Documt nof

The World Bank

FOR OmcIAL USE ONL

Reo No P-5922-UN

MEMORANDIr. AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

IN THE AMOUNT EQUIVALENT TO SDR 44.5 MILLION

TO

THE FEDERAL REPUBLIC OF NIGERIA

FOR THE

LAOS DRAINAGE AND SANITATION PROJECT

MAY 10, 1993

MICROFICHE COPY

Report No. :P- 5922 UNI Type: (PM)Title: LAGOS DRAINAGE AND SANITATIONAuthor: HENLEY, D.Ext. :34854 Room:J 6057 Dept. :AF4INrThis document has a restricted distribution and may be used by recipients only in the performance of

their official duties. Its contents may not otberwise be disclosed without World Bank authorization.

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CURREENa EQlnVALENb(April 1993)

Currency Unit = Naira (N) = 100 Kobo (k)US$1 = N 25.0Naira (N) = US$0.04

MEASUE AND LENSL

1 kldometer (km) 0.62 miles1 meter (m) = 3.28 feet25.4 millimeters (mm) = 1 inchI cubic meter (m) = 264 US gallons

= 1000 litels3.8 liters (1) I US gallon4.5 liters (1) = 1 Iuperial gallon

ABBREVII AND ACRONYMS

FCT - Federal Capital TeritoryFGN - Federal Government of NigeriaFMF - Federal Ministry of FinanceICB - Interational Competitive BiddingJICA - Japan International Cooperation AgencyLASG - Lagos State GovernmentLCB - Local Competitive BiddingLGA - Local Government AuthorityUS - Land Information SystemLSWC - Lagos State Water CorporationLAWMA - Lagos State Waste Management AuthorityODA - Overseas Development Administration (U)SAP - Structal Adjustment ProgramSG - Surveyor GeneralSOE - Statement of ExpenditureTEPPO - The Environment and Physical Planning OfficeURB - Urban Renewal BoardWBAPO - World Bank Assisted Projects OfficeWPCSS - Water Pollution Control Strategy StudyWTP - Wdilingness to Pay

FISCALIYAR

Janlary 1 - December 31

FOR OFCL USE ONLY

FEDERAl REPUBLIC O? NIGERIA

LAGOS DRAINAGE AND SANITATON PROJECT

CREDrr AND PROJECT SUMMRY

Borrower: Federal Goveririent of Nigeria (FGN).

Beneficiirv: Lagos State.

Amount: SDR 44.5 million (US$63.0 million equivalent).

Terms: Standard IDA terms with 35 years maturity.

relending tr: From FGN to Lagos State Government (LASG) for twentyyears including five years of grace at standard IBRD variableinterest rate with LASG bearing the foreign exchange risk.

Financine Plan: Local Foreip Total-US$ million

IDA 6.0 57.0 63.0LASO 20.8 0.0 20.8JICA 2.0 2.0Total

Rate of Retulrn: 22%

Staff Appraisal Report: Report No. 11307-UNI

Map: IBRD No. 24312

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

MEMORANDUM AND RECOMMENDATION OF TDHE PRESIDENTOF THE INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THIE DIRECTORSON A ]PROPOSED CREDIT

TO THE FrDERAL REPUBLIC OF NIGERIAFOR THE LAGO DRAINAGE AND SANITATION PRO.ECl

1. I submit for your approval the following report and recommendation on a proposeddevelopment credit to the Federal Republic of Nigeria for SDR 44.5 million, the equivalent ofUS$63.0 million, on standard IDA terms with a maturity of 35 years to help finance theLagos Drainage and Sanitation Project. The credit would be onlent to the Lagos StateGovernment (LASG) at standard IBRD variable interest rate for twenty years including fiveyears of grace, with LASG bearing the foreign exchange risk. The Japan InternationalCooperation Agency (JICA) is expected to provide a further US$2.0 million equivalent asgrant.

