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Document of

The World Bank

FOR OFICIAL USE ONLY

Report No. 14612

PROJECT COMPLETION REPORT

DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA

ALGIERS REGIONAL WATER SUPPLY PROJECT(LOAN 2461-AL)

JUNE 14, 1995

Private Sector Development, Finance, and Infrastructure DivisionMaghreb and Iran DepartmentMiddle East and North Africa Regional Office

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

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EXCHANGE RATES

Appraisal Year Average US$ 1 = DA 4.80Intervening Year Average US$ 1 = DA 11.04Completion Year Average US$ 1 = DA 36.00

WEIGHTS AND MEASURE-$

Metric System British/US System1 centimeter (cm) = 0.39 inches (inch)1 meter (m) = 3.28 feet (ft)1 kilometer (kIn) = 0.62 miles (mi)1 square meter (m2) = 10.76 square feet (sq. ft)1 square kilometer (km2) = 0.38 square mile (sq. mi)1 metric ton (m/ton) = 0.98 long ton (1g. ton)1 liter (L) = 0.26 gallon (G)

GLOSSARY

AGEP - Agence Nationale de l'Eau Potable et Industrielle et deI'AssainissementNational Water Supply and Sewerage Agency

ANB - Agence Nationale des BarragesNational Dam Agency

DGE - Direction Generale de l'ExploitationGeneral Operations Directorate

EPFAL - Etablissement de Production, de Gestion et de Distribution d'Eaud'AlgerAlgiers Water Company

EPIC - Entreprise Publique Industrielle et CommercialeSemi-autonomous public commercial enterprise

SEDAL - Soci&td des Eaux de l'Agglomeration d'Algerformer Greater Algiers Water Company

SONADE - Soci&6 Nationale de Distribution d'Eau Potable et Industrielleformer National Potable and Industrial Water Distribution Company

SPIK - Systame de Production Isser-KeddaraIsser-Keddara Production System

ALGERIA - FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

THE WORLD BANKWashington, D.C. 20433

U.S.A.

Office of Director-GeneralOperations Evaluation

June 14, 1995

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on AlgeriaAlgiers Regional Water Supply Project (Loan 2461-AL)

Attached is the Project Completion Report (PCR) on the Algeria - Algiers Regional WaterSupply project (Loan 2461-AL, approved in FY84), prepared by the Private Sector Development,Finance, and Infrastructure Division, Maghreb and Iran Department of the Middle East and NorthAfrica Regional Office. The Borrower did not prepare Part II.

The project is the second in a series of four projects that were implemented under Bankfunding in the 1980s; two in Algiers and two of national scope. The main objectives were toincrease the water production capacity (two dams, transmission structures, and a treatment plant),expand the primary distribution system, and rehabilitate the secondary network. The project alsoincluded a technical assistance program that focused on strengthening the project executing agency,Entreprise de Production, de Gestion et de Distribution d'Eau d'Alger (EPEAL) and supported theestablishment of the national regulating and overseeing agency, AGEP. The loan was closed in1993, two years after schedule.

Implementation concentrated on physical components; the dams and the transmissionstructures (tunnel and pipeline) were completed two years ahead of schedule, but the construction ofdistribution pipelines was delayed due to slow performance of local contractors. Leak detection andsubsequent rehabilitation of the system was almost a total failure and the unaccounted-for-water stillstands at 45 percent. The project did not achieve its ambitious institutional goals. These missedopportunities are now the specific focus of a follow-on operation (Loan 3743-AL) which wasapproved in 1994.

The outcome of the project is rated as marginally satisfactory but its institutionaldevelopment impact as negligible. The sustainability of project benefits is rated as uncertaindepending on whether the deterioration of operation and maintenance can be reversed under thefollow-on operation.

The Project Completion Report is of good quality and provides a realistic picture of theimplementation of the project.

No audit is planned. _

This document has a restricted distribution and may be used by recipients onLy in the performance oftheir officiaL duties. Its contents may not otherwise be discLosed without WorLd Bank authorization.

FOR OFFICIAL USE ONLY

DEMOCRATIC AND POPULAR REPUBUC OF ALGERIA

ALGIERS REGIONAL WATER SUPPLY PROJECT

(LOAN 2461-AL)

PROJECT COMPLEnlON REPORT

PREFACEEVALUATION SUAMMARY

PART I. PROJECT REVIEW FROM THE BANK'S PERSPECTIVE

Project Identity ........................ 1Project Background ........................ 1Project Objectives and Description . ........................ 3Project Design and Organization ......................... 4Implementation Experience ........................ 5Results ........................... 6Sustainability ........................ 8Bank's Performance ......................... 8Borrower's Performance ....................... 9Consultants' Services ....................... 9Project Documentation and Data .......... ............. 9Conclusions and Lessons Leaned ........................ 10

PART II: PROJECT REVIEW FROM THIE BORROWER'S PERSPECT"I

PART III: STATISTICAL INFORMATION

Table 1: Related Bank Loans in the SectorTable 2: Project TimetableTable 3: Cumulative Loan DisbursementsTable 4: Project CostsTable 5: Project FinancingTable 6: EPEAL's Financial Statements, 1984-93Table 7: Economic Rate of ReturnTable 8: Status of Compliance with CovenantsTable 9: MissionsTable 10: Staff Inputs

MAP NoS. IBRD: 16088R and 16089R

/ The Borrower did not submit a completion report.

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

DEMOCRATIC AND POPLAR REPUBUC OF ALGERIA


(LOAN 2461-AL)


PREFACE

This Project Completion Report describes the preparation, appraisal, and implementationof the Algiers Regional Water Supply Project, for which Loan 2461-AL in the amount ofUS$290 million was approved on June 28, 1984 and signed on September 26, 1984. The loanbecame effective on January 25, 1985. The original closing date was December 31, 1991;however, it was extended first to December 31, 1992 and finally to December 31, 1993 to allowfor completion of the water network renewal in central Algiers. To date, US$279.6 million havebeen disbursed, leaving a balance US$10.4 in the loan account. The closing out of the loanaccount is pending receipt of a refund for the special account in the amount of US$20,226.24.

