasseriously leaking through cracks in the masonry walls and mass concrete floor,but this has been reduced to a reasonable level by repair work. Two additionalstorage tanks of 2,000 m3 each are being constructed in the first Project.

(e) Doodpokhari Scheme

Doodpokhari springs were first developed for domestic water supplyin 1896. The springs issue from limestone outcrops in the hills 6 km south-west of Lalitpur. Subsurface pipes collect the water in a well which is con-nected by a 2.8 km cast iron pipeline, 15 mm in diameter, to a reservoir atBhajangal. The reservoir provides 810 m of balancing storage at TWL 1,358 m,and is a convenient point for disinfection with chloride of lime. Though theraw water is slightly hard, with low turbidity, it is not aggressive with apH of about 8.1. Only traces of iron and small concentrations of manganesehave been noted, but there is suspicion of pollution. The source requiresprotection, and chlorination has to be made more efficient. No other treat-ment is required. Bhajangal reservoir is in good condition with negligibleleakage. A 2.8 km trunk distribution pipeline 225 mm in diameter conveyswater from the reservoir to Lalitpur. Some improvements are recommended bythe consultants for this scheme and are included in the first Project.

(f) Sundarighat Scheme

This is the only run-of-the-river pumped scheme in the valley, andis also the newest having been commissioned in April 197.[. The intake worksconsist of two 30 m long slotted screen pipes 100 mm and 150 mm in diameter,laid 2 m below the Bagmati riverbed, and connected to a 4 m diameter weldedsteel sump near the western river bank. A pumping station situated on theriver bank, equipped for pumping both raw and treated walter, lifts water toan adjacent treatment plant. About 2.4 km upstream of the intake is theconfluence of the Bagmati River with the Bishnumati Khola, in downtownKathmandu, and 1.6 km downstream of the intake the Bagmat:i River flowsthrough the deep Chobar Gorge. All surface and subsurface water from agreater part of the valley must pass through Chobar Gorge, and as may beexpected, the river is highly polluted at Sundarighat, especially by raw

ANNEX 5Page 6

sewage discharged into the Bishnumati Khc,la and the Bagmati River atKathmandu. The water is, however, not difficult to treat to acceptablestandards. Sundarighat treatment plant was designed to treat 32 1/sec, buton the advice of the consultants, will be down rated to about 12 1/sec. Thetreatment process provides for prechlorination, dosing with alum and lime,flocculation, horizontal flow sedimentation and slow sand filtration. Thedown rating of the plant will reduce filtration rates from 0.40 m per hourper square meter 1/ to 0.15 m per hour per square meter 2/, more suitablefor slow sand filtration. The consultants have also recommended discon-tinuing prechlorination and alum dosing in favor of the normal method offorming3a biological membrane on the filters. Treated water is stored ina 210 m tank, and pumped into the 225 mm diameter trunk distribution pipe-line from Bhajangal reservoir to Lalitpur. A new high lift pump station andindependent 200 mm pumping main serving Lalitpur which is about 4.5 km tothe east of the intake has been constructed recently. A few modificationsto improve the treatment efficiency are included in the first Project.

(g) Mahadev Khola Scheme

All the above schemes serve the Kathmandu and Lalitpur areas whichare on opposite banks of the Bagmati River. The Mahadev Khola scheme servesBhaktapur about nine kilometers to the east of Kathmandu. The flow in theMahadev Khola 3/ is derived from perennial springs and serves local irriga-tion needs as well as Bhaktapur water supply. An intake weir built in 1896at Nagarkot, which is northeast of Bhaktapur, diverts water into an inletchamber. In 1971 the original 100 mm diameter raw water pipeline which con-nected the inlet chamber to a service reservoir at Bansbari 3/ was replacedby a 200 mm diameter spun iron pipeline. At the same time the original 125 mmdiameter trunk distribution pipeline from Bansbari to Bhaktapur was replacedby a 300 mm cast iron pipeline. The distance from the inlet chamber toBansbari is 3.1 km and from Bansbari to Bhaktapur is another 2.3 km. Theraw water is moderately soft and aggressive with low turbidity except inthe monsoon. The only treatment provided is disinfection by gas chlorina-tion. WSSB has plans for the future construction of a treatment plant forconjunctive use with ground water. Only minor improvements are includedin the first Project.

1/ 0.16 U.S. gallons per minute per square foot.

2/ (0.06 U.S. gallons per minute per square foot.

3/ Not to be confused with the Bir Dhara scheme where similar placenames are used.

ANNEX 5Page 7

(h) New Pharping Springs Scheme

The ongoing first Project includes the construction of the Pharpingscheme which will utilize three springs and one or two wells. Pharping issituated to the south of Kathmandu about four kilometers from Lalitpur. Threelimestone springs issue frsm the hillside; two of these, the Sat Mul and SeshNarayan, supply a 16,000 m headpond serving the 500 kilowatt Pharping hydro-electric power station, and also local irrigation and domestic needs. A lowerspring, the Kutori Mul, emerges near the power station and provides localirrigation needs in season. HMG has decided to shut down the power station,as i-t is redundant, and WSSB proposes to develop the three springs to supplyKathmandu and Lalitpur. In the absence of long term spring flow data, theminimum low flows were estimated from a hydrological study of 20 years of rain-fall data in the adjoining Godavari catchment. This was compared with valuesfor the Kutori Mul spring measured during 1971/72, and frequency curvesdeveloped for all three springs. The study indicated small annual variationsof flow from the deep-seated springs, fed from a large volume of water instorage. Daily flows available for water supply from all the springs for 85%,75% and 50% of the time in an average year are estimated to be about 176 1/sec,201 1/sec and 313 1/sec respectively, and daily average annual minimum flowsare estimated to be:

Sat MIul Sesh Narayan Kutori Mul Total1----- /sec -------------------…

Average annual minimum 78 52 66 196Less irrigation use 19 13 8 40

Total available forwater supply 59 39 58 156

About two kilometers south of Kutori Muul an exploratory well wasdrilled in 1973 and when tested for 24 hours yielded about 35 1/sec. Thefirst production tubewell was drilled and developed recentLy but test pumpingresults have been disappointing. Another tubewell is being drilled arid ifsatisfactory the tubewells will be connected to the scheme for conjunctiveuse with the spring flows. Hydrological studies of the acquifer predicted adaily yield of 93 1/sec from the proposed tubewells. The engineering studiesand final design of equipment have been prepared for a total daily minimumsupply of about 249 I/sec, comprising: (a) 156 1/sec from the springs, and(b) 93 1/sec from the tubewells. As 201 1/sec is availablea for 75% of thetime from the springs, the conjunctive use of groundwater is expected to bemostly for meeting Kathmandu and Lalitpur peak demands in the later years.Submersible pumps would pump groundwater from the tubewells to a centralpumping station to be constructed at Pharping near the hydroelectric powerstation. The Pharping pumping station would also be fed by gravity from theKutori Mul spring through a new intake and a 300 m long, 2.50 mm diametet

ANNEX 5Page 8

pipeline. The water received from these sources would be injected into a newtransmission pipeline connected to the penstock of the hydroelectric powerstation, conveying water from Sat Mul and Sesh Narayan via the head pond. Anew 4.5 kilometer long, 350 mm diameter transmission pipeline is designed tohave a carrying capacity for supplying, by gravity, about 170 1/sec, almostequal to the daily flows from the upper Sat Mul and Sesh Narayan springs for50% of the time in an average year. As these flows recede to 100 1/sec, thelowest for 85% of the time in an average year, the supply would be increasinglyaugmented by pumping from the lower Kutori Mul spring, and as these flows alsorecede to about 57 1/sec--the minimum in an average year--greater quantitieswould be pumped from the Pharping tubewells. The total capacity of the trans-mission pipeline would be about 249 1/sec, which will discharge into a serviceI ~~~~~~~~3reservoir at Shainbu. This reservoir will have a capacity of 2,700 m andwill be equipped with chlorination facilities. From the Shainbu reservoir thetrunk distribution pipeline 500 nm in diameter will convey water to Lalitpurand southwest Kathmandu. The quality of water from these springs is expectedto be the same as the water from other springs.

(i) New Tubewells

In the first Project three other tubewells have been drilled, inaddition to the tubewells at Pharping. The test pumping of these tubewells hasshown a somewhat better yield than was expected during the appraisal of thefirst Project. The yields are as follows:

-- Bode, near the old well; 62.5 1/sec- Bansbari, west of the Bir Dhara transmission line; 62.5 1/sec-. Balaju, north of the Ring Road near Bishnumati Khola; 24.3 1/sec

The connection pipelines and pumphouses for these tubewells arebeing designed and itender documents are being prepared. All of the tubewellswill be equipped with chlorination facilities. Water quality is satisfactorybased on the analysis of the first water samples taken during the test pumping.The results indicate a low content of iron and manganese, a pH-value slightlyabove 7.0 and a total hardness about 70 ppm. Bansbari and Balaju tubewellswill pump to the adjoining transmission lines of Bir Dhara and Tri BhimDhara schemes respectively. Bode tubewell will be connected to the 3existingdistribution system and reservoir at Tigni. The reservoir of 500 m is inpoor condition and is proposed for replacement by a new reservoir in thesecond project.

(j) M4uldole Scheme

WSSB has implemented a small water scheme some 9.5 km south ofLalitpur to provide supply to two villages from Muldole spring. The capacityof the spring is estimated to vary from 20 to 40 1/sec.

ANNEX 5Page 9

8. In the first Project a central laboratory will be erected tofacilitate the necessary water quality testing for distribution control anddevelopment of treatment arrangements for which WSSB has requested a treat-ment expert and a laboratory chemist from ODM.

9. During the first Project a leak detection expert and a meteringspecialist from ODM have been working with WSSB since 1974. They havetrained local staff in rehabilitation of network and connections and thestaff have obtained practical experience in carrying out: metering and wasteprevention programs. About 20 flow meters will be installed in the firstProject in the system and at the plants and reservoirs to enable WSSB toobtain data on water produced and supplied to the system. Also a new com-munication system will be provided between reservoirs and Pharping pumpstation. This will provide reliable data for updating the master plans inthe proposed second project.