2. Background. Under the Lagos Storm Drainage and Solid Waste Project (LSSWP)which will close in mid 1993, financing was provided for refuse collection equipment anddepots for essentially all of Lagos city and for stormwater drainage for part of the city.Technica assistance was provided for establishing the Lagos State Waste ManagementAuthority (LAWMA), designing sanitary landfills, establishing revenue generation systemsand for preparing detailed designs for further stormwater drainage in Lagos Mainland, Apapaand Lagos Island, parts of the city which were not covered by the LSSWP drainagecomponent. LAWMA is now firriy established and is establishing new sources of revenue.The Environment and Physical Planning Office (TEPPO) of Lagos State has also beenstrengthened by its involvement in LSSWP and it is strongly promoting expansion of theLagos drainage system as the benefits of the first project become recognized. Other keyissues needing attention in the urban sector include environment and sanitation, transport andtraffic management, and the inadequacy of funding and procedures for maintenance.

3. All of Lagos is subject to periodic flooding and needs dependable storm drainage.This is especially so because in many areas storm drainage systems are also the only means ofsaniary drainage. Extension of the drainage system is important as is its maintenance.TEPPO (Drainage Division) is trying to improve its capacity to clear and maintain itsdrainage system. Especially as water becomes more available under the Lagos Water SupplyProject, sewerage and other types of sanitation will be essential. It is doubtful, however, thata large-scale sewerage system would be affordable in the near term and it would be difficultfor the State to maintain. A more incremental approach to the improvement of sanitationwould be preferable, and the State is interested in developing an appropriate program toimprove sanitation and general living conditions.

4. hoect Objectv. The primary objective of the proposed project would be toimprove the long term ability of the Lagos metropolis to sustain and improve its function asan urban center. It would also be to ;mprove living conditions in parts of Lagos which sufferfrom regular immdation by improving stormwater drainage in accordance with long termplans and as a follow-up to the previous project. The project would support initial steps inupgrading other urban services by prepaing plans, feasibility studies and designs for urbanupgrading, and improving human waste and wastewater disposal, and would continue toimprove solid waste management by providing fiuther support to LAWMA for organizationand system development.

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5. Prject Description. Major physical components of the project include (i)reconstruction, dredging, regrading and aligning existing drainage on Lagos Mainland(US$28.5 million or 33.2% of project cost); Lagos Island (US$8.0 million or 9.3%); andApapa (US$14.6 million or 17.0%); and (ii) support for a program of maintenance of xistingdrains (US$11.7 million or 13.6%). In addition, the project will include: (i) technica.assistance and training to upgrade drainage maintenance capability (including assistance withmaintenance contracting), for design of future drainage investment projects, and forconstruction supervision (US$4.1 million or 4.8%); (ii) preparation of plans, feasibilitystudies and designs for future developments in sanitation including conventional seweragewhere appropriate, training and supply of laboratory equipment for pollution monitoring(US$6.0 million or 7.0%); (iii) technical assistance and training for the newly created UrbanRenewal Board to review its charter and plan its development strategy, to prepare an urbanrenewal project and undertake a demonstration project (US$3.7 million or 4.3%); (iv)assistance to further develop the city's resource mobilization capacity (US$2.1 million or2.5%); (v) assistance with development of a mapping ability for Lagos (US$2.0 million or2.3%); and (vi) further assistance to the LAWMA for development of a transfer station andwaste disposal site, provision of additional equipment and spare parts, and organizationaldevelopment (US$5.1 million or 6.0%). Technical assistance primarily focussed aroundimprovement in sanitation and living conditions for the people of Lagos and strengtheningassociated institutions is included in these figures at a total of US$14.1 million, of whichUS$ 0.8 million would be for policy support, US$8.7 million for project preparation andassistance with implementation, and US$4.6 million for institutional development. Asummary of estimated project costs and the financing plan are given in Schedule A,procurement and disbursement methods at Schedule B, a timetable of key processing events atschedule C, and the status of Bank group operations in Nigeria at Schedule D. Maps are alsoattached. The Staff Appraisal Report No. 11307-UNI, dated May 10, 1993, is beingdistributed separately.