Parts I and III of this report have been prepared by the Infrastructure Operations Divisionof the Maghreb and Iran Department, Middle East and North Africa Region. They are basedon information from the files of the ECA/MENA Information Center and a completion missionto Algeria in May 1994. The Borrower did not submit Part II.



(LOAN 2461-AL)


EVALUATION SUMMARY

Proiect Background

1. The population of Algiers, the nation's capital and largest city, more than tripledbetween independence in 1962 and 1984 reaching 1.5 million. The expansion of the city's socialinfrastructure, however, did not keep pace with this urban growth and all public services (e.g.,water supply, sewerage, transport, telecommunications) were highly deficient in 1984. Thewater supply system of Greater Algiers had remained basically the same since the early 1970s.By the early 1980s, the city was experiencing severe water shortages, and by 1984, theunsatisfied demand had reached 46%.

Project Objectives and Description

2. The primary objective of the Algiers Regional Water Supply Project was to increasewater production to the level required to meet the unsatisfied demand and future demand up to1993, which was forecast to reach 308 million m 3 in that year. It would also expand andimprove water distribution in Greater Algiers and reduce the percentage of unaccounted-forwater to, at least, 25% by 1995 through the renovation of the secondary distribution networkand an extended program of leak detection and repairs. Essentially, the project supported theconstruction of the Isser-Keddara Production System (SPIK), consisting of a dam and transfertunnel on the Boudouaou River at Keddara, another dam on the Isser River at Beni Amrane, anda water treatment plant at Boudouaou village. The project also included: (a) installation of atransmission pipeline to link the Keddara Dam with the water treatment plant; (b) laying ofprimary distribution mains and construction of three new reservoirs and related pumpingstations; (c) supply of meters and operational equipment; (d) leak detection and repair program;and (e) technical assistance to improve the managerial and financial capacity of the water utilityserving Greater Algiers, the Entreprise de Production, de Gestion et de Distribution d'Eaud'Alger (EPEAL), and to support the establishment of a national agency for the regulation andsupervision of water and sewerage authorities (AGEP).

Implementation ExpeFience

3. All major civil works for the entire SPIK were completed way ahead of schedule;the construction of both the Keddara and Beni Amrane dams was carried out in five rather thanthe seven years anticipated during project preparation and appraisal (Part m, Table 2).Consequently, the pace of disbursements far exceeded the appraisal forecasts (Part m, Table 3).

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Procurement of civil works was carried out in a generally efficient manner and with only minorproblems. Other project components were either partially implemented or not at all. Notably,technical assistance funds earmarked for EPEAL and AGEP were entirely unused.

Results

4. The total project cost was US$644.1 million equivalent, compared with US$770.5estimated at appraisal (Part III, Table 4). This 16% cost underrun was the combined result ofaccelerated completion of major works, failure to implement a number of components, and costsavings from the separate contract for works for the treatment plant (Part I, para. 5.1).

5. The construction of two dams together with expansion of the water distributionsystem measurably improved services to most of Greater Algiers. The SPIK now furnishes 105million m3 of water p.a., which represents about half of EPEAL's total production. TheKeddara Dam and the Hamiz-Keddara transfer are functioning well. On the other hand, the BeniAmrane Dam, treatment plant, and pumping stations face a number of persistent problemsmainly due to inadequate maintenance.

Sustainablitv

6. Despite the increase in production and expansion of services, heavy water lossespersist. In fact, efficiency has deteriorated to the point where nearly half of the water producedis unaccounted for (45% in 1991 and 1992). If production facilities were being properlymaintained, the aging distribution network were being rehabilitated, and an effective leakdetection and repair program were being carried out, the present production capacity would beadequate to meet the needs of domestic, commercial, and industrial consumption through theyear 2010. But because no progress has been made toward carrying out these activities duringthe last ten years, it unlikely that the benefits of the project will be sustained.

Conclusions and Lessons Learned

7. The project was a success from the standpoint of physical works implementation.Major civil works were completed in 1987, and some 90% of loan proceeds were disbursed.However, disbursement of the remaining funds, mainly for works awarded to local enterprises,was spread out over the next six years. If the performance of these enterprises had not been soweak, the Bank loan could have been fully disbursed and the loan account closed by the originalclosing date of December 31, 1991.

8. However, the project clearly failed to develop an efficient water distrbutionnetwork, as evidenced by the volumes of water being lost. This failure can be attributed mainlyto the project's having been implemented in an environment characterized by weak institutionallinkages and a bias against investment in maintenance and external assistance at a time of rapidurban growth and network expansion. Despite the availability of technical assistance funds,EPEAL's management improvement program never got off the ground. Moreover, efforts todetect and repair leaks in the network were ineffective. On the other hand, the continued direct

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association between the Bank and the water company under two loans, together with less directassociation through subsequent loans, has enhanced the company's standing, strengthened itsmanagerial and financial autonomy, and encouraged it to carry out appropriate financial policies.At the same time, Bank supervision missions were less forceful in convincing authorities at theministerial and enterprise levels that carrying out maintenance, as well as leak detection andrepair, programs was no less important than investing in new water works.

9. The new Water Supply and Sewerage Rehabilitation Project (Loan 3743-AL) willprovide EPEAL with another opportunity to operate and maintain an efficient water supplysystem. Moreover, in the context of this project, efforts are already underway to restructuresector institutions, introduce a system of incentives, and pave the way for the eventualprivatization of services. This new context should assist EPEAL management in rehabilitatingthe needed 200-300 km p.a. of its 1,775-km distribution network and in carrying out a leakdetection and repair program with a view to reducing unaccounted-for water to an acceptablelevel. EPEAL's successful participation would surely enhance the sustainability of the SPIK.