Distribution Network

10. Kathmandu distribution network was first laid in 1896 and extended

in 1920, 1930 and 1966. The Lalitpur and Bhaktapur networks were first laidin 1896, and except for minor additions remained unchanged until 1972 whensome of the trunk mains were reinforced at Lalitpur and replaced in Bhaktapur.The pipes are predominantly of cast iron with some steel and asbestos, withthe larger diameters ranging from 100 mm to 600 mm:

Range of pipe diameters (mm) 100-225 250-300 375-600 Total- kilometers -------------

Kathmandu 38 11 10 59Lalitpur 30 -- -- 30Bhaktapur 5 2 -- 7

Total 73 13 10 96

The distribution system in Bode/Thimi consists of a 150 mm main ofasbestos cement reducing to 100 mm cast iron pipe. The total length of themain is about 2.1 km. The systems in the Kathmandu Valley presently providesupplies to over 17,000 service connections and 1,100 standpipes. The dis-tribution network is not adequately maintained, and under the present inter-mittent operating conditions it is inevitable that contaminated water isdrawn into the mains through defective joints. However, both internal andexternal corrosion is minimal, and is limited to some recently laid castiron pipes. The distribution network extensions and improvements in thefirst Project include the following quantities of pipes:

ANNEX 5Page 10

Pipe size (mm) 50 80 100 150 200 250 300 350 400 500

Lengt:h (km) 0.25 12.93 9.60 5.53 10.91 4.14 3.21 7.02 1.33 3.87

Total length of new pipes is 58.8 km.

Unaccounted-for Water

11. As there are few working meters to measure water production, and onlyabout: 30% of the house connections are metered, unaccounted for water cannot beaccurately estimated. Under the existing intermittent supply, unaccounted forwater is estimated to be about 50% of water sent into distribution and this islost through leakage and wastage. Wastage is mainly from running taps leftopen through the two three-hour daily supply periods, especially from unmetereddomestic connections and standpipes. Mains' leakage is caused by poor workman-ship during pipe laying, and studies by the consultants and the experience ofthe 0DM team indicate that most of the other leakage is caused through badlyinstalled ferrules, and the use of substandard pipes and fittings in makinghouse connections. Other causes of unaccounted for water include underregis-trat:ion of meters because of the intermittent supply and defective meters.FaciLities for the testing and repair of meters are provided in the firstProj ect.

Village Water Supplies

12. These are simple supplies usually with gravity intakes or with con-nections to existing water supplies by a small transmission pipeline between50 min to 100 mm diameter serving a few standpipes. The standpipes are notinstalled firmly and are sometimes fittetd with waste-not valves, but do nothave concrete platforms to enable consumers to collect the water in a con-tainer without waste. There is usually no drainage for the wasted water,whiclh often stagnates around the standpipes. Every village has a few privateconnections. In the first Project eight: villages with a total population ofabout 8,000 are provided with extensions and improvements to the supply sys-tems.

SEWE1RAGE (Map, IBRD 12678)

Sanitation

13. Very few people in the project area have any form of sanitary facilities. As in other predominantly rural cultures most of the people use thefields, river banks or waste ground. Until recently some householders in thebuilt-up areas of the larger towns had latrines with buckets emptied bysweepers. With increased education, the traditional labour has largely turnedto less offensive employment, and these latrines are now either emptied atlonger intervals, abandoned, or in most cases, converted to hand or cistern-flushed latrines connected to open drains, septic tanks and cesspits. In the

ANNEX 5Page 11

closely built-up old city of Kathmandu several properties were connectedto an existing covered surface water sewerage system but outside this arearaw sewage, odorous septic tank effluent and sometimes sludge now flowsinto and clogs open roadside drains. There are no records of the sanitaryfacilities, and the following data on the valley towns are based on samplesurveys made in 1972.

Existing Sanitary Facilities

Number of properties served byTotal Hand Cistern Connections

number of flushing flushing to existing SepticSewerage Zone properties latrines latrines sewage syEtem tanks Cesspits

Kathmandu 19,100 13,220 1,250 7,000 /1 880 880Tahachal 1,530 750 160 160 110Kirtipur 1,050 100 20Lalitpur 6,780 1,040 160 120 270Thimi 1,090 50 10Bhaktapur 4,520 450 60

Total 34,070 15,610 1,570 7,000 1,160 1,350

/1 Of these 3300 have water service connections.

Sewer System

14. The original Kathmandu sewers constructed between 1896 and 1905 con-sist of a small system of brick culverts varying in size from 600 mm diametercircular to 1,500 x 1,050 mm ovoid sections. The lateral. sewers are generallyconstructed as rectangular brick culverts with concrete cr stone cover slabs.These originally served as surface drains only, but since 1950 most of thehouses adjacent to the sewers have made connections to latrines and septictanks discharging raw and septic sewage. The lateral sexwers, because of therectangular construction, suffer frequent blockages, and as they were in-adequately provided with manholes cannot be effectively cleaned. WSSB pro-poses to replace with circular concrete sewers those sections which aresubject to frequent blockages, and provide additional manholes. A smallquantity of materials for these remedial works is included in the first Proj-ect. The trunk sewers were well constructed, and although they have notbeen maintained within living memory are in generally good condition andoperate satisfactorily. A section is badly silted, but this can be rectifiedwith jetting equipment included in the first Project. The main sewers dis-charge into open irrigation channels where the polluted water is used primarilyto irrigate market garden vegetable plots. The excess sewage flows withouttreatment into the Bagmati River and the Bishnumati Khola..

ANNEX 5Page 12

15. The sewerage component of the first Project includes the construc-tion of a complete sewage collection systesm for areas of Kathmandu and Lalitpurmost acutely in need of sewerage, new trunk and outfall sewers to convey thesewage from the collection system to a pumpstation at Kirtipur, and two treat-ment plants--at Dhobighat and at Kodku--which are stabilization pond plantsand which will discharge their effluent into the Bagmati River.

Collection Network Extensions and Improvements

16. A new colLection system covering some 100.8 ha of the Kathmandu"core" area is included in the first Project. At Lalitpur, however, a newcollection system limited to serve only the most congested, insanitary coreareas is included in the first Project. The selected areas are those mostpopular with foreign and local tourists. The projected 1985 population thatwould be served by water-borne sewerage systems to be constructed under thefirst and second project is estimated to be about 110,000 in Kathmandu, andprobably 10,000 in Lalitpur. The following quantities of collector sewerswill be laid in the first Project:

Lateral and Branch Sewers---------------------- (meters) ------------------------

Diameter 100 mm 150 mm 200 mm 250 mm 300 mm 350 mmLengthi 10,000 11,400 2,700 1,500 1,300 500

The total length of new lateral and branch sewers is 27.4 km.

17. There are about 7,000 house sewer connections on the existing sys-tem, of which 3,300 properties have piped water connections. About 3,800futurea connections are provided in the first Project. Most of these connec-tions will be made in the highly congested parts of Kathmandu and Lalitpur.For every unsewered property a three-meter long, 100 mm dia. lateral seweris included to ensure that all of the householders will take connections.WiLth the exception of the Bir Hospital, there are no large non-domestic sewageflows in the first Project. However, the trunk and outfall sewers are designedfor planned future extensions, and the flows from the palace, hospitals andindustries have been calculated from available information. The followinglengths of trunk sewers are to be laid in the first Project:

Truink Sewers------------------------- (meters) ------------------------

Diameter 500 mm 600 mm 700 mm 800 mm 900 mm 1,000 mmLength 1,900 3,000 1,8(0 650 1,100 600

Total length of new trunk sewers is 9.1 km.

Two storm overflows are to be provided, one on the new system and anotheron the existing system.

ANNEX 5Page 13

Kirtipur Sewage Pumping Station

18. The Kirtipur pumping station will receive flows from the outfallsewer and lift it to the Dhobighat treatment site on the east bank of theBagmati River. The pumping station is designed to deal with expected 1985sewage flows, and is capable of expansion to meet future flows. The pumpingstation is of conventional design with wet and dry wells and an overflow tomeet excess storm flows from the Tukuchu Khola. Becauset of anticipated dif-ficulties with maintenance and spare parts three similar electrically-drivenpumpsets will be provided--two duty, and one standby--each having a ratedcapacity of 830 1/sec. Until such time as the flow builds up, only one pumpmay be in operation at a time with the other two as standby. A store, workshopwith tools and a change-room are included in the first P'roject, to be con-structed by the side of the pumping station. A spun ircin force main about1,760 m long and 1,000 mm in diameter will convey the sewage to the Dhobighattreatment plant site, which is at about the same ground level as the pumpingstation.

Lalitpur Sewerage System

19. The Lalitpur sewerage system is designed on the same criteria asthe Kathmandu system, but drains by gravity to waste stabilization lagoonsat Kodku on the southern bank of the Bagmati River to the northeast of thetown. Kodku is about four kilometers upstream of Dhobighat.

Dhobighat and Kodku Waste Stabilization Lagoons

20. Initial treatment will be by duplicate primary anaerobic pondsfollowed by one secondary facultative pond, which will be converted to amechanically aerated pond at a later date, and one final settling pond. AtDhobighat about 30 ha of land is available, and about half this area isrequired for the first stage project to treat an average dry weather flow of540 1/sec expected in 1985. The Kodku stabilization pond system would besimilar in design to the Dhobighat ponds, but smaller, requiring 2.02 hato treat 60 1/sec in 1985.

Following the commissioning of the first Project sewerage scheme,there should be an immediate reduction in pollution, resulting from the treat-ment of sewage now discharged untreated into the river. In the early yearsof sewage treatment operations, more accurate information would be obtainedon low flows in the river, and WSSB staff would be trained in the estimationof BOD in the sewage effluent and of dissolved oxygen in the river, to ensurethat river quality is maintained at a selected standard. The laboratorybuilding to be constructed at Kirtipur pump station site will also provide aspace for a sewage laboratory.

Health Statistics

22. Health statistics obtained from the records of Bir Hospital inKathmandu do not indicate the total incidence of disease caused by fecalpollution.

ANNEX 5Page 14

Fecal and Water borne diseases April 1971 to April 1972

Disease Admissions

Cholera 3Typhoid Fever 116Bacillary Dysentry 75Amoebic Dysentry 51Dysentry (unspecified) 118Diarrhoea and Infantile Diarrhoea 346Gastro-enteritis and colitis 1,250Infectious Hepatitis 40

Total 1,999

Minor attacks of illness are not recorded, and the incidence of diarrhoea,hookwook and roundworm is so common as to go unremarked. According to oneestimate, about 50% of all patients admitted to Bhaktapur Hospital sufferfrom hookworm, and nearly 100% suffer from roundworm.