6. IDA would finance US$63.0 million, or 76.3% of total projects costs excluding dutiesand taxes. This would all be onlent by the Federal Government to Lagos State under IBRDconditions, the State bearing the foreign exchange risk. The Japan International CooperationAgency (JICA) is expected to cofinance US$2 million equivalent worth of planning and designwork for sewerage. Local costs of US$20.8 million equivalent would be financed by theLASG, which will provide binding instructions to the Federal Ministry of Finance to desductthese funds from its Federation Account in monthly installments each of N9 million,(US$0.36 million equivalent) fior 18 months and then increasing to N12 million (US$0.48million equivalent) and deposit them into a project account. LASG would adjust this amountas appropriate to meet project needs.

7. Project npementation. The project would be implemented by TEPPO assisted byconsultants who would also be responsible for construction supervision. The Director ofDrainage would be responsible for the physical investment cc'.onents and projectcoordination. This arangement is considered to be an impro ement over that for the previousproject where a separate office managed the project. There is now considerable experience inthe State in implementing Bank assisted projects.

8. I l. A major component of the pioject would address the problemsof maintenance of drains, and developing the ability to keep them clear. The success of theLAWMA under the first project in clearing garbage from city streets has had a significant

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impact on the State's abUity to minimize drain blockage, and justifies continued support tothat authority. The project will help to establish a maintenance culture' within LASG byfinancing maintenance by contract, with the portion to be financed by the credit reducing overtime. The initial LASG contribution will require to be deposited into a maintenance accountprior to disbursement from the credit for maintenance.

9. Lessons Learned from Previous Prolects. The Bank has helped fmance two previousinfrastructre projects in Lagos, the Lagos Sol d Waste and Stormdrainage Project (Ln 2620-UNI, approved September 1985), and the Lagos Water Supply Project (Ln 2985-UNI,approved July 1988). Both are ongoing and no Project Completion Report has yet beenproduced. The first helped finance the upgrading of stormwater drainage in parts of Lagosmainland, and solid waste collection and disposal for essentially the entire Lagos metr.-politanarea, including support for the establishment of an autonomous authority (the LAWMA) andfor introduction of revenue collection arrangements including the enumeration of allbeneficiaries in Lagos and the development of a billing and collection system. The projectalso developed and introduced a property tax system which now helps to finance the LocalGovernment Authorities. The project suffered serious procurement delays during the earlystages of its implementation but is now close to completion. It has had a huge impact oncleaning up the previously ubiquitous piles of garbage which blocked streets and drainagechannels in Lagos, and has significantly reduced flooding in the areas served by its drainagecomponent The Lagos Water Supply Project has also had significart procurement delays inconstruction of the secondary and tertiary distribution system; however the water productionand transmission works are now complete and progress is now being achieved with finishingconstruction and institutional development components of the project. The most significantlessons learned from these projects concern the need to give detailed attention to procurementplanning and implemenmtion, and to ensure that institutional development components aregiven adequate early attention. The LASG and its implementing agency now haveconsiderable experience with Bank procurement requirements and serious delays are notanticipated with the proposed project.

10. Procurement delays have been caused by several factors, including poor or non-existent procurement planning, preparation of detailed designs not being commenced untilafter project initiation, poor project management, interference within the government in tenderevaluation and recommendation, and lack of understanding of the Bank's procurementprocedures. For the proposed project, detailed designs and bidding documents are availablefor Lagos Island and Apapa drainage, prepared under the previous project, and tenders havealready been invited. Documents for Lagos Mainland and Surelere are expected to beavailable by September. Procurement packaging has been clearly identified and scheduled.Consultant proposals for construction supervision have been invited. Proposed contracts aresmaler and simpler than several of the problematical contracts under the previous loans.With the election of a new State Government, a more conscientious and accountable approachto development is apparen

11. Previous Nigerian infrastructure projects have also suffered from lack of counterpartfinds. It is now standard practice to require that these fnds be deducted by the FederalMinisty of Finance (FMF) from the state's Federation Account in monthly installments anddeposited into a project account, and that states give binding authority to the FMF to do thisthroughout the project to cover local cost requiremen (para. 6). Such a procedure has beenagreed under the new project. Financial control has at times been poor under the previous

-4 -

projects. More recently TEPPO has retained the services of a consultant project accountant,and this will continue under the new project with strengthened duties of financial control.