(LOAN 2461-AL)


PART I. PROJECT REVIEW FROM THE BANICS PERSPECTIVE

1. Project Identity

Name : Algiers Regional Water Supply Project

Loan No. : 2461-AL

Amount : US$290 million

Region : Middle East and North Africa

Country : Algeria

Sector : Water Resources

Subsector : Urban Water Supply

2. Project Background

2.1 Water Resources. Water resources in Algeria are generally limited and difficultto exploit. Most of the surface water sources are dry in summer, are of poor quality, and thuscannot readily be used for domestic and industrial supply. In general, regulation of the riversthrough costly reservoirs is required in order to ensure economically exploitable yields. On theother hand, the rate of infiltration from storm runoff and surface sources is high and as a result,groundwater is available in most of the country and represents more than two-thirds of theavailable water resources. The salinity of a large portion of the groundwater, however, is high,restraining its use for domestic consumption and irrigation. Most urban areas are presentlysupplied with groundwater.

2.2 Water Supply Services. Since independence in 1962, there has been an explosionof its urban population, which until recent years was growing at 3.5% p.a. This wasparticularly acute in Algiers, the nation's capital and largest city, whose population has morethan tripled between 1962 and 1984 reaching 1.5 million. The expansion of the city's socialinfrastructure did not keep pace with this urban growth and all public services (e.g., watersupply, sewerage, transport, telecommunications) were highly deficient. The water supplysystem of Greater Algiers had remained basically the same since the early 1970s. By the early

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1980s, the city was experiencing severe water shortages, and by 1984, the unsatisfied demandhad reached 46%.

2.3 Institutional Framework. The water and sewerage sector organization hasundergone substantial reorganization over the past 20 years. In 1970, the National Potable andIndustrial Water Distribution Company (Societe Nationale de Distribution d'Eau Potable etIndustrielle - SONADE) was established to ensure adequate water production and distributionto meet the needs of the main urban centers (Algiers, Oran, Constantine, Annaba, Setif).Investments were generally financed by Government grants, tariffs were low, and service andmaintenance levels poor. In the late 1970s, the Government changed its strategy placing greateremphasis on water resources development and on improving basic infrastructure. Areorganization of the sector began in 1980 and culminated in the establishment of 13 regionalpublic utility companies. In 1987, four regional water utilities were disbanded, the remainingnine reduced in size, and 26 wilaya companies formed, giving the sector a total of 35companies.

2.4 Bank Involvement in the Sector. The Bank has granted six loans to Algeria forwater supply and sewerage, including an engineering loan (Part m, Table 1). The Bank firstbecame involved in the sector in 1978 when it granted a loan in the amount of US$82 millionfor the Algiers Sewerage Project (Loan 1545-AL) to finance the construction of sewerinterceptors and a sewage treatment plant in Greater Algiers, as well as management andengineering studies in the cities of Algiers, Constantine, and Oran. The project also financeda study of the organization, management, tariffs, and financial structure of the Algiers WaterCompany (SEDAL). The study was completed in 1981. The Entreprise de Production, deGestion et de Distibution d'Eau d'Alger (EPEAL), the new water utility that succeeded SEDAL,has been implementing the new organization since 1982 entirely on its own. The AlgiersSewerage Project was followed by the Algiers Regional Water Supply Project and two projectsof national scope, which are still ongoing and finance the expansion of water supply andsewerage in the country's other large cities (i.e., Oran and Constantine) as well as in medium-size cities. Through all four project loans, an attempt has been made to strengthen sectorinstitutions. Although not always successful, Bank intervention has nevertheless led to majorinstitutional and policy reforms, such as the Government's decision to redefine its relationshipwith the country's water utilities granting them greater autonomy and to establish regional tariffsby 1997 to better approximate the average long-run marginal cost of water in each hydrographicregion.

2.5 The Bank has recently adopted an integrated approach to water resource managementand development. This new approach has been well documented by the Middle East and NorthAfrica Regional Office,2 the Maghreb and Iran Department,3 as well as through a joint effort

21 The World Bank: "A Strategy for Managing Water in the Middle East andNorth Africa," September 20, 1993.

2/ The World Bank: "Algeria: Water Resources Development StrategyPaper," Green Cover, January 28, 1993.

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between that Department and the Environment Division of the Technical Department. 4 Recentrevisions to the lending program reflect an emerging, streamlined portfolio highly focussed onenvironmentally sustainable water resource development to meet the needs of human, industrial,and agricultural consumption. Assistance priorities for integrated water resource managementand development will consist of infrastructure rehabilitation, private sector development, naturalresource management, rational water pricing, and environmental protection. Institution buildingwill be geared toward establishing autonomous, financially viable institutions with a more solidbase for cost recovery. Effective demand management will promote conservation.

2.6 The present dialogue on water resources for urban water supply between the Bankand the Government of Algeria centers on the startup of the sixth project, Water Supply andSewerage Rehabilitation, in June 1994. This project supports the rationalization of institutionalarrangements in the urban water sector with a view to achieving full cost recovery byautonomous, self-financing utilities. Another key feature of the project is a comprehensive,nationwide rehabilitation program. In addition to replacing aging distribution networks, thisprogram will cover leak detection and repair, setting up of a reliable metering system,establishment of efficient billing and collection procedures, and updated census of watercustomers.

3. Project Objectves and Description

3.1 Project Objectives. The objectives of the Algiers Regional Water Supply Projectwere to: (a) increase water production to the level required to meet the unsatisfied demand andfdture demand up to 1993, which had been forecast to reach 308 million m3 in that year; (b)expand and improve water distribution in Greater Algiers; and (c) reduce the percentage ofunaccounted-for water to not more than 25% by 1995 through the renovation of the secondarydistribution network and an extended program of leak detection and repairs.

3.2 Project Description.

Part I

(a) construction of an impounding dam on the Oued Boudouaou (Keddara Dam) with anannual capacity of 145 million ml and a tunnel to transfer excess water of the Hamizreservoir into the Keddara Dam;

(b) supply of mechanical and auscultation equipment for the Keddara Dam;

4/ The World Bank: "Democratic and Popular Republic of Algeria: Reviewof Issues in Environmental Management" (in two volumes), Green Cover,October 6, 1993.