23. WHO has reported a cholera outbreak during August to October 1976,with 123 notifications in total, and one death.

Pokhctra (Map, IBRD 12679)

24. Pokhara water supply system covers Pokhara town and three adjoiningvillage Panchayats. Pokhara is located about 200 km west of Kathmandu.

Water Sources and Production

25. The Pokhara water supply is from springs at Bal Dhara and the stream-fed Bhote Khola. The production capacity, estimated by consultants, is asfollows:

Daily Flow, 1/secMinimum in Av. Year Exceed 85% of Time

Bal Dhara 1 1Bhote Khola 29 31

30 /_ 32

/1 No records

ANNEX 5Page 15

26. Pokhara has potentially good sources of supply in the snow-fedSethi, Mardi and Kali Kholas (Kali Khola Scheme) and Phewa Tal Lake.The Kali Khola Scheme is being implemented in the first P'roject and theestimated minimum flow in an average year is 46 1/sec and the flow exceeding85% of time 57 1/sec.

Existing Pokhara Water Schemes

27. Pokhara derives its water supply from two limestone springs at BalDhara to the west and the spring-fed Bhote Khola to the northwest of the town.There are no records of flow other than stream gaugings made in 1957 on theBhote Khola.

(a) Bal Dhara scheme was constructed in about 1920 and the spring wateris collected in two wells and flows through separate casi: iron pipelines of50 mm and 75 mm diameter providing local supplies in areas to the north andthe south of the town. The pipelines have a combined capacity of about 31/sec, but the minimum yield of the springs is a little over 1 1/sec. Thereis no storage or treatment. The water has low turbidity,, is moderately hard,and is polluted. WSSB proposes to improve protection of the source and makesome minor repairs at the intake.

(b) The Bhote Khola scheme constructed in 1965 consists of a weir andintake on the Bhote Khola, and a 200 mm diameter asbestos cement pipeline con-veys water to a break pressure tank at Amala Bisauni, a distance of 3.0 km.The pipeline is estimated to have a carrying capacity of 68 1/sec, but fromstream gaugins made in 1957 it is estimated that the average annual minimumflow in the Bhote Khola is only 29 1/sec. A 150 mm diameter asbestos cementpipeline 3.6 km in length,3with a capacity of 68 1/sec connects the breakpressure tank to the 450 m Bindhabasani service reservoir situated in down-town Pokhara. The pipeline is leaking badly, and after allowing for enroutesupplies the water delivered to the service rese5voir is estimated to be only16 1/sec. WSSB has recently constructed a 450 m capacity storage reservoirnear the break pressure tank, and a new 200 mm transmission line of cast-ironfrom Amala Bisauni to Pokhara distribution system. The water is soft andtends to be aggressive, and is suitable, after disinfection, for domesticwater supply but turbidity increases during the monsoon period. Provision ismade in the first Project for disinfection. Bindhabasani reservoir has appre-ciable and increasing leakage from cracks in the walls and floor. The pre-liminary cost estimate prepared by consultants indicates that repair work ofthe reservoir would be excessive and may cost practically the same as con-struction of a new one. Therefore WSSB is proposing the abandonment of theexisting reservoir and inclusion of a new reservoir in the proposed projet.

Kali Khola Springs Scheme

28. Of two alternative gravity schemes studied by tLhe consultants forPokhara water supply the Kali Khola springs scheme is the most economic for

ANNEX 5Page 16

development and is being constructed in the first Project. About five andone-.half kilometers northeast of the existing Amala Bisauni reservoir, arethree perennial springs meeting together to form the Kali Khola, which isa tributary of the Sethi Khola. The only reliable recorded gauging of thesestreams was made in may 1963 and gave a flow of 80 1/sec during the dryseason. Another dry season gauging made by WSSD in 1967 gave an unusually lowflow of 18 1/sec. There is some uncertainty as to whether these latterrecords (a) referred to the Kali Khola springs or (b) were accurate. Theconsultants and WSSB have carried out flow measurements during the periodDecember 1973 to June 1974 and the flow figures given in para 26 are based onthese measurements.

29. Separate weirs and intakes sited above possible sources of pollu-tion on each of the three springs will be connected by about two kilometersof 100 mm pipeline to a collecting chamber near the confluence of the springs.A 250 mm diameter cast iron pipeline about 4.7 kilometers long would be laidfronm the collecting chamber to the Amala Bisauni reservoir. The first Proj-ect includes a chlorination house with gas chlorinators, and a store. Notreatment is included in the first Project as the spring water is of goodquality for most of the year, and the sources would be protected from pollu-tion, WSSB has plans to construct a desiltation tank for waters from BhoteKhola and Kali Khola schemes to be used during the monsoon period. Thisquestion requires still further consideration and will be studied in moredetail when the water production superintendent from ODM arrives.

Distribution Network

30. The Pokhara network was probably first laid in the 1920's and ex-ten6ed in 1965. Pipes are in the range of 100 to 225 mm and 9 km in totalleng;th. They are cast iron, galvanized steel and asbestos cement, and someof the asbestos cement pipes do not have adequate cover and break frequently.The system presently provides supplies to over 1,000 service connections andabout 250 standpipes. The extensions in the first Project include the fol-lowing sizes and quantities of pipes:

Diameter (mm) 50 80 100 150 200 250Total Lenght (meters) 150 3350 8900 2650 2900 4400

Total length of new pipes is 22.4 km.

These pipes will be used for constructing the new transmission line in theKali Khola scheme!, new distribution mains in Pokhara and replacing old leakypipES.

Unaccounted for Water

31. Less than 10% of service connections were metered in July 1976, andstandpipes served about 85% of the total served population. Half of the totalwater fed to the system was estimated to be wasted.

ANNEX 5Page 17

Sanitation

32. In Pokhara it is estimated that only 8% of the population havesanitary facilities. There is no sewerage component for Pokhara in the firstProject. No health statist4cs for Pokhara are available.

Biratnagar (Map, IBRD 12680)

33. Biratnagar's existing water supply system covers only the northernpart of the town Panchayat. The consultants proposal for extended supply sys-tem covers the rest of the town Panchayat and part of the five adjoiningvillage Panchayats.

34. Biratnagar is situated in the Morang District of the Kosi zone, 4.5km north of the Indian border in the southeastern Terai area. The area isformed of alluvial fine sediments similar to those found in other parts ofthe Terai and consultants have obtained the characteristics of the aquiferin Biratnagar by reference to data obtained elsewhere in the Terai. On thelimited evidence available it would appear that both shallow and deep aqui-fers extend over the whole area.

Water Production and Reservoir

35. The public water supply in Biratnagar is from a single tubewell tothe north of Biratnagar bazaar area and a number of handpump wells providedby the Panchayat.

36. The existing supply system was implemented in 1965. The tubewellhas a 380 mm steel casing at the surface and is approximiately 100 meters deep.There are no record drawings nor drilling logs available. The pump presentlydelivers about 25 1/sec but was apparently rated at 37.5 1/sec. The in-stallation is unreliable and the works are frequently shut down for repairand maintenance. There is no standby pumping or power available and it isoften necessary to discontinue the supply.

37. The pump delivers through a 2003mm diameter pumping main of castiron to an overhead storage tank of 450 m . The tank is of concrete andelevated 18 m above the ground level (bottom of the tank). The outlet mainof the tank is 300 mm in diameter and is connected to the system at thenearby street main.

38. At present there is no treatment to the water pumped from the tube-well and the quality of supplied water is not monitored in any way. Thequality of raw water was tested by consultants on the basis of a few samplesand analyses indicate a clear, colourless and hard water. Water is notaggressive but an objectionable concentration of manganese was detected insome samples. The iron content is negligible. The analysis of waters from

ANNhtA J

Page 18

pub:Lic handpump wells exhibited similar characteristics as the water fromthe tubewell. Public wells are susceptible to pollution because of thenature of these installations, and this is indicated also by a few bac-teriological analyses. These are not, therefore, recommended as suitablein tihe long term for public supply.

Disi:ribution Network

39. The piped supply from the tubewell is provided only for five hoursin :he morning and about three hours in the evening, but in practice thestorage tank empties before the end of the supply period. The initial dis-tribution system covers only the northern half of the town Panchayat and hasa total length of about 25 km. Diameters vary from 12 mm to 200-mm of whichthe pipes in diameters 127 mm to 200 mm are of cast iron and the remainder ofgalvanized steel. In 1975 the town Panchayat has implemented some minorextensions to the system, of galvanized steel pipes from 25 m to 50 mm witha total length of 3.6 km.

40. The system presently supplies about 700 service connections andabout 240 public standpipes, but many of these are not in working condition.The town Panchayat has ceased to permit: new private connections or additionalstandpipes. In order to meet increasing demands for water supplies, the townPanchayat has installed shallow tubewells provided with handpumps in recentyears, and the number of these is about 430.

Una,zcounted for Water

41. The distribution system is in fairly good condition since it waslaid quite recently. The high percentage--50%--of unaccounted for water ismainly explained by wasteful use of water through unmetered connections andstanadpipes, many of which are jammed in the open position, thus permittingthe unrestricted flow of water during the whole of the supply period.

Sanitation

42. Consu'ltants have estimated on the basis of a sample survey thatabout 2.5% of the houses have septic tanks and 7.5% have pit latrines. Theremaining properties have no sanitary facilities. Based on the foregoingit is estimated that only about 12% of the population is living in housesprovided with septic tanks or dry pit latrines.

43. Health statistics obtained form the Kosi Zonal Hospital indicatesthe amount of diseases caused by fecal pollution as follows:

ANNEX 5Page 19

No. of CasesDisease 1974 1975 1976 (Oct.)

Bacillary Dysentry 12 - -

Amoebic dysentry 2 - -Gastro-enteritis 47 68 35Dysentry Unspecified 6 22 11Diarrhoea 4 3 5

Birganj (Map, IBRD 12680)

44. The Birganj existing water supply system covers the core of the cityfrom Murti in the north to Chaphaiya in the south, and mainly areas straddlingthe main road. The only extension to this is the Adarsha Nagar area, a recentlydeveloped residential area west from the main road. The consulants' proposalwould extend the system to cover more completely the central area of the cityand provide reinforcements to the existing system. Also the proposal includessupply mains to several adjoining villages around the urban area.