12. Rationale for Bank Involvement. The project has been designed in the light of theBank's Country Assistance Strategy (CAS) which was discussed at the Board on April 13,1993. The Bank's basic objective in Nigeria is to promote sustainable poverty reduction.This objective is supported by policies and approaches that promote efficient growth,generating employment and providing basic social services. At the same time, the Bank'sassistance strategy is tailored to meet the present realities of a large, slow moving portfolio,the uncertainties created by the political transition and slippages in economic management,and Nigeria's limited creditworthiness. Improving implementation and maintaining a modestand tightly focussed lending program is a fundamental part of the overall strategy of the Bank.Within this context, the Lagos Drainage and Sanitation Project, forms part of the Bank'sprogram of assistance to develop Nigeria's infrastructure as an essential element in its overalleconomic development. The project is designed to improve basic living standards for peopleliving and working in flood prone areas. Health hazards due to flooding by sewage andaccumulated garbage would be reduced; employment would be generated through 4n annualprogram of drainage maintenance by contract; and improvements in public sector managementwould be pursued through technical assistance for organization and system development forkey agencies. The project also includes implementation of a demonstration urban renewalproject which could be replicated throughout Lagos to improve living conditions for the urbanpoor. The project will permit the Bank to continue its involvement with the development ofurban infrastructure in Lagos, the largest city in Sub-Saharan Africa. The project is expectedto be disbursed in five years, which is shorter man the standard profile for similar projects inNigeria. The shorter timeframe is feasible because of the simplicity of project design and theadvanced state of preparation of major components. In addition, detailed attention was givento procurement planning and implementation early in project preparation to help alleviate thetypes of procurement difficulties and subsequent disbursement lags encountered underprevious projects.

13. Actions Agreed. Bidding documents for Lagos island and Apapa have already beenfinalized and consultant proposals for supervision have been invited. LASG has allocatedsufficient funds for drain maintenance in the 1993 budget. At negotiations agreement wasreached that LASG will: (i) put in place a mechanism for financing and carrying out drainmaintenance, by contract (para. 8); (ii) continue to employ a capable project accountant andfinancial controller; (iii) incorporate appropriate clauses into specifications to minimizenegative environmental impacts during construction (para. 14); (iv) employ a consultantfamiliar with local conditions to ensure that IDA requirements are met with regard torelocation of affected residens, and properly compensae affected residents before relocationis required; and (v) undertake a mid term review focussed on project management, projectimplementation progress, maintennce, and counterpart funds availability. Conditions ofeffectiveness would be: (i) submission of bidding documents for contracting of drainmainteance; (ii) appointment of consultants for supervision; (iii) signing of a subsidiary loanagreement between the Federa Government and Lagos State; (iv) establishment of the projectaccount with regular deposits from the Federation Account (para. 6); and (v) deposit of theinitial installment into the project account. Conditions of disbursement will be: (i) for twodrainage components involving resettlement, approval by the Bank of relocation andcompensation plans for people affected by the drainage investment components amd

- -

satisfactory progress in the execution of the ressettlements; and (ii) for maintenance, adequateprovision by LASO of counterpart funds.