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Part HI

(c) construction of a diversion dam on the Oued Isser at Beni Amrane, pumping facilitiesand a conveyance main (including two tunnels) to transfer water to the KeddaraReservoir;

(d) laying of a transmission pipeline between the Keddara Reservoir and the BoudouaouTreatment Plant;

(e) installation of a transmission pipeline to convey treated water to Greater Algiers;

(f) laying of two primary distribution mains, and construction three new reservoirs andrelated pumping stations;

(g) supply of master and domestic water meters and operational equipment for EPEAL;

(h) leak detection and repair program;

(i) technical assistance to EPEAL in reviewing and implementing its organizationalstructure and management and financial procedures; and

(j) technical assistance to the Ministry of Hydraulics, Environment, and Forests (MHEF)in carrying out a sector survey and establishing a national agency for the regulationand supervision of the regional water supply and sewerage authorities (i.e., AGEP).

4. Project Design and Organization

4.1 A Bank loan of US$5 miflion was made in 1980 to finance technical assistance forthe preparation of the Algiers Water Supply Project. This assistance led to the formulation ofa master plan for the development of water resources in the Algiers-Sebaou region. The Bankreviewed the feasibility study of the master plan, which became the basis for project appraisal.In 1981, however, further processing of a loan for the project was stopped, awaiting theGovernment's approval of a tariff increase for Greater Algiers. Meanwhile, the contract forthe construction of the Keddara dam was awarded after ICB and in consultation with the Bank,and civil works proceeded as scheduled.

4.2 The project was appraised in March 1984 and the loan negotiated in May of that year.Under agreed implementation arrangements, the General Directorate of Hydraulic Infrastructurewithin MHEF (having since then been reorganized into the Ministry of Equipment) wouldsupervise the construction of the Keddara Dam, the Hamiz-Keddara Tunnel, and the other civilworks with consultant assistance. The General Operations Directorate (DGE) within theMinistry would operate and maintain the Keddara Dam, Hamiz-Keddara Tunnel, and the BeniAmrane Dam for EPEAL, and EPEAL would pay DGE for its services. In 1986, the NationalPotable and Industrial Water and Sanitation Agency (Agence Nationale de l'Eau Potable et

Industrielle et de I'Assainissement - AGEP) was established with the Ministry to coordinateregional water company operations. AGEP's role would be to assist the Ministry in planningand implementing water supply and sewerage investment programs, recommending nationwidetariffs for approval by the Government, identifying the required level of Governmentcontributions to the companies to optimize the use of financial resources in the sector, andformulating detailed sector policies. EPEAL would be in charge of metering, leak detection,and repair programs.

5. Implementation Experience

5.1 All major civil works for the entire Isser-Keddara Production System (SPIK) werecompleted way ahead of schedule; the construction of both the Keddara and Beni Amrane damswas carried out in five rather than the seven years anticipated during project preparation andappraisal (Part m, Table 2). Consequently, disbursements far exceeded the appraisal forecasts(Part m, Table 3). Procurement was carried out in a generally efficient manner and with onlyminor problems. By 1984, about one-third of the Keddara Dam construction was completed andinternational contractors for the remaining works had been prequalified. The Governmentdecided to group the Beni Amrane Dam, Boudouaou treatment station, pipelines, and relatedequipment into seven items, to allow contractors to submit bids on all seven items, or separatebids on the treatment station and the remaining six items. A package consisting of six of theseitems was awarded to a foreign consortium, which included the contractor for the Keddara Dam.The last item consisted of the design, equipment supply, and civil works for the Boudouaouwater treatment plant. An in-depth analysis of the bids by the Algerians revealed that if thescope of this contract were limited to the design of the facility and supply of equipment, therelated civil works could be awarded separately leaving open the option to increase (up to 20%)the quantity ordered under the earlier contract with the firm awarded the six other items. Thisproposal, which was judged to be consistent with Bank guidelines, resulted in a savings of aboutUS$10.1 million.

5.2 Three years after the Beni Amrane Dam became operational, it was discovered thathigh volumes of clear water could not be pumped to Keddara because it was taking a week forthe water to settle. In September 1991, Algerian authorities requested agreement from the Bankto finance a second water intake at the Beni Amrane Dam. Following a request granted by theBank, the contractor that had built the dam installed an additional intake, which improved theperformance of the Beni Amrane transfer.

5.3 Although the project provided for 1,350 staff-months of expert services, the technicalassistance component, which was intended for AGEP and EPEAL, was not implemented underthis project. The strengthening of AGEP was deferred to the National Water Supply andSewerage Project (Loan 2821-AL), as was the sector survey carried out by AGEP. Furtherinstitutional assistance to restructure AGEP will be provided under the new Water Supply andSewerage Rehabilitation Project (Loan 3743-AL).

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5.4 EPEAL's management improvement program never got off the ground. In 1986,EPEAL placed a pre-qualification notice in a local newspaper inviting internationally knownmanagement firms to submit proposals. But EPEAL did not follow through. Instead, it soughta credit through French bilateral assistance to carry out the program and requested cancellationof this portion of the Bank loan. EPEAL later decided to use Bank funds rather than bilateralaid for that purpose and withdrew the cancellation request, but it never recruited managementconsultants.

6. Results

6.1 Project Costs. 'he total project cost was US$644.1 million equivalent, I comparedwith US$770.5 estimated at appraisal (Part m, Table 4). This 16% cost underrun was thecombined result of accelerated completion of major works, failure to implement a number ofcomponents, and cost savings from the separate contract for works for the treatment plantprocurement (Part I, para. 5.1).