45. Birganj is situated in the central Terai in Parsa District and lies3 km from the Indian border on the major road link between Kathmandu and India.The Terai plains are formed of mixed alluvial sediments. The main aquifer isone of generally mixed sands and gravels at a depth of 80 to 120 meters belowground level. Above the main aquifer several other aquifer systems exist weithhigh water tables into which a number of shallow tubewelLs or open wells havebeen sunk.

Water Production and Reservoirs

46. The existing water supply in Birganj is based upon use of the under-lying aquifer and water is pumped from two tubewells which are located nearthe distribution system.

(a) Birganj Water Works

The present Birganj water works were commissioned in 1965 to replacethe 30 year old, worn out tubewell scheme. The works consist of a tubewelland water tower. The tubewell has an upper casing of 380 mm and the lowercasing is 150 mm in diameter, including 30 m of screen. The total depth ofthe tubewell is 107 m. The tested capacity of the tubewell is 52.5 l/secwith a drawdown of only 5.5 m. The existing pumping capacity is about 50 1/sec0The water is gumped from the well through a 200 mm rising main to an overheadtank of 450 m . The tank is of concrete and its floor is 19.3 m above theground level. The tank has two outlets--200 mm and 150 mm in diameter--which are connected to a distribution main at the nearby main road. Basicallythese installations are in good condition and there is no leakage occurringfrom the tank. There appears to have been no mechanical failure of the pump-set since it was installed, but frequent faults on the motor starter and over-heating of the motor occur because of lack of proper ventilation in the pump

house.

ANNEX 5Page 20

(b) Adarsa Nagar Water Works

A new tubewell scheme was constructed in 1973 to give a supply for

the new development area at Adarsa Nagar. These works consist of a tubewell

and a water tower. The tubewell's upper casing is of 350 mm steel pipe and

the lower casing of 200 mm including 26 m of screen. The total depth is about117 m, The tested capacity of the well is 81 1/sec, but the installed pumping

capac:.ty is only about 50 1/sec. The well water is pumped to an overhead tank

of 450 m3 through a 200 mm rising main. The tank is a circular concrete onewith floor level 18.3 m above ground level. The tank is connected to the

distribution mains at a nearby street with a 300 mm outlet pipe. Since this

water works is fairly new there are no special problems in its operation andthe installations are in good conditions.

47. The tubewell schemes do not have, at present, any treatment and the

quali':y of water is not monitored. Consultants have carried out some quality

analysis of the tubewell water. The results indicate a clear, colorless andhard water which is not aggressive. The concentrations of iron and manganeseare very low but the water was found to be slightly polluted. In general thewater is considered suitable for potable supply but requires chlorination.

Distribution Network

48. According to the limited information, which is available about theoriginal system in Birganj, the material is mainly galvanized iron and thesizes vary from 25 to 75 mm. The newer distribution pipelines, laid after1965, are of cast iron from 100 mm to 20C mm and of galvanized steel in

sizes 75 mm and under. The total length of the system is estimated to be

about 30 km. The system provides supplies to about 1,030 service connec-tions and 80 standpipes. Supply is, for the time being, intermittent dueto lack of funds to meet the cost of electricity for pumping. The availabilityof water is not the limiting factor. Two new development areas in Birganj--onein northwestern part of city and the other one east of the existing centralarea--are presently being planned for implementation within a few years.These areas will provide lots for about 2,500 new houses and development of

water suply systems is urgently needed. About 150 public handpumped tube-wells have also been installed to extend the water supply service to areas whichare not yet covered by the network and also within the piped supply area.

UnaccDunted for Water

49O The pipes in the existing systetm are in fairly good condition andpipe aorrosion appears to be limited. However, pipes are frequently broken byheavy traffic on main thoroughfares, and leaks and breaks in service are com-mscn. The most noticeable wastage is from standpipes which are often left con-tinuously open. All of the existing service connections are unmetered whichcauses wasteful use of water. On this basis consultants have estimated un-accounted for water to be 50% of supply.

ANNEX 5Page 21

Sanitation

50. The consultants have made a number of sample surveys on the avail-ability of sanitary facilities in houses. On this basis it is estimated thatabout 38% of the population is currently served by septic tanks. The townPanchayat operates a night soil service within a limited area.

51. Health statistics obtained from the Tribhuvan Samarak Hospital indi-cates the amount of diseases caused by fecal pollution as follows:

No. of CasesDisease 1975/76

Dysentery 23Gastro-Enteritis 145Diarrhoea 140Hepatitis 8Typhoid 10

AMiNEX o

Page 1

NEPAI.

APPRAISAI OFTHE SECOND WATER SUPPLY ANID SEWERAGE PROJECT

Population, Water Demand and Production Projections

Introduction

1. The projections are in general based on the consultants masterplan reports for all the towns included in the project. Since these reportsare already two to four years old, additional information was obtained fromthe Central Bureau of Statistics (CBS), Family Planning Department, WHO andfrom the water supply offices in the project cities. WSSB has recentlycarried out preliminary updating of the basic water supply data in Biratnagarand Birganj and this has been taken into account in preparing the projections.

Population Growth

Statistical Data

2. Population censuses, with demographic data collected on a scientificbasis, were carried out for Nepal in 1952/54, 1961/63 and 1971. In these twodecades the annual rate of growth for the country was 1.31% and 2.05% respec-tively. This rate is comparable with 2.2% for the whole of Asia in 1960-69.

3. The CBS report 1/ gives the pro;jected annual countrywide growth rateas follows:

Period Annual Growth (aver.)

1971-76 2.16%1976-81 2.18%1981-86 2.30%

The Family Planning Department 2/ has estimated that a 10% or 20%reduction in fertility in 20 or 25 years will not lead to a decline in theexisting growth rate. Only a reduction in fertility as high as 40% or 50%can result in a substantive reduction in the growth rate. If there is nofertility drop the growth rate would be about 2.6% and 2.8% in 1980 and 1985respectively.

1/ Population Projections for Nepal, 1971-86. HMG/Central Bureau ofStatistics; May 1974.

2/ Population Projections for Nepal/Preliminary Report; September 1976.

ANNEX 6Page 2

4. In Kathmandu Valley, probably because of better medical facilities,the growth rate in the past decade was 2.41%. The consultants have also cal-culated growth rates for the three town Panchayats 1/ in the valley. Thefollowing table gives census data and growth rates:

1961/63 Census 1971 Census /a Annual GrowthArea in Valley Population Population Rate

Kathmandu Town Panchayat 126,081 150,342 2.22%Kathmandu Village Panchayats NA 40,601 -Lalitpur Town Panchayat 48,795 59,049 2.26%Bhaktapur Town Panchayat 33,877 40,112 1.70%Bode/Thimi Village Panchayats NA 10,000 -55 villages NA 63,000Rural NA 220,448 -

Total Kathmandu Valley 459,900 /b 583,552 2.41%

/a Estimated from preliminary census figures given by the Central Bureau ofStatistics to the consultants for the purposes of the project.

/b Includes villages and rural population.

5. In the Pokhara Town Panchayat, apart from the 1971 official census,only local censuses were taken in 1964 and 1970. Because of migration, whichin recent years has increased significantly, the annual growth rate of Pokharais more than double that of Kaski district in which it is situated. The fol-lowing table gives census data and growth rates:

Census Census AnnualArea Year Population Year Population Growth

Kaski District 1961 128,000 1971 145,000 1.25%Pokhara 1964 16,891 1970 19,594 2.5%

"1 1964 16,891 1971 20,611 2.9%1970 19,594 1971 20,611 5.2%

6. The figures given in the 1971 census for Biratnagar and BirganjTown Panchayats are as follows:

Growth RatePopulation 1971 (1961-71)

Biratnagar 45,100 2.5%Birganj 13,200 2.1%

1/ Panchayats are political subdivisions.

ANNEX 6Page 3

In Eiratnagar there is an unknown number of seasonal residents variously esti-mated from 34,000 to 65,000 by local officials. The eastern Terai area, inwhich Biratnagar is situated, had a grolwth rate of 2.75%.

Population Projections

7. The consultants have developed constant rate, low, medium and highprojections for all project towns. In the first project the medium assumptionwas used because of the family planning program introduced at that time. Thehigh assumption is now justified as the family planning program is not expectedto have a declining effect on the growth rate for some time and migration isexpected to be even more active than before.

8. The population projections for the project areas are as follows:

Assumed High AssumptionGrowth Rate 1975 1980 1985 1990

…000-----s …----- 's …

Kathmandu Valley 279 320 367 421

- Kathmandu Town Panchayat 2.6 (167) (190) (217) (247)- Kathmandu Village Panchayats 3.4 (47) (55) (65) (77)- Lalitpur Town Panchayat 2.6 (65) (75) (85) (97)

Villages in fringe areaof :.'athmandu served fromSystem /1 3.0 37 89 104 120

Bode/Thimi 2.8 13 15 17 19

Pokha ara 39 50 65 84

- Town Panchayat 6.0 (28) (37) (50) (67)- Village Panchayats 2.8 (11) (13) (15) (17)

Biratnagar /2 105 115 127 141- Permanent population 3.0 (65) (75) (87) (101)- Seasonal population (40) (40) (40) (40)

Birganj /2 3.0 45 53 61 71

Total populationin project areas 368 /3 642 741 856

/1 Includes 30 villages in 1975 and LO more in 1978./2 WSSB will take over in FY1979./3 Does not include Biratnagar and Birganj (see note /2).

ANNEX 6Page 4

The average overall rate of growth will be close to 3%. The overall projec-tion is presented in Appendix 1. The difference between medium and highassumptions would be about 40,000 and 80,000 people in 1980 and 1990, respec-tively.

9. The town of Bhaktapur is not included in the above population tablebut its operations are part of WSSB. However construcf'ion work there isbeing carried out by the Federal German Government and is not part of theproject. The population of this town is now about 45,000, and is estimatedto reach 68,000 by 1990.

Water Demand Forecasts

Population Served

10. The population served in Kathmandu and Lalitpur in 1971 was 233,000,about 93% of the total. Out of this 127,000 (55%) of the people were suppliedby 12,500 private connections, which means an average of 10 persons perconnection. The rest of the served population were us-ing water from publicstandpipes at about 200 persons per standpipe.

11. At the present time in Kathmandu and Lalitpur, the number of personsper private connection is about nine and per standpipe about 160, which givesthe following totals:

No. of Connections Persons/Conn. Pop. Served %

Private Connections 15,749 9 141,700 51.5Standpipes 833 160 133,280 48.5

274,980 100.0

The total served population, 274,980 in 1976 is about 96% of the total popula-tion of these towns.