14. Environmental Asfects. The project has been classified as environmental category B.It consists largely of realigning, regrading and clearing existing roadside and other urbandrains and no significant permanent detrimental environmental impac. has been identified.The impacts identified include disruption during construction, particularly where majorhighway crossings are involved, disposal of material dredged from existing channels whichmight possibly contain hazardous waste material previously discharged to the channels, andreloc-ation of a small number of buildings, most of which are temporary structures. The firsttwo of these matters will be minimized by appropriate restrictions in the works specifications.Relocation has been minimized by attention to detailed design. One permanent and 31temporary structures will need to be removed, however residents are expected to be able toresettle in the same area. Compensation and relocation costs will be paid. Major beneficialenvironmental impacts are indicated below in para. 16.

15. Pro&r Objective Categories. Many of the beneficiaries of the project are poorurban-dwellers of Lagos. Otner relevant objective categories are: Infrastructure and UrbanDevelopment; Health; Public Sector Management; Environment.

16. McotBenc. Major project benefits will accrue due to reduction in flooding ofdwellings, businesses, and transport corridors, reduced deterioration of roads, elimination ofunsightly asumulations of garbage in drains, and reduction in health hazards caused byflooding by sewage. In the economic analysis, about 60% of the benefits derive from savingsin vehicle operating costs, 20% from increased rental values of properties, anid the remainderfrom reduced road damage, time savings and other factors. It was not possible to place arealistic value on health benefits. The average economic rate of return is estimated at 22%,and varies between 13.6% and 32.6% for different components of the project. A reduction ofabout 70% in the benefit from vehicle operating costs, or a 40% reduction in all benefitswould yield an ERR of 12%. About 1,300,000 people, many of them poor, live within thecatchment areas of the drainage works to be constructed, including about 225,000 in areasdirectly subject to regular flooding. A further 1,400,000 people will benefit from reduceddisruption to travel and commerce in the city during the wet season.

17. Risks. The project does not pose any unusual risks. The major risks identified are:(i) that counterpart funds may not become available as required (para. 6); (ii) that thenecessary drain maintenance fimancing and actions will not continue beyond the life of theproject (para.8); and (iii) that studies in the sewerage/sanitation and urban upgrading fieldswill not lead to sustainable investments. The first of these has been addressed by requiringdeduction at source from the Federation Account; the second by establishing procedures whichcan be easily repeated and by involvement of the private sector; and the third, to the extentpossible, by the participatory approach adopted.

-6 -

18. Recommendation. I am satisfied that the proposed credit would comply with theArticles of Agreement of the Association and recommend that the Executive Directorsapprove it.

Lewis T. Preston

PresidentAttachments

Washington DCMay 10, 1993

-7-

Schedule AFEDERAL REPUBLIC OF NIGERIA

LAGOS DRAINAGE AND SANITATION PROJECTESTIMATED COST AND FINANCING PLAN

(US$ miltlon)

ESTIMATED PROJECT COST

Local Foreign Total______(USS millions)

Physical Components

1. Construotion of Suelore drain 3.5 8.0 11.52. Constructon of Lagos mairland drains 3.3 7.7 11.03. Consuction of Lagos Island drainage 2.0 4.7 6.74. Construction of Apapa drains 3.6 8.4 12.0S. Drinage maintenance 4.3 4.6 8.96. Transfer station and landfill development 0.5 1.0 1.57. Vehicles and equipment for LSWMA . 1.4 1.6

Sub total 17A

Technial Asistance Components

8. Construcon supeision and maintenance 0.5 1.9 2.4assistance

9. Preparation of future projacts 0.1 1.0 1.1and training

10. Sewerage and saitaton sudies and design (i.2 4.7 4.911. Labortorvy equipment and training 0.1 1.0 1.112. Revenue billing and collection assistance 0.1 1.5 1.613. Community upgrading technical assistance 0.2 0.8 1.014. Demonstration community upgrading project 0.7 1.4 2.115. Develop LIS 0.1 1.8 1.916. Solid waste disposal techical assistance 0.1 12 1.

and trainingSub total Zi 153 17.4

Base cost (April 1993) 19.5 51.1 70.6Physical Contingencies 1.9 3.9 5.8Price Contingencies 5.4 4.0 9.4TOTAL _26.8 I/ 5 9

Financine Plan Local Foreign TotalUS$ Million

IDA 6.0 57.0 63.0LASG 20.8 - 20.8JICA - 2.0 2.0Total Financing 2Q9.0 85.8

1/ Of this amount, an estimated US$3.2 million equivalent is for taxes and duties.