6.2 Functioning of the Installations. The construction of two dams together withexpansion of the water distribution system measurably improved services to most of GreaterAlgiers. The SPIK now furnishes 105 million m3 of water p.a., which represents 48% ofEPEAL's total production. The Keddara Dam and the Hamiz-Keddara transfer, under themanagement of the National Dam Agency (ANB), are functioning well. The only problems liein the lack of water resources due to the recent drought. Earlier problems protecting resourcesfrom pollution (domestic pollution, proximity to gas pipelines) have been resolved. On the otherhand, the installations under the management of EPEAL, the Beni Amrane Dam and pumpingand treatment facilities, suffer from a number of persistent problems. Maintenance is inadequatedue to the lack of qualified staff, maintenance equipment, and spare parts, especially for thepumping and treatment facilities. Protection of the holding basin is also inadequate due todifficult access and a nearby construction site. Efforts to install new meters and renewal of oldones throughout the network have been ineffective; only 70% of EPEAL's customers haveindividual meters. The leak detection and repair program fell short its targets as unaccounted-forwater remained at around 45% of the quantity produced instead of 25-30%, which would havebeen within acceptable limits.

6.3 Institutional Strengthenine of EPEAL. Terms of reference were approved forEPEAL's management improvement program, which was never carried out. Nevertheless,EPEAL indirectly benefitted from the continuous policy dialogue between the Bank and theAlgerian authorities surrounding the design, preparation, and implementation of three follow-onnational water supply and sewerage projects (Loans 2591, 2821, and 3743-AL). It directlybenefitted from the training component of the Algiers Sewerage Project (Loan 1525-AL). Asa result, EPEAL doubled the productivity of its staff in terms of number of employees per 1,000

2./ derived on the basis of actual disbursements.

connections, from 16 in 1984 to 8 by 1993, while evolving from a municipal division into asemi-autonomous public enterprise (EPIC).

6.4 Institutional Strengthening of AGEP. Project-supported technical assistanceobjectives designed to assist the Ministry in creating AGEP were only pardally met. WhenAGEP was founded in 1986, it was charged with formulating sector policy for urban watersupply and overseeing sector operations, as well as providing water utilities and municipalsewerage services with technical assistance and training. Unfortunately, AGEP had to bereleased from those responsibilities so that it could urgently fill a technical void and devotenearly all its resources to planning and supervising the construction of water works. Under theSecond National Water Supply and Sewerage Project (Loan 2821-AL), AGEP did manage,however, to undertake a major organizational study, with consultant assistance, to determine theactions to be taken, as well as the structures and procedures to be put in place, in order toimprove efficiency throughout the sector. With support from the Bank under the new WaterSupply and Sewerage Rehabilitation Project (Loan 3743-AL), AGEP will be restructured intoan autonomous, self-financing entity capable of providing the water utilities with technicalassistance to improve their commercial and financial activities.

6.5 Flnancial Performance. The Algiers Sewerage Project (1524-AL) included a watertariff study, which was completed in 1981. But not until 1984 did the Government approve a41 % tariff increase, which would enable EPEAL to finance at least 50% of its investments. Thetariff increase together with notable progress made by EPEAL in strengthening its organizationand procedures assuaged the Bank's concern over the Government's commitment to the AlgiersRegional Water Supply Project. Even though this represented a significant increase, the projectwould nearly triple EPEAL's gross fixed assets resulting in a high debt service in the mediumterm. Incremental increases in the company's ability to finance these new investments throughinternal cash generation would underpin its financial performance objectives during projectimplementation.

6.6 Comparison of financial projections with EPEAL's actual statements from 1984 to1993 (Part III, Table 5) shows major variations due to: (a) much higher local inflation thanexpected; (b) limited capacity to take over and manage an aging distribution network; (c)inadequate commercial management; and (d) inappropriate financial reporting procedures andaccounting systems, which fail to take into account the transfer of assets and correspondingmedium- and long-term debt. Local inflation had been originaUy estimated at 7% between 1984and 1988, 6% in 1989 and 1990, and 5% in 1991 and thereafter. But in reality, it increasedprogressively, over the years, reaching 24% in 1992. As result of spiraling inflation and thefailure to reduce unaccounted-for water, operating costs rose at a considerably higher rate thanrevenues from water sales. Before 1992, periodic tariff increases were insufficient to offset thatdeficit. In 1992 and 1993, EPEAL's operating ratio dropped below "1." However, this positiveindicator must viewed with caution since the annual depreciation expense does not reflectrenewal of the assets managed and operated by the company or the interest on the correspondingmedium- and long-term debt. In contravention of the Loan Agreement signed between theAlgerian Government and the Bank, as well as the subsidiary loan agreement signed theGovernment and EPEAL, the SPIK assets were not transferred to EPEAL's balance sheet (Part

IH, Table 7). In the meantime, however, the Government, backed by the Bank, has changedits approach to the ownership and financing of water production and distribution systems. Underthe Water Supply and Sewerage Rehabilitation Project (Loan 3743-AL), it has been agreed thatthe Government will retain ownership of the infrastructure and lease these assets to the utilitycompanies for a fee.

6.7 Economic Justification. The recalculated economic rate of return (ERR) usingcurrent tariffs and 1994 prices for investment and operating costs is 10% (Part mII, Table 7),compared with 8% at appraisal. Higher economic performance is due to an earlier completiondate for major civil works, as well as considerably fewer staff per 1,000 connections resultingin low incremental operating costs. Regardless of the ERR, the overriding justification for theproject was the need to provide Greater Algiers with a sufficient supply of safe drinking waterand adequate services. The project was the least-cost solution to provide such supply. It wouldgenerate enormous health and environmental benefits that cannot be measured in quantifiablevalues. These include reduced expenses for health care, reduced time spent by women andchildren collecting water, higher productivity of children in school, as well as higher workerproductivity as a result of better health.

6.8 Enviromental Inpact. Neither the implementation nor the subsequent operationof the SPIK has had a negative impact on the environment. On the contrary, the availability ofpotable water has contributed to the well-being of the population. Notwithstanding this importantcontribution, the project could have had a greater impact if EPEAL's leak detection and repairprogram had succeeded. When the project was launched, large volumes of water distributedfrom an old network were being lost due to leaks in the system. By stopping those leaks, theproject would have eliminated water pools, ideal breeding places germ-carrying vectors.