12. In other project areas there are no recent statistics available,but the projections given in the consultants' reports can be used. The fore-cast for population served is as follows (overall projection see Appendix 1):

Population ServedArea 1975 1980 1985 1990

Kathmandu - Lalitpur (includingvillages served from the System) 95 97 98 98

Bode/Thimi 95 97 98 98

Pokhara 90 93 94 95

Biratnagar 16 60 90 93

Birganj 40 60 90 95

ANNEX 6Page 5

The low percentage for Biratnagar and Birganj is based on the assumption thatvery little, if any, developments have taken place in water supply since thepreparation of the master plans in 1973. However, about 70 to 80% of thetotal population has access to public water supply because of the existence ofpublic handpumps and shallow wells.

Per Capita Consumption

13. Since the metering of producltion has only just been started, thereare no data for calculating the per capita consumption. Consultants havecarried out several sample surveys in 'the project towns and estimated percapita consumptions for 1975 which inc:Ludes a small component for non-domesticconsumption such as hospital, governmenlt, commercial and institutional con-sumption. These estimated figures are used as a 1975 base and an overall in-crease of I 1/cd to 2 1/cd per year is used in the forecasts. This increaseis possible because the sources from 1978 will be sufficient to meet demandand to allow for standpipe users to take individual connections. The esti-mated per capita consumption makes no allowance for industrial consumptionbecause factories are providing their own process water supply. The percapita consumption projections are as follows:

Per Capita Consumption1 /cd

1975 1980 1985 1990

Kathmandu - Lalitpur 50 80 90 100Villages (mainly standpipe service) 20 30 35 40Bode/Thimi 30 50 70 80Pokhara 20 50 70 80Biratnagar 70 65 70 85Birganj 50 60 77 90

The exceptional figure in Biratnagar in 1980 assumes that with extension ofthe distribution system an increasing proportion of the seasonal populationwill have access to piped water supply and will use mainly standpipes or sharewith households having private connections. The existing low consumptionfigure in Bode/Thimi and Pokhara is a zonsequence of the high proportion ofstandpipe supplies.

Unaccounted for Water

14. The principles given in the consultants' reports are used in deter-mining the forecast for unaccounted for water. The results, town by town,are as follows:

ANNEX 6Page 6

1975 1980 1985 1990

Kathmandu - Lalitpur 50 40 30 25Villages (supplied from the System) 50 40 35 30Bode/Thimi 50 40 30 25Pokhara 50 50 40 30Biratnagar 50 40 30 25Birganj 50 40 30 25

Projected Water Demand

15. On the above basis the projections of water de'mand, in m3/day, for thedifferent project areas are as follows:

1975 1980 3 1985 1990-------------- m /day -------------

Kathmandu - Lalitpur (incl. villagessupplied from the System)

Average Demand 28,000 45,500 52,000 62,000Peak Demand 34,500 55,800 65,800 75,800

Bode/ThimiAverage Demand 700 1,200 1,600 2,000Peak Demand 900 1,500 2,000 2,500

PokharaAverage Demand 1,400 4,700 7,100 9,100Peak Demand 1,800 5,900 8,900 11,400

BiratnagarAverage Demand 2,400 7,600 11,600 14,800Peak Demand 3,000 9,500 14,500 18,500

BirganjAverage Demand 1,800 3,200 5,800 8,300Peak Demand 2,300 4,000 7,300 10,400

The peak water demand of the four major project areas is presented as a graphin Appendix 2. In general, the ratio of 1.25 for peak-day demand is used fortowns, but for villages in the Kathmandu Valley, only the average demand isprojected since the supply is mainly by standpipes.

Water Production

16. Appendix 2 shows also the production capacity of the existing watersources and sources to be constructed in the first or second project.

ANNEX 6Page 7

In the Kathmandu - Lalitpur System the sources are being developed inthe first Project and should be sufficient beyond the year 1985.

Bode/Thimi System will bs supplied from the new tubewell recentlydrilled with a capacity of 5,400 m /day. This capacity is far above the needsof Bode/Thimi and is therefore planned to be used for water supply to Bhaktapurin the coming years. Pokhara and Biratnagar will need new sources in 1983 andBirganj in about 1987. The recommendation for new sources will be included inthe updating of the master plans.

17. The above projections include some 30 villages on the fringes of theurban areas of Kathmandu and Lalitpur which already receive supply from nearbytrunk mains or individual small water schemes. Eight of those villages areincluded in the first project with extenisions and improvement to their supplysystems. In addition to this, 10 new villages, with 40,000 population, areincluded in this project for the first time. The proposed system capacitywill meet only the present day demand, but while revising the master plan forKathmandu Valley the future arrangements and needs for village water supplieswill be studied in more detail.

ANNEX 6Appendix 1

NEPALAPPRAISAL OF THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

PROJECT AREA POPULATION PROJECTIONS

800,000

700,000

600,000

500,000 0 X (0) _

400 OC 000______

1. Kathmandu Valley; Kathmandu-0g _ ,,, ............... .Lalitpur - Bode/Thimi - Villages suppliedfrom systemrr.

2. Pokhara

300,000 n D 777 - (- I34. Birganj

Total Population, high assumption

-------------- Population of various areas

.............. Population Served200,000

100,000 .

0 I I I I I - I I I !1970 75 1980 85 1990

World Bank - 1

NEPALAPPRAISAL OF THE SECOND WATER SUPPLY AND SEWERAGE PROJECT

WATER DEMAND AND PRODUCTION PROJECTIONSKATHMANDU VALLEY OF MAJOR PROJECT AREAS

M3Idw Kathmandu - Lalitpur -

M/drv Vilagets pplied front system M3/d, BIRATNAGAR75,000 . . / 20,000

70,000 __ * .

. / ~ ~~// ___/_I_ . / ./ _ 15.000.New Waells (4) /_

: Vdlag=es /60,000 / Io,

10,000Kethma-md- Llitps_.

50,000 .. New Wells (2)

Ph.,pirg Sptgs _

. L0 5,000 ___ __

40,000 - . lrprp-v -ment of Existi g Well

................... .. ............ ... z zt Existing Well

, Limite.d Tr ... '.'eancty .. _

35,000 L 1970 75 1980 85 1990 1970 75 1980 85 1990

M3

/d,y POKHARA12,000 .

M3

/d,y BIRGANJ15,000

10,000

8,000 (0,000 _

6,000 . _ w f__E.ismig Well 12)2K,li Khrlo Sp-Ook Spri_

4,000 .... L __5,000

2,000 4- nu51 Xgs~t

19 1990 1970 75 1 80 5 90

............... .Ptod..ti,o Cap-cityPeak Day Deerand

WOlW B-ok -16726

NEPALAPPRAISAL OF THE SECOND WATER SUPPLY AND SEWERAGE PROJECTORGANIZATION CHART OF THE WATER SUPPLY AND SEWERAGE BOARD

| SCRE-ARyMINISTRY OF WATgR AND POWER

MANAGEW SANAGE R

!PNGINEERING ANND WANTD ORINCISTRATIENW

AAVISION PEN INWR E WATIVSON ENGINE R OPERATIONS CHIEF Dr T P TRATEN PLAN CHIEF OF

A CIROT R ANDRGANJ COS PGKHARA WORS DISTRIER TIONS NETOR NLR A RSTON FINANCE

_~~~~~~~~~~~~N _.__.E __

"QW-N EWTECTION PURLIC RO CEXPENDITURE

OOAMINISTRATION AND ADMINISTRATION AND S ADMINISTRATIOlN AND WATER AND SEWER rMETER PROCUREMENT RI 8LLIND AND

FINAUCE .. T< -NANCE TREXNTENSIONS W R DAPLY COLLECTION

WEor R.,,S-,ODIRE

NEPALAPPRAISAL OF THE SW)Nfl TATER SUPPLY AND SI2WERAG-R PROJEJCT

INIDbiE STATNETiSM NRS MILLION

. F.s* i, .-J Iutl i >lzX9- A 67| 3978 a if .i5 143 5 l9B >3

F OFUL TION 00oIS 4"9of) 469~06 0 84, 0 0 499600 680,00 7 0 g 1 o Q o °23, 0 86 ° 00 5 6,00 7 5, 0°°PU ULATION O 8RVg9w WATM 000S 539;,? t/040 4 43247 4q93 47 S 0994 96 0 76 V30,0E 6v53*35 ,9S g9 7 34,85PAISLA IO4W Sy j61N,P4 0-O a T8q I 0 t33, 22 M0o 2 01j0LI1p I 0tel ,g li $, a 380g@g

£0Nv - -tTN a ,31 0, 51 858,0 i4to7 49 8Il,7 79, 06 61 54 83,aM * WAI'tR--000'S ~~1~,Y5 29,I'3 ~~9,I7 50,46 56,00 i 61,60 73

SEWER COtcTIOP4S,. 000'3S 3Of ) 3,00 30 0 9000 7,00 ,OO 2lI0oo 13,00 1,00 17,00POPULATION 8ERV1D0SEWERAF-0O0lS 27.00 2 7.00 2 7.00 4 2.50 56.oo 67 .50 7 7.00 91.00 9 7.50 10 2.00

% POPULATION SERVEDuSEW, 5.93 5.76 5.58 8.52 8.2I 9 .63 1 0.65 1 1.00 1 l.16 1 1.66

VOLUME SOLDOMILLInN MS 6,02 6.22 7,68 8,99 12.22 14,f25 15,3 17,34 19,66 21,36CONSUMPTION/CONNEC/MONTH-000'S 27 62 27,34t 25, 8 25,01 26.00 25.87 25f,64 25,71 26,60 26,44X UNACCOUNTED FOR WATER qo0,0 9Q,0oo 50,00 47,00 45.00 40.00 38, 00 36.00 34, 00 32, 00PRODUCTIONPMILLION M3 12 03 12,43 15.36 16,96 22.22 23.7S 25,05 27,slob 29,79 31,41PER CAPITA PRODUCTION LCD 82,77 84,29 97,34 105,74 112.93 116902 116,13 117,17 117,62 117,09

REVENUES. WATER 1,53 Z,34 3,10 4,29 11,30 13,69 23,40 26,05 42,95 49.52SEWER REVENUES ° °0' 0,00 0,00 0,00 1*02 1,36 2,5C 3,06 5,39 6,40OTHER OPERATIONAL REVENUES 0O70 1,90 2,13 2.21 3 52 3.04 4S93 5,00 6.23 6,76

TOTAL REVENUES 2,23 4,24 5,23 6,SI 15,84 18,89 30,08 34.11 54,57 b2,68

WASIES WATER 0 80 t,16 1,47 1.89 2,41 2,83 3,30 3,89 4.53 5,25CHEMICALS 0,01 0,02 0,03 0Q03 0,04 0O0 O 0.06 0,07 0,06 0,09SAI.O13 A fln A OS 0l 9,4Y a,:T 0.20 0,23 0,24 A: 0,'sPOWER,v a 'JlSv "., IW ,& yJ4-.