Schedule BFEDERAL REPUBLIC OF NIGERIA

LAGOS DRAINAGE AND SANITATION PROJECTPROCUREMENT METHOD AND DISBURSEMENTS

A. Summary of Pronosed Procurement Arransemens(llSS million) 11

Ica LCB Total1. CivU Works 51.0 16.3 67.3

(38.2) (8.7) - (46.9)2. Supply Goods 3.4 - 1.0 4.4

(3.1) - (0.9) (4.0)3. Sorvices for taining and

technical asistance - - 14.1 14.1*- (2.1) (12.1)

TotaW 54.4 16.3 15.1 85.8

S£Z (30) (630)

B. Allocation and Disbursement of IDA Credit

Catetory Amount % to be disbutsedfrDmmDAcredit

1. CivU works except drain maintenance(a) Apapa drainago 10.3 100% of foreign expenditures and 55 % of local(b) SureJer channel 10.0 expendintres(c) Lagos Island dIage 5.7(d) Mainland drainage 9.6(e) Transfer stion and land fill 1.3(M Urban renewal demonstation 1.8

2. Dtain Maintenance 5.3 100% of foreign expenditures and 40% of localexpenditure until December 31. 1995;60% of foreign expendites and 40% of localexpenditures unti Dcember 31, 1996;and 40% thereaftr

3. Supply of goods and equipment 4.0 100% of foreign expenditures and 70% of localexpenditures

4. Training, technical assistance and 9.0 100%consruction supervision

5. Unallocated 6.0Total g3.

Estimated IDA Disburment

IDA Piscat Year 19 199S 19 9 1998-USS Milion__ _

Annual 11.2;/ 20.2 19.6 11.0 1.0Cumulatve 11.2 31A 51.0 62.0 63.0

1/ Figures In parentheses are the respecdve amounts, in US$ million equivalent, to befinanced by IDA.

2/ Includes initial deposit of US$3.0 million to a special account.

X9X

Schedule CFEDERAL REPUBLIC OF NIGERIA

LAGOS DRAINAGE AND SANITATION PROJECT

TIETABLE OF KEY PROCESSING EVENTS

(a) Time taken to prepare the project: Fifteen months

(b) Prepared by: Lagos State Office of Environment andPhysical Planning with IDA I/ assistance

(c) First IDA mission: February 1992

(d) Appraisal mission departure: May 1992

(e) Negotiations: May 1993

(f) Planned date of effectiveness: September 1993

(g) Relevant PCRs and PPARs None

1/ David Henley (Senior Sanitary Engineer) Task Manager, Jagdish Bahal (FinancialAnalyst), Letitia Obeng (Sanitation Specialist), James Wright, Division Chief,Infrastructure Division, Edwin Lim, Director, Western Africa Department, andConsultants Chris Banes and Ken Till.

- 10 - ScheduleD

PagO I of 3

THE STATUS OF BANK GROUP OPERATIONS IN NIGERIA

A STATEMENT OF BANK LOANS AND IDA CREDITS(As of March 31. 1993)

Fifty-e loans and two credit fully disbursed 3,198.2 39.9Of which SALs and Program Lo a>

3011-UNI 89 Nigeria Trade & Investment Poicy (500.0)2758-UNI 87 Nigeria Trade Policy & Export Dcvt (452.0)