7. Sustainability

6. Despite the increase in production and expansion of services, heavy water lossespersist. In fact, efficiency has deteriorated to the point where nearly half of the water producedis unaccounted for (45% in 1991 and 1992). If production facilities were being properlymaintained, the aging distribution network were being rehabilitated, and an effective leakdetection and repair program were being carried out, the present production capacity would beadequate to meet the needs of domestic, commercial, and industrial consumption through theyear 2010. But because no progress has been made toward carrying out these activities duringthe last ten years, it unlikely that the benefits of the project will be sustained.

8. Bank's Performance

8.1 The Bank's role in the sector has been to assist the Government in strengthening itsproject planning and implementation capacity and in establishing a strong institutionalframework, with support for sector policy formulation. Since the first Bank loan to the sectorin 1978, a major objective has been to strengthen sector institutions. This objective has been

- 9 -

pursued on two fronts. In the first place, the Bank has advocated improved policies dealing withtariffs, water conservation, and water rights. The first water tariff increase since the country'sindependence was approved on the occasion of the first Bank-financed project. Other tariffincreases have followed, with the two most recent being a doubling of the current tariff in 1993and 33 % in 1994. Together with a change in policies, we have pursued the reform of the sectororganization. With the first loan, we advocated the creation of regional water utilities. The firstone was set up in Greater Algiers. The continued direct association between the Bank andEPEAL under a second loan (i.e., Algiers Regional Water Supply Project) has enhanced itsstanding, strengthened its autonomy, and encouraged it to carry out appropriate financialpolicies.

9. Borrower's Performance

9.1 The Algerian authorities demonstrated their commitment to the physicalimplementation of the project by entering into a contract for construction of the Keddara Damand starting civil works more than two years prior to the approval of the loan. ANBcompetently supervised construction of that component and later AGEP site engineerscompetently supervised the Beni Amrane Dam and related works. Unfortunately, however, therewas no systematic reporting between ANB and AGEP, the latter of which had overall projectmanagement responsibility. In addition, there were long delays in making payments tocontractors. In October 1985, for example, arrears of up to six months in payments owed tocontractors mounted to US$47 million equivalent. Moreover, during the project period, progressin institution building was extremely slow. The eventual commitment to reforming the sector,nevertheless, became manifest and culminated in the signing of an acceptable Letter of SectorPolicy Development by the Minister of Equipment, as a prerequisite to the presentation of thelatest project to the Bank's Board of Directors in May 1994.

10. Consultants' Performance

10. The consultants who supervised civil works carried out their tasksin a fully satisfactory manner.

11. Project Documentation and Data

11.1 The amalgam of information contained in the Staff Appraisal Reports, Loan andProject Agreements, correspondence files, audit reports, and computerized disbursement datawere adequate. However, preparation of this report entailed somewhat excessive cross-referencing of materials because essential background or detailed information was excluded fromsome documents.

- 10-

12. Conclusions and Lessons Leamed

12.01 The project was a success from the standpoint of physical works implementation.Major civil works were completed in 1987, and some 90% of loan proceeds were disbursed.However, disbursement of the remaining funds, mainly for works awarded to local enterprises,was spread out over the next six years. If the performance of these enterprises had not been soweak, the Eank loan could have been fully disbursed and the loan account closed by the originalclosing date of December 31, 1991.

12.02. However, the project clearly failed to develop an efficient water distribution network,as evidenced by the volumes of water being lost. This failure can be attributed mainly to theproject's having been implemented in an environment characterized by weak institutionallinkages and a bias against investment in maintenance and external assistance at a time of rapidurban growth and network expansion. Despite the availability of technical assistance funds,EPEAL's management improvement program never got off the ground. Moreover, efforts todetect and repair leaks in the network were ineffective. On the other hand, the continued directassociation between the Bank and the water company under two loans, together with less directassociation through subsequent loans, has enhanced the company's standing, strengthened itsmanagerial and financial autonomy, and encouraged it to carry out appropriate financial policies.At the same time, Bank supervision missions were less forceful in convincing authorities at theministerial and enterprise levels that carrying out maintenance, as well as leak detection andrepair, programs was no less important than investing in new water works.

12.03 The new Water Supply and Sewerage Rehabilitation Project (Loan 3743-AL) willprovide EPEAL with another opportunity to operate and maintain an efficient water supplysystem. Moreover, in the context of this project, efforts are already underway to restructuresector institutions, introduce a system of incentives, and pave the way for the eventualprivatization of services. This new context should assist EPEAL management in rehabilitatingthe needed 200-300 kn p.a. of its 1,775-km distribution network and in carrying out a leakdetection and repair program with a view to reducing unaccounted-for water to an acceptablelevel. EPEAL's successful participation would surely enhance the sustainability of the SPIK.

- 11 -



(LOAN 2461-AL)


IL PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE

The Borrower did not submit a completion report.

- 13 -



(LOAN 2461-AL)


m. STATISTICAL INFORMATION

Table 1: Related Bank Loans in the Sector

L*a Nu --d -h. upo -Y *:-tus

Loan 1545-AL Construction of sewer interceptors and a sewage treatment plant in 78 Completed;Algiers Sewerage Project Greater Algiers; nmnagement and engineering studies in the cities of PCR 6/89

Algiers, Constantine, and Oran; and establishment of a regional watersupply and sewerage authority (SEDAL).

Loan S-17-AL Assessment of urban, industrial, and agricultural water needs in Greater 80 CompletedEngineering Loan Algiers and surrounding areas; preparation of a master plan for the use

of water resources in the MitidjalIsserlSebaou Valley; detailed designand preparation of tender documents for a first construction stage ofwater production facilities for the Algiers conurbation; preparation of amaster plan for potable water distribution in Greater Algiers; and thedetailed design and tender documents for a first construction phase ofthis plan.