REPAIR I MAINTENANCE 0,47 0,60 0,76t 0,9 1,24 1,47 l,71 2,01 2,34 a 71w--wnw v t4 w~~~~~~~~~~~~~~~.-._-w ._.. ........ ..... -. _..-o__ ....- _.- W~-- .o-.-.-..-.

DIRECT COSTSSWATER 1133 1,86 2,36 3,03 3,86 4,95 9,30 6,24 7,26 8,41SEWER WAESS 0,0 0 ,00 0,00 o00 0,27 0,41 0 56 0,70 0,75 0,79SEWER MATERIALS 0°00 o,0o 0.00 6,00 n,07 O0l1 0,15 0,20 0,25 0,31

.w ~~~~~~~.. ..... T… -........ . ........ ........

DIRECT COSTS SEWERAGE . 0. O" OO 0 000 0,00 0,34 0,92 0,71 0,90 1,00 1,10*wtawssswI mannsamo *wsssaww aszxsm:W t |ssas-" *w-etw ssWEBS| wauua:sat acavs-= S5:CYZSZ-

TOTAL DIRECT C03TS t,33 1.86 2,36 3,03 4,20 S,07 6,01 7,14 8,26 9,51ADMINISTRATION 0 49 0,60 0,76 Q,9s 1,24 1e47 1.71 2,(1 2,34 2,71OTHER INDIRECT COSTS 0,05 0,04 0,16 0,21 O,62 0,79 1,3o 0,73 1,21 1,40

TOTAL COSTS 1,87 2,90 3,28 4,22 6,06 7,29 9.02 9,88 1181 13,62~~~~~w_.-vw ------- ... ,e_. ....... Nw------_*____ww-- ....... ........ .....

INCOME BEFORE DEPRECIATION 0,36 1,74 1,99 2,28 9,78 11.6o 21,46 24,23 42,76 49,06DEPRECIATION 1I22 1,44 1 29 2,03 4,18 6,94 9,82 12,75 15,62 19,05

INCOME BEFORE INTEREST -0,86 0,30 0,70 0,25 2,60 4,66 11,64 11,48 27,14 30,01INTEREST CHARGED tIPER, 00) 0,0) 0,00 0,00 0, °0'0 0,06 8,47 ,804 16,60 15,93

23333333 33:333 32 3 323333 3333333 333Z33x3 3323s333l 3ss s lass s 3333e333 3S333333 33S3xI

NET SURPLUS -.086 0, 30 0, 70 o25 5,60 4,6o 3.17 3,£44 10 ,54 14,08

AVERAGE RATE BASE 37,61 40,82 46,69 7S9,88 198,56 262,6Q 168.87 473,15 571,60 688,31'OPERATING RATIO % 83,89 S8,99j 62,73 64,94 38.26 358,8 29.99 28,96 21,65 21,74sRATE OF RETURN % ACTUAL -2,29 0,73 1,50 0,33 3,53 1,77 3.16 2,43 4,75 4,36RATE OF RTIURN % TARGET -- 0.00 0.00 0.00 2. OO 2. 00 2. 00 2. 00 3. 00 L. 0O

NEPALAPPRAISAL OF THE SEOND WATER SUPPLY AND SEWEAGE PROJ ET

FIDW OF FUNDS STATa4ENTS NRS MILLIONYL4A TO JLY 1) 197T 197(. 1977 1978 1979 1980 1981 t982 1983

SOURCES OF FUNDS

INCOME BEFORE DEPRECIATION 0.36 t.714 1.95 2.28 9,78 ll.h6 21.'(b 214.23 4 2,76 49.06GROSS INTERNAL GENERATInN o,3h 1,74 1,9S 2q28 9,78 11,60 21,46 24,23 412,76 49,)06GOVT. EQUITY CONTRIBUTIONS 41.11 11.32 1S.58 22,96 30n,43 21,22 23.So 32,00 37.5o 35.00SECOND IDA CREDIT o,) 0,0( 0o,00 7,00 30,00 39,o ,00 24.,o (.00 0,0 0,0(SUPPLWaETAL IDA 0,00) 0(o 0,00 300 20?0 0,00 0,0( 0 .00 0.00 ( .°-00THtR LOANS 8A23 9,68 39,85 41o88 0,00 o ?I 21,0o 30,0 0bO,0 55eOOTOTAL LOANS R,23 9,68 39,85 75,8e n0,00 39,vo 45,0( 3,()00 , 0 0 55,0(1==XZ==*Z 55S 2t:S S2=:55S: =S::C5X2s ttg=-=ZSX 52XX5xx= S-5StlZ: cz===X= _===C=== -=S=5-mzTOTAL SOURCES 13,30 18,7/4 57.38 tO4.12 90,21 71,82 89 96 86.23 14 (,26 139.06

APPLICATIONS OF FUNDSINVESTMENT IN PRr'JECT n,)' o 0,vo 0o,0 0,87 43.11 56,75 314,36 t,0 0 ,00 0,00PREVIOUS PROJECT 7.n2 9,22 '9,93 95,84 28,89 000 00,o 0o,0 o,0o0 0, 00FURTMER PROJECT 0a00 0,t0 0°'°0 0 °°00 000 0,00 3*0, 60,0 11000 100 .00MTHER WQRK ?,45 3.11 1,1 200 9123 cQ 3.59I 1u.o0 4.Su 5,00__._ .,__.............. a_ . .*.,__ ".w.............. __ ..... .... ____._ __ ... -w - _ . _ ...... _ __.__.TOTAL INVESTMENT 9,4/7 12,33 61,74 104,71 81e23 59,795 7,6 7 4'00 114s50 105,00IDA CREITS AMORTIZATION ," 9,o00 0,0 0 ,o00 n.00 1,29 2.50 2,50 5,00 7,50OTHER LOANS AMDRT1?ATInN 0,0 ,0o( 0,00 00,0 00o0 2.40 4,8)0 4,80 44,80 4, 80_ ~ ~ ~ ~ ~ . . . . ... ... .,_ _ . .w ._ _ .* * . ._ ._ .. .. . -------- .. .. . ._ ._____w_ --- .... TOTAL AMORTIZATION o04) 0o,o0 0.o0 0 no 0 .oo 3.69 7.3o 7,30 9,80 12,30DPER,INTEREST LONG T.DF8T 00 0, 0.( 0. 0o0 o 000 0,0 0,06 8.147 8.04 16,60 15,93TOTAL OPERATIONAL INTEREST n,0') 0,o0 0o,00 0 00 0 ,0,0 00 8,047 8,011 16,ho 15,93= _ = _ :: = ==_Z= * s : Sm = =:: S z=z _ ===- __=TOTAL DEBT SERVICE 0o,0 0,0 0 ,o0 o.0o 0, 0 3,7I l577 1S,34 26,40 28.23INCREASE IN WORK.CAPITAL 3.83 6,11 '4,36 -.,59 8,98 e,36 6.33 -3,I1 -0,8h 5.83

=X=====- S:,:=:= ==CC== :5=1_: 05=== -:=_ 2= -=.:=m =- St===S-:SlTOTAL APPLICATIONS 1363" 18,714 57,38 104,12 90,21 71,82 89,96 86,23 140,2h 139,06 X

DEBT SERVICE RATIf1 0,0') o,o00 0.00 0o,o00 0a 3313 1,36 t,58 1,62 1,714X CONTRIBUTION TO INVESTMENT 3.80 14 .11 3.16 2,18 12. 04 13.20 8,30 12.01 14 .29 19884X INTERNAL CASH RATIO o,69 2.66 1t,52 o97 3,08 2,06 I.2I 1.63 2, 42 2,60

a. * * -4~ .4 S fla.t a 0wIfm -G -4 C; 4*0 w nn = *-..4Iflx 0 0 U CftOO~~~~~~~~041.1 Is 3R4 U D 0 W' Ot 44