2376-UNI 84 NBCI Small/Medium Scale Industry 1 26.9 0.92390-UNI 84 NNPC Gas Teehaicai Assistace 13.1 S.32436-UNI 84 Nigeria Integratd Agric Devt (Kaduna) 122.0 35.92480-UN! 85 Nigeria Technical Assistance 13.0 4.72503-UNI 85 Nigeria Sokoto Health 34.0 11.72528-UNI 85 Nigeria Borno State Water Supply 72.0 24.72607-UN1 86 Niga Urban Development U (tmo) 44.7 6.12618-UNI 86 NigeriA Induswty Tech Asistance 5.0 2.62620-UN! 86 Nigeia Lagos SoLd Waste & Storm. 72.0 9A2733-UNI 86 Nigewia Multi-State Agric Devt 1 162.0 40.62734-UNI 86 Nigeria Transport Parastat 20.9 6.22737-UN! 87 Nigeria Liveock Development n 71.0 27.42741-UNI 87 Nigeria South Borno Agric Devt 25.0 10.42760-UNI 87 Nigeria Forestry U 71.0 28.02925-UNI 88 Nigeria Infrastucture Devt Fund 69.5 47.72926-UN! 88 Nigeria Technical Education 23.3 2.72963-UNI 88 Nigeria Highway Sector 200.0 1S7.52985-UNI 89 Nigeria Lagos State Water Supply 173.2 161.12988-UNI 89 Nigeria Multi-State Agric Devt U 85.2 51.42995-UN! 89 Nigeria Private Smal & Med Entr. Dov 142.0 93.63034-UNI 89 NIgeris Imo Health & Population 27.6 25.02035-UNI (CR) 89 NIgeia Third Multi-State Agric Den 0.0 100.9 58.33104-UNI 89 Nigeria Refneries RehabIlitation 27.7 22.23116-UN! 89 NEPA Power System Mainteane 70.0 46.63125-UNI 90 Nigeria Essential Drugs 68.1 60.83126-UN! 90 NIgeria Tree Crops 106.0 101.83183-UN! 90 NIgeria National Seed and Quarantine 14.0 12.7

n 2139-UNI (CR) 90 Nigeria Federal Universities Deyt 0.0 120.0 122.93236-UNI 90 NITEL Telecommunications 225.0 214.1323S-UNI 90 Nigeria Oyo State Urban 50.0 48.52191-UNI (CR) 91 NIgeria Pdmary Educatioa 0.0 120.0 119.92238-UNI (CR) 91 Nigeria National Population 0.0 78.5 72.82261-UNI (CR) 91 Nigeria Nationa Agricultural Research 0.0 78.0 79.23317-UNI 91 NNPC Oso Condensate 218.0 56.23322-UNI 91 Nigeria Water Rebabilitation 256.0 242.63326-UNI 91 Nigeria Health System Fund 70.0 68.83451-UNI 92 Nigeria National Fadama Dev 67.5 37.53483-UNI 92 Nigeria Agric Tech Support b> 42.5 42.52353-UNI (CR) 92 Nigeria Environmental Management 25.0 26.12372-UNI (CR) 92 Nigeria Multi State Water 101.0 103.72415-UNI (CR) 93 Nigeria Multi State Roads b> 68.0 69.12431-UNI (CR) 93 Nigeria Economic Management Tech. Ass. 20.0 20.4

TOTAL S3X37T 751.3 2,409.0of which has been repaid I A69.3 14.2

Total now held by Bank and IDA 4,417.2 737.1Amount sold 16.8of which has been repaid 16.8

Total undisbursed 1,736.8 672.9 2,409.6

a> Approved during or after FY80b> Not yet effective.* SAL, SECAL or Program Loan

_ii- Schedule DPage 2 of3

B. SrATAMEN` OP IW INVESIrMEN(Asof Marci 31, 1"3)

68 UN1 1964 NIDB Deeplmamo 1.A IA70 UN! 1964 Aie TeWtles Ltd. TeztleMfg. 6.9 0.6 7.5121 UNI 1967

197021,40UN! Im246 UNI 1973 Puntun Pood Pocesing L6 1.6

482 UN! 1980 Nigeria TetUe Mills - Textis 22J 0.7 23.962 UNI 1987 Ltd.285UNI 1974 Laflag Sugar Food PromaIng 0.1 0.1

$40 UNI 1981 Ikeja Hotel Towism 12.0 L5 13.5720 UN! 1985990 UNI 198_1145UN1 1989 NEW Irn a stel 11.1 11.1