Loan 2591-AL Construction of a new surface water production system, a 85 OngoingNational Water Supply demineralization plant, and the rehabilitation of existing productionand Sewerage Project facilities in Oran; construction of new water production works and

expansion of the distribution network, collection and treatment of wastewater for reuse in Constantine; technical assistance to help recentlyestablished regional water companies streamline their organization,operational procedures, and financial systems. X

Loan 2821-AL Implementation of four regional subprojects, comprising the construction 87 OngoingSecond National Water of well fields, reservoirs, water treatment plants, pumping stations, andSupply and Sewerage transmission pipes; construction of three sewage treatment plants;Project expansion of the water distribution networks of all 13 (later 9) regional

companies; study of the construction industry in the water supply andsewerage sector; four inter-basin water transfer studies; and mnangementtraining. l

Loan 3743-AL Water supply system rehabilitation in 10 cities, including leak detection 94 OngoingWater Supply and and repair, meter installation, and gauging; water distribution networkSewerage Rehabilitation relooping and balancing in the same ten cities; rehabilitation of about 24Project sewage treatment plants located in different sites in the country;

consulting services to AGEP and ANB to carry out feasibility anddetailed studies, and environmental impact assessments of planned waterand sewerage works; institutional development assistance to AGEP,ANB, the National Agency for Hydraulic Resources (ANRH), and thewater utilities; and supply of operational equipment to AGEP, ANB,ANRE, and the water utilities.

- 14 -

Table 2: Prolect Timetable

Identification 3/81

Preparation Beginning - 3/81

Preparation End 6/81 3/81

Appraisal Mlssion 6/81 - 3/84

Loan Negotiations 5/84 - 5/84

Board Approval 6/28/84 - 6/28/84

Loan Signature 9/26/84 - 9/26/84

Loan Effectiveness 1/25/85 1/25/85

Loan Closing 12/31/91 12/31/92 12/31/93

- 1 5 -

Table 3: Cumulative Loan Disbursements

(US$ millions)

. :.: :. -. - R .................. t . . . . t .| . . ~~ ~~~ ~. . .. . . ..... X.*..-.-;,-.'.-'.','-}.-'. .:.,.cti.j. . . s' ...

1985 3.20 3.20 35.50 35.50 1109 %1986 21.90 25.10 46.61 82.11 327 %1987 39.10 64.20 73.48 155.59 242 %1988 72.40 136.60 42.46 198.05 145 %1989 63.30 199.90 56.76 254.81 127 %1990 43.40 243.30 8.29 263.10 108 %1991 34.40 277.70 2.86 265.96 96 %1992 12.30 290.00 0.00 265.96 92 %1993 - - 5.54 271.50 94 %1994 - - 8.05 279.55 96 %

- 16 -



Table 4: Proiect Costs

*S ~ ~ ~ ~ ~ ~ ~ ~~~(

- 17 -

DEBAOCRATIC AND POPULAR REPUBLIC OF ALGERIA Page 1 of a


TABLE 6: EPEALS FINANCIAL STATEMENTS. 1908443

(DA Milion)

INCOME STATEMENT

1964 1965 1966 1967 1968PRmicted I Prb Actual Proi Actual P ProRected ActuAl

OPERATING REVENUES

Water ha1. 1tt 02 137 101 1O 150 171 1O 187 200M.Wr Rental and Repsir a 4 10 6 17 6 18 20 30 23Other Revenues 6 66 11 47 17 45 19 30 20 6Total 125 162 158 161 194 201 208 210 236 229 -

OPERATING EXPENSES

Personnel 52 s5 56 73 57 94 60 96 a6 110Energy 23 18 24 23 25 24 27 28 29 33Chemicalsand othr materlals 10 37 15 11 22 24 24 21 33 32Taxes 8 15 9 16 10 12 11 10 13 14Depreciation 37 38 38 39 38 62 47 as 70 s8ToWa 129 164 141 162 152 215 160 220 211 258

Net Operating Income (4) (2) 17 (0) 41 (14) 39 (10) 25 (29)

Less: Interest 1 1 1 1 1 3 17 2 33 5Lese: Non-Operating Adjustments - 3 - (6) - (12) - 5 - (6)

Net Income (6) (6) 16 5 40 (6) 22 (17) (7) (29)

Operating Ratio 104% 102% g90 101% 79% 109% 89% 106% 103% 115%

- 18 -

DBAOCRATIC AND POPULAR REP5MUC OF ALGERIA Page 2 of 8


TABLES: EPEAL'S FINANCLAL STATEUENTS. 1094-3

(DA Milan)

INCOME STATBAENT

t989 low9 199t 1992 l9P d Actual cted ctua Actual P d Acua Acta

OPERATING REVENUES

Water Sales 367 205 432 208 506 314 566 482 60oMeter Rental and Repair 38 27 47 42 56 36 64 36 36

Other Rewenues 22 a 23 13 11 21 12 71 25

Total 416 239 503 264 572 371 630 588 6o0

OPERATING EXPENSES

Peronnel 77 127 81 146 85 190 89 246 273

Energy S4 36 66 39 70 73 74 107 11SChemicals and other materials 60 35 73 31 09 50 78 63 82

Taxes 20 16 31 18 34 25 37 36 30

Depreciation 117 72 157 75 164 a6 186 71 72

Total 328 287 406 309 421 413 441 521 584

Net Operating Income 89 (48) 97 (46) 151 (42) 180 67 76

Le_: Interest 31 5 120 6 184 20 S0O 41 56Le: Non-Operating Adjustments - (7) - (4) - 75 - 40 22

Net ncome 58 (4a) (32) (47) (14) (136) 29 (14) (t)

Operating Ratio 86% 122% 106% 119% 102% 116% 96% 906 97%

- 19 -

DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA Page 3 d a


CASH FLOW BLE 6: EPEAL'S FINANCIAL STATEMIENTS. 1984-93

(DA Mllion)

1984 106 1906 1987 1968

Projectd Acual PreedAa l Proj etd Act"ual P_____d Aduai Projed Actual

USES OF FUNDS

lnvegtments S00 266 50 25 1,022 630 1,248 29 922 30

Increa.e/(Decrease) In WorkingCapital (25) (10) 22 33 (10) 28 (22) 18 (17) 30

Debt ServiceInterestChargedtoOperations 1 1 1 1 1 3 17 2 33 5

Amortization of Loans 2 2 2 17 30

Sub-Total 3 1 4 1 4 3 34 2 63 5

TOTAL 486 256 625 60 1,016 60 1,260 48 968 75

SOURCES OF FUNDS

Operating Irnome before Deprec. 33 33 56 46 80 so 80 50 96 45

Borrowings 92 19 104 15 214 3 433 0 450 137

ContuibutlonuTransfers 362 206 406 0 722 508 740 (2) 423 0

TOTAL 480 256 625 60 1,010 6o0 1,200 48 908 182

- 20 -

DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA Page 4 f 8


CASH FLOW LE e: EPEAL'S FINANCIAL STATEMENTS. 1984-3

(DA MEiNon)