mw 1-- _ U3-ZC ~ -4 =I

-4m~~~~~ ZI'~4 4 eatP~- fZ** ~~ ~ ~~U 44 ~~~trift.4ZZM 4040C Ic 4

TM a -4 r- -4 t-iZIC. CS '0 rime a a

400 . -4 '' .4 4 of x ON'3 . a co go flZ*@

co in r 43 c 4

LE 0 4- I C 43 a a03

CD W * -ma-Wi Z,. 13 0 0 -4 130 U 1 z

a a~~~E

'-I- .4 ~~~~~~~~~~~~~~~~~~~~ .a -- 4.4* a a C

o arqa , o4n 4 L A4 - 0 3- Sp

9 4~~~0

w bi nUn~ U r to AA a cm I I

01~~a ~~~~~~~~~~ ~~~~~~~4 a a.~~~~~~~~~~~~~~~~

a 9 PA~~~~~~ a4 Ic

U *~~~~~~~~~a On -m 4 i a~~~~~~~~~~~~~~~~~~~~k - a

~~~ ~~~~~ 4 ~~~~~~~~.. 0~~~~~12 IC. 0n*4@** I le, U In w C

C3,SDg2 L-A -I F Ofa 404 * 4a a Almas e4 O . ru10

is ~a a CC a a ,

o a X~ V 49 0 4 0 C, 44o (1 4 4 ud 1 a

a a a 02 0 A to .43 I'm =0 - f. - 9 9 &aC~ C, re -4C4 I0 4 A

3D 4~ fqC4 Q 14 4 S 40 32 s 3 M ~~t-f 1 o- 4 3 a* .~~~~ a a . 4*4 a a~~~~~~ M 4a a 4~~~u*-a a -~~~~~~~P,I - ar- 'a 43 4 I ZI l0 a

- 4404 4 .40*84 ~~~~-~' I-a 4 A *-= - M MM A O a

Z2 a j Ai~~~~~~~ -

a g a a a 3 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ wI In 1 I S4 nfo4 4e G 3 4 a a 4Al ~ a~

a- -4 fp 410 c Cb*30 - .-

*t CW CMD 4 f •.0C Q- 0 0 a co oa 4.b aVW ~-.4f4 ' G04R -4 V 4 ,4444- le ~ 0~- m ik @-4

iza LA 0. .0 ~ ~ I-* I LAW aI7: 4A&Ol to I IV a

3 4 4 4~~~~~~~ ~~4 a -i a3A a, a I

\;R 40 C34 be 4 - gm Go4 N I \r~~~~~o-*~~~~~O -u -ic a 4004 .~~~~~~~~~~~~~~~~~~~ 4 '4~~~.. ..4 Ie00 4 . a*- 45

aIr *~~~~.4 4~~~9o~~~44 Z. :AD I4 -4 I30 1 *i Is WI0444 44 n 4 4 k44. I II0'AI.-

S. . 4 4 a.4 . 4 1 O'D&a s wa U 0 14owl~ "9a OD 4 14 M M I 8 W kI aUt d

4 "-S , ~ - w -aI4~4 '- 0 a M CU

OT a4 0 a4 I4 0 - 4

ANNEX 11Page 1

NEPAL

APPRAISAL OFTHE SECOND WATER SUPPLY AND SEWERAGE PROJECT

Assumptions for Financial Projections

1. The financial statements in Annexes 8, 9 and 10 cover the watersupply and sewerage operations in Kathmandu Valley including Lalitpur andBhaktapur, and also water supply operations in Biratnagar, Birganj and Pokhara.The figures for FY1975 and FY1976 have been audited. All other figures areprojections based on WSSB's estimates and the mission's findings. An allowanceof 6% has been made to allow for future price inflation where appropriate.

income Statements (Annex 8)

2. These are a consolidation of WSSB's and the mission's projectionsand incorporate Biratnagar and Birganj from FY1979 and three further townsfrom FY1982.

(a) Water Connections

The number of connections upon which the income is based areas follows:

ANNEX 11Page 2

Year Ending Kathmandu and Pokhara Biratnagar and BirganjJuly 15 Metered Unmetered Total. Metered Unmetered Total

75 2,300 14,500 16,800 --- --- ---76 4,700 12,900 17,600 ---77 17,000 6,400 23,400 --- --- ---78 28,600 --- 28,60) --- --- ---79 33,840 33,84() 2,040 1,270 3,31080 39,040 --- 39,040 4,080 640 4,72081 42,140 --- 42,140 6,170 --- 6,17082 45,240 --- 45,240) 7,630 --- 7,63083 48,300 --- 48,300 9,080 --- 9,08084 51,440 --- 51,440 10,540 10,540

Three New Towns GRAND TOTALMetered Unmetered Tota]L Metered Unmetered Total

75 --- --- --- 2,300 14,500 16,80076 --- --- --- 4,700 12,900 17,60077 --- --- --- 17,000 6,400 23,40078 --- --- --- 28,600 --- 28,60079 --- --- 35,880 1,270 37,15080 --- --- --- 43,120 640 43,76081 --- --- 48,310 --- 48,31082 --- 800 800) 52,870 800 53,67083 1,400 400 1,800 58,780 400 59,18084 2,860 --- 2,860 64,840 --- 64,840

(b) Standpipes

These are expected to be as follows:

Kathmandu and Pokhara Biratnagar and Birganj Three Towns Total

1975 1,350 --- --- 1,3506 1,350 --- --- 1,3507 1,350 --- --- 1,3508 1,350 --- --- 1,3509 1,750 270 --- 2,020

80 1,800 330 --- 2,1301 1,800 350 --- 2,1502 1,800 370 200 2,3703 1,800 390 230 2,4204 1,800 410 260 2,470

ANNEX 11Page 3

(c) Sewer Connections

There are at present about 3,000 sewer cornections in Kathmanduto houses with a water supply and upon the comp:Letion of thesewerage component of the first Project in FY1978 it is expectedthat about 2,000 new sewer connections will be rmade each year.

(d) Water Production

The present system capacity is 16.3 million m . This is expectedto increase to 24.4 million m in FY1978 when the Pharping Springssupply being built under the first Project, begins to flow intotVe system. In FY1979 the system capacity will increase to 31.9m with the completion of the first Project sources. This willinclude 5.7 million m Srom Pharping, Baniatar and BansbariWells and 1.8 million m from Pokhara Springs. In the sameyear, FY1979, WSSB is expected to take over the Biratnagar andBirganj supplies increasing the totah system capacity firtherby 5.9 million m from 31.9 million m to 37.8 million m . InFY1983 it is expected the WSSB will absorb three further townsand for projection purposes it is estimated that: thS systemcapacity of these three towns will be 4.7 million mi3 increasingthe total system capacity of WSSB to 42.5 million m

(e) Water Losses

These are presently assessed at 50% of production and it isnot expected that the situation will further worsen with thelarge increases in water production expected in FY1978 andFY1979. The ongoing work of the waste detection teams, theprogressive metering of supplies and the emphasis on systemrehabilitation in the second project should all help toprevent further deterioration, and in FY1978 it is expectedthat the losses will begin to reduce towards the target levelof 25% set for 1991.

(f) Revenues

Water revenues are projected on the likely demand for wateravailable after the above figures have been taken intoaccount and at the rates of charge set out in Annex 12and with projected tariff increases in FY1979 and also inFY1981 and FY1983.

Sewer revenues are estimated on the basis of 50% of theaverage revenue for a metered water connection.

ANNEX 11Page 4

Other operational revenue is made up of additional fees calculatedas 6% of billing and other miscellaneous income.

(g) Expenditures - Direct Costs

These are based on actuals for FY1975 and FY1976 increased inproportion to the increase in connections with an allowancefor price escalation of 6% a year.

(h) Expenditures - Indirect Costs

Administration is calculated as in (g) above but other indirectcosts reflect a provision for bad debts which is calculated at5% of actual billings up to FY1980 and 2-1/2% thereafter.

(i) Depreciation

This is based on the consultants recommendations for variousrates of depreciation as follows:

Type of Asset Rate of Depreciation

Civil Engineering Works 2Plant and Equipment 5Meters and Similar Equipment 10Vehicles 20

For the purpose of the projections an average rate of 2-1/2%of the asset values at the beginning of each year plus halfof that rate for the assets brought into operation duringthe year, has been used.

(j) Interest Charged to Operations

This is interest to be paid to HMG on the first IDA creditand the supplemental credit at 6% and on the proposed IDAcredit at the rate of 9%.

Flow of Funds Statements (Annex 9)

SOURCES

3. (a) Government Equity Contributions

These are HMG equity contributions; 25% for the first Proj-ect, and 30% for the first Project cost overrun, the secondproject and a further project in FY1981 to FY1984. In addi-tion HMG is expected to make small contributions for workoutside the main project of up to NRs 5.0 million a year.

ANNEX 11Page 5

(b) Equity Increase

The increase of NRs 6.73 million in FY1979 represents the takeoverof the Biratnagar and Birganj assets in that year, and the NRs10.0 million increase in FY1982, the takeover of three towns inthat year.

(c) IDA Credit

This is the proposed credit for the second project. The firstcredit including the supplementary financing and other loans areshown under 'Other Loans' lower down.

APPLICATIONS

(d) Investment in Project

This is the second project to be constructed duriLng FY1978 toFY1981.

(e) Previous Project

This is the first Project being constructed during FY1975 toFY1978 and includes the cost overrun.

(f) Further Project

A further project will be needed during FY1981 to FY1984 andappropriate projection entries have been made.

(g) Other Work

This is work outside the projects to be carried out by WSSBfrom its own resources or from HMG equity contributions.

(h) IDA Credit Amortization

Repayments to HMG of the onlent, supplemental financing areto be made over 20 years starting in FY1980 and f-or the proposedIDA credit for the second project are to be made over 20 yearsstarting in FY1983 after a five-year grace periodl.

(i) Other Loans Amortization

This is the repayment of the onlent first IDA credit whichstarts in FY1980 after a six-year grace period.

(j) Operational Interest Long Term Debt

Interest is payable on the onlent first and second IDA creditsto HMG after the grace periods.

ANNEX 11Page 6

(k) Increase in Working Capital

This is the increase or decrease in funds required for thefinancing of changes in the values of items of current assetsand current liabilities including changes in cash and bankbalances.

Balance Sheets (Annex 10)

4. (a) Fixed Assets in Operation

These are listed at replacement values calculated by consultantsin FY1973 which became the opening value of assets for WSSB inJuly 1974. These have then been revalued for rate of returnpurposes in FY1975 by 16.9%, the rate of increase of theKathmandu consumer price index, and then at 6% each year there-after being the expected local inflation rate. The depreciationrates have been explained in para 2(i) above.