724 UN! 1985 TigerBattay Day-el Batteds. 7.2 721222 UNI 1990247 UNI 1973 NIGALEX Non-Fearus Metah 1.0 03 13

1000 UNI 1988 Dunlop Nigeria MotorVehiesand 125 125Accesories

1225UN! 1990 AfcottNNira Vegable Oil 4.5 4.52137UNI 1991 Nt0ML MoneyCapitalMarkets 10.0 10.02139 UNI 1991 Mobi Nigeria PerUoum 17Q0 170.02430 UNI 1991 VICODA Moanufauing 0.1 0.12582 UNI 1991 Stark Industries Manufacturing 03 03213 LINI 1991 Agro-TecASvcs Food PresinSg L0 L02583 UNI 1992 VicentSteel Manufturing 08 03

1992 NPDH-PSDH Cgpil Markets L0 1o

Total gm commitents 261.8 56 267.4

Les cencelba s teomunatlots ezchangeadjustents. epaymen and syndicated sal.s 164.7 2.7 167.4

Total commitment now beld byic 97.1 PA 10Q

Totalundisbuwed 3603 .00 3

- 12 - Scbedule D

Page 3 of 3

NIGERIA - EMPLEMENTATION ISS$

The Department has taken several actions to deal with generic implementation issues such as weakinstitutions and project management, slow procurement, and inadequate counterpart funding. These actionsinclude: (a) appointment of a procurement specialist and a local accountant in the Resident Mission; (b)appointment of Portfolio Managers in all sector divisions; (c) establishment of an implementation task forceto formulate actions to deal with cross-sectoral problems and to coordinate actions to clean-up the portfoliothrough the redesign of projects, reallocation of funds to viable components and cancellation of loancomponents which cannot be turned around; (d) a more pro-active role for the Resident Mission inimplementation by working even more closely with state-level officials; (e) increased emphasis on Sectorimplementation Reviews (SIRs) to be followed by a redesigned Country Implementation Review (CIR). TheResident Mission is also continuing efforts to meet with the new State Governors. In addition, a number ofnew initiatives have been put in place to strengthen the implementation process. For example, a newsupervision strategy has been adopted for the agriculture sector; in order to engage state governments ongeneric and sector issues in a more effective manner, task management for supervision is being allocated bystate rather than by project, as there are agricultural projects in all 30 states. Total disbursements in FY92amounted to US$344.7 million compared with US$208.4 million in FY91.

A number of portfolio reviews have taken place since early 1992 to identify specific actions for slowdisbursing projects, including possible cancellation of funds unlikely to be used in the next three years, theuse of upcoming loan closing dates to agree on timebound specific project actions, as well as areas for projectrestructuring in accordance with Bank guidelines. Total cancellations of $220 million have already beenprocessed. Cancellation of a further US$65 million is under discussion with the Government.

In addition, new initiatives are being launched by the Department. The Region has made additionalresources available to help accelerate implementation of Nigeria's portfolio. These resources are being usedto strengthen the staff and operations of the Resident Mission which is playing an increasing role in projectsupervision. Furthermore, eight projects have been identified for special emphasis based on implementationlags. Half of these projects support the social sectors, and the average level of commitment is over $100million. Special action plans have been developed for all eight projects to reflect the primary sources of delay:decision-making, procurement and counterpart funding. Two local procurement analyst are in the process ofbeing recruited to strengthen procurement review at RMN.

To address the wider concerns of adequate budgetary allocation for timely counterpart funding, thetask force on implementation has developed a comprehensive table of counterpart funding requirements foreach ongoing project over the next two years broken down by federal and state level contribution. This hasbeen shared with the government for their use in financial planning. It is also intended to serve as a usefulbudgetary guideline for the Transition Council and new civilian government.

May 10, 1993

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