'b) Work in Progress

Under the first Project there are major water supply and sewerageworks so that work in progress builds up to a fairly large levelbefore the works are completed and brought into service in FY1979.However, the works in the proposed second project and a projectedthird project are much smaller in individual units and most ofthese can be brought into service within the year. From FY1981,therefore, work in progress is projected at about 50% of thework carried out during the current year, all other assets beingassumed to have been brought into service during the year.

(c) Accounts Receivable

These have been running at about 35% of billings and it is ex-pected that improved collection methods will reduce this prog-ressively to 25% from FY1979 onwards.

(d) Advances

These are for advances to suppliers and staff and have averagedabout 2-1/2% of total operating costs in FY1975 and FY1976, andhave been projected at this percentage.

(e) Inventories

An allowance to increase these by 10% a year plus 6% for priceinflation has been made.

(f) Other Receivables

In FY1975 and FY1976 these averaged about 12% of operating costsand have been projected at this percentage.

ANNEX 11Page 7

(g) Equity

When WSSB started operations in July 1974 the assets taken overfrom HMG were valued at NRs 39.77 million. This is shown asequity and is the value of HMGs initial invest:ment in WSSB.The increases in FY1979 and FY1982 are the value of assetstaken over in those years with the absorption of Biratnagarand Birganj and then the three towns (see para 3(b) above).

(h) Contributions

HMG is making equity contributions of 25% of the first Projectcosts and is expected to make equity contributions of 30% tothe first Project cost overrun, the proposed second project andany future work. HMG is also making small contributions towork being carried on outside the projects (see para 3(a) above).

(i) Revaluation Surplus

Fixed assets in operation have been revalued each year forrate of return purposes (see para 4(a) above) and the amountof revaluation added to the value of the assets less an amountadded to depreciation each year is set aside in this account.

(j) Operational Surplus

This is accumulation of the initial operating losses whichare gradually eliminated as surpluses accumulate.

(k) Long Term Debt (Net)

These are the accumulated long term debts arising from theonlent first IDA credit, the supplemental credit, the pro-posed second IDA credit and a projected third loan lessrepayments in the years from FY1979 onwards.

(1) Accounts Payable and Deposits

These include payments due to suppliers as well as retentionmonies on contracts and deposits received from contractors.In FY1975 these items represented about 2% of investment andabout 5% of direct wages respectively, and have been projectedon the same basis.

(m) Current Maturities

These are repayments of long term debt due to be paid withinthe following twelve months.

ANNEX 12Page I

NEPAL

APPRAISAL OFTHE SECOND WATER SUPPLY AND SEWERAGE PROJECT

Schedule of Present Water Charges

Effective January 15, 1975

The Water Charge for Unmetered Taps

Charge per Month

Size of Tap First Tap Other TapsNRs NRs

1/2" 1/ 5.00 2/ 3.003/4" 30.00 6.001" 60.00 12.001-1/8" 170.00 30.002" 340.00 50.003" 930.00 100.004" 1930.00 235.00

Standpipes

1/2" (Public Tap) 100.00 Paid by His Majesty'sGovernment

The Water Charges for Metered Taps

Charges per Month

Size of Tap Minimum ChargesNRs

1/2" 3.00 3/3/4" 20.001" 40.00

1-1/2" 120.002" :200.003" 600. 004" 1.200.00

1/ The 1/2" charge was introduced on April 15, 1975.2/ The charge is NRs 9.00 in Kathmandu only.3/ The charge is NRs 5.00 in Kathmandu only.

ANNEX 12Page 2

The metered charge for 0-10,000 liters is NRe 0.50 per thousand liters and anyexcess over 10,000 liters is NRe 0.80 per thousand liters.

Additional Fees for Late Payments

Up to one month 10%Over one month 20%

r~ 7 -b r__ _ - - - 8Ad _ _8

NEPAL

C H I N A APPRAISAL OF THE SECOND

_30 A A1u-'S>S\- ->-~ X WATER SUPPLY AND SEWERAGE PROJECT/.1 " N; -'- -- - * _. EXISTING AND PLANNED SUPPLIES 30'

Ni xPthoragathX a/ > >// t

Water Suppies ExistingWor Under Construction

\a 0/y > j r qow \ 37 *- \ / o Towsns and Villages

isDaxSe.Ld/h;r Ai 4 1

.:/ K ;A R 1 A l I- (__K Project AreaDon 1 de4

4oira ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~> r ~~~~~~~Existinp Roads

r 1 t O i - rS,lgatl D ri[- t 59 ) j O JJm*rl ----- / .Roads UJdei Construction

lanokpl 9 5, / ' >(/ EriRlot~ >1 I{ a(- ; - -r ik7 Raays

0Ptiohmaonoma - . - - - > J rN ."' r-r-r-x CoercaCl Aiport

XXa 0 Matsendr/(norggr C/N( '_ 1- . ,qCmeca lpr

rfXt 9 y * I \N r;N N>\, Dade6 DHAyvALAGI,Rl - <Rivers

_i' a i$; t- Coilekn G~" t---- < Admin straotve Boundaries

'N +~~~~~~~~~~~~~~~~~~~~~~

i8 Katoriu< ~ t i/ Sa an EanGsar RAPT I ~oGl A \G N D WA K I

/ V X G. Nt~~u/tiears pt t O irarliput48 iuisipo . / a I>u ako) C Ph4 /. . .>

,neo >Co / >E \<; o;E, rjn0lgoi c -. ......... B0 u '. OPyythrtn Norst ~ Pol / Erinar B A<N'G IN/I A T I \ . J*N 28-

| /1 X X~ ~ ~~~N'P/orrstEu, ra / -- -> \'a + a, __ 5 "'2 "tA -+ __a/ g .z ~0 8t ( \; t J :/ 1. X ! X c < -;-' / i ., t t R A I I

t~~~~~ N Kriot ) _r A '5p,' N o< i /.-u|>/a t kr5 ,< '|Lu' - | N \ C ) t 4 /A N / V' Kuna11 0*9Saihanlj

/

Nun/mr 'Ott NE 'a~~~~~~~~~~~BaaL

'5 / llir r,: ' 2; 40__ If t O 00 'K I ,a \, 0 hai0pue

...I____ .... .____._ _ __ ____ Nl D ___I___ _____ ___ \/ 0' ,',,;, __ A

(Z ~~20 4r 401 tO I" 0 0, . oiEttrRarntc9 ~0 7y

82' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~'

/ ~~~~~~~~~~~(AA kH

(SUNDARIGHAT ~ ~ ~ ~ ~ ~ )SNDRLL

0-~~~~~~~~~~

(SUNDARIGHAT~~~~~~~~~~~~~HATAU

0(boOD,POKHARIHAGPU

0

(HARPING) ~-- b ~~~~~~~~~~NEAL

APPRAISAL OF THE SECONDWAT'ER SUPPLY AND SEWERAGE PROJECT

KATIIMANDU VALLEY

V ~~~~~~~~~~~Ex st ng And Plnnned Wniter SUpplieS

0~~~~~~~~~~~~~-0

-~~~~~~~~~ U RA A A TREATMENT Ri AEN EANEBA t E

NEPAL AT/ R CE R TO -, *T./

APPRAISAL OF THE 4 'SECOND WATER -

SUPPLY AND ___

SEWERAGE PROJECTKATHMANDU AND LALITPUR / T WORKS

Existing And Planned Distribution System -

TR BUAN ARE T

TEATMENT WORE5O

't E-n R.- 'j-L

% \\

- - TEARMEN KS. | iT -REjoN Vieline, NDooi- -,, M,=l-i-

(E-cond Proicot'bRhbd~~

Z < W \ _ = ~~~~~s. s C

jSecod P-o1e-

NDi> a \ BA Siren,, and Rood,- I N D I ~A- B U RMAS ' BotlT-p Areas

SRI LANFA I rz*aqssRC

________________________ .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~BRD) 126/8

NEPAL

APPRAISAL OF THE SECOND -

WATER SUPPLY AND SEWERAGE PROJECTKATHMANDU AND LALITPUR

Existing And Planned Sewerage System

7I ewsgc T-eo-,en, Pln- Are (F,ri, PjA.,iAt)

* F-rge Pamp,ng Station IF 5rPsaisat)

- FtarrOeeSrr(Frsr Praieet - - , F, ;*A?~. ____Esl sting S-rerieS

New SeI e e r i , aAt I --- .. s-d- Pnaaolr - - a.

Pjrpi-- MAi- (First P,.,,,rii

OF* Sft

b,, f-f A,,,-¢ 0,,,,,

6$ - ideA, s;1iiisa,

nA ) ' ° ,P .nE

-d R..d ~ ~ ~ ~ ' ' . H .......................................................

< X aS XS.$0lW* ' ib plS \;/ g~~~~~~~

M~~~~~~~~ .*AL0'..J

z~~~o *.LL.,x rA ,,E.0 .i ,.2

2 _.A .. ;i .t .& ................................. Sr JJ X* .A A/ ..............................................................................

w 9 A ... ... ... ... ... ... ......... S e . X. ,i .X -2 AA ZA \ | 2 /8 /............................................................................9 I

Sr y\y Uts Jo Ow F Ak ? z |A (r = ubr . 2 < - _ X r > ?~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

7, rr r/-,f -iS t.;; t . . t A X q r g ;3 t t g S - 2'* '- jt

1X I NDA r B R A U 41!Cj- i\r

'. I;N;;;leseAl A rX 4 lOFF

igL#' WAPt U tSUnt m41 {q\\t ECO T

_ n__ _ _ _

- - -I . - -- - - ----------- ------ --

-- ___

--_---IBRD 12619

Iuvj

A7FJFF7 l.7 9177

--A, -~ ~ ~ ~ ~ ~~~ - -

I .F , - 7A7, AdP DI--

N- S-mg :,,t,kc ~~h, 77-F - , . .- f F

* F FE .77,7N- FE--

IF ________E,

Tr w i 1

IBRD 12680

BIRATNAGAR JANUARY 1977

NEPAL\. BAKHARI Secondpo t Appraisal of the

BAKHARI SecndWoter Supply and Swrg rjc

Jr- BIRATNAGAR AND BIRGANJI4z I j 0 or ¢ Existing And Planned Wcater Supplies

A Exising tebeweells.KANCHANBARI New rtbewelv S,nond Project)

New reeroir (Second ProjectI N DIA / ,- 1 * Existing reservoirsxx, .,,,r.,, -iE'ixrin tn-ri In-srior xxr -i=-rbntton pipelines,

''~~~~~~ : ; 5 t ' ~~~~~~~~~~~~ " '~~A dinane;'; terntus in- anan

-~ ~ ~ Y2 Ii HAP

-~~~~~~ I ~~~~~~~~~~~l -~~~~~~~~~~New trens-issior are distribtol- pipelines,

I,..-. t ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~die-eters in arm (Second Project)

J, --- ----- -AJAHU

9vORTH -,0005/ streets, IxYxer ro end trels d r'j~ ~ ~ ~~~~-S' Railway

A~~~~~rorr1

I ~~~~~~~~~~~~~~~~~ - ~~~~~~~~~-~Rive,s

JvTUWA KATHKAHAUHAPA

0 3000 2000

.~~ , cv~j~~sixivnu BIRGA.NU

-. CHAPKAIYA VILLAGES RJe i ; 18 " ') '' flg ~~~~~~~~~ ~ ~ ~~~~~~~~~SABAITHAWA PARSAUNI

.~~~~~~~) ~~~~~~RAMGH,ADWA

lN iA 1 .UK ' / .

lOt~~ -f- 47\ <I N D I A i ,, 1p,w ,.v < !~

g . . r \ ucIaueshts I'NCtc k (.e, ,,iES l XTo * !- d \I ~~~~~~~SRIPUR- 'k ' \55Ai el won-t;;ADARSAIHA

u-I lj~~~ i RANIGHAT

|t i R 5 z ;>- o iOtA

|r rTOLA<AGAWA AXMANAWA 000 c