1989 19o6 1991 19O2 1903Probd _t ActualProid h o Actual PrAaPld Ad A

USES OF FUNDS

Investments 603 41 164 29 206 40 220 37 36Increasel(Decrease) In WorkingCaptal (36) 115 (24) 34 5 (217) 13 62 146

Debt SeiceInterest Charged to Operations 31 8 129 6 164 20 16O 41 eAmnortzationof Loans - 30 244 112 336 113 484 114 541 531Sub-Total e1 249 241 342 275 503 274 583 586

TOTAL 700 406 381 408 489 336 516 682 768

SOURCES OF FUNDS

Operating Income before Deprec. 205 31 254 33 314 (51) 363 go 126Borrowings 302 20e 262 372 215 386 8 583 542ContrlbutionsrTransfers 111 0 (134) 0 (40) 0 156 0 100

TOTAL 700 296 381 406 480 336 516 682 768

21 -

DEMOCRATIC AND POPULAR REPUBLIC OF ALGEPJA Page 5 of a


TABLE e EPEAL'S FNANCIAL STATEMENTS. 1964-43

(DA Million)

BALANCE SHEET AND PERFORMANCE INDICATORS

1964 196 low 1917 19s8Protd A Pr d Ackat P_ __d Ac_ Proid Acul Proid 1

ASSETS

Fixe s"ofd 1,348 1.152 1,360 1,180 1,394 1,781 2,248 1,796 3,194 1,830Less Accumulated Depreciation (734) (69e) (771) (737) (810) C790) (867) (864) (927) (932)Work in Progress 613 15 1a160 32 2.166 40 2,613 62 2,567 5s

Net Fixed Assets 1t226 468 1,787 456 2,771 1.023 3,972 986 4,824 957

Current AssetCash 9 39 10 s t 1 47 12 11 16 55Accounts Receivable g9 239 110 256 11e 296 109 369 93 421Other Receivables 21 12 16 19 17 24 19 22 15 23Inventory 42 40 46 36 38 37 3e 41 36 43Sub-Total 161 330 183 306 182 402 176 443 160 542

TOTAL 1,387 799 1,970 821 2,962 1,425 4,148 1,429 4,984 1,499

EQUITY AND UABIUTIES

Capita 1,206 667 i,m6 691 2,406 1,273 3,242 1,257 3.,67 1,217

Medium- and Long-Term Debt 129 15 230 31 428 45 831 42 1,250 83

Current UabilitiesMaturities on MT and LT Debt 2 4 2 3 17 5 30 10 30 107Accounts and Notes Payable 49 93 48 96 42 103 46 120 47 92Sub-Total 51 96 51 99 59 107 76 130 77 199

TOTAL 1,387 799 1,970 821 2.962 1,425 4,148 1.429 4,984 1,4s9

- 22 -

DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA Page a of 8


TABLEt EPEAL'S FINANCIAL STATEMENTS, 1964-O3

(DA Million)

BALANCE SHEEr AND PERFORMANCE INDICATORS

1969 1900 1991 1902 1993Projected Actual roiede Actal PProected Actual Popebd Actbl Acual

ASSETS

Fixed Asets 5,837 1,930 8.337 196m 6e.3e9 2,008 6,402 2,045 2,081Lose: Accumulated Depreciation (1.044) (1,006) (1.200) (1,079) (1.364) (1.146) (1,528) (1.217) (1,289)WorkIn Progres 598 0 262 1 436 1 631 4 6Net Fixed Assets 5,391 925 5,396 881 5,440 864 5,504 832 797

Current AssetsCash 19 47 22 5S 23 66 24 97 47Accounts Receivable 137 438 118 466 130 481 149 642 a06Other Receivables 10 25 11 28 14 22 13 56 137Inventory 57 48 74 61 74 111 79 199 202Sub-Total 223 568 225 611 241 680 286 9g6 1,191

TOTAL 5,614 1,U43 5,623 1,402 5,681 1,544 5.709 1,827 1,968

EQUITY AND LIABILITIES

capital 3,900 1,275 3,743 1,246 3,689 1.006 3,875 1,023 1,097

Medium- and Long-Term Debt 1,530 108 1,679 127 1,779 134 1,671 147 184

Current UabilitiesMaturitiesonMTandLTDebt 112 14 113 26 114 22 116 23 20Accounts and Notes Payable 63 86 8S 93 98 382 107 634 677

Sub-Total 175 100 202 119 212 404 223 867 707

TOTAL 5,614 1,493 5,623 1,492 5,.81 1,544 5,760 1,827 1.988

- 23 -

DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA Page 7 of a


TABLE S EPEAL!S FINANCIAL STATEMENTS, 1964-O

(DA Million)

PER FANCE INDICATORS

19B4 1965 1966 1967 196_mioW Actual Proi Actual Prctd Acul P Acta Pl o Acbal

FINANCIAL INDICATORS AND RATIOS

Current Rato 3.1 3.4 3. 3.7 3.1 3.8 2.3 3.4 2.1 2.7Operting Rato 104% 102% 00% 101% 79% 100% 89% 106% 103% 115%DebtEquity RPao 9 2 12 4 15 4 21 4 26 13

91 96 88 96 85 96 79 96 74 87Debt Service Coverage Ratio 11.8 54.0 15.0 28.9 21.4 15.8 2.6 25.6 1.5 7.2Collectdon Perod (months) 9 I8 a 19 7 18 0 21 5 22Payment Period (months) 18 20 1S 34 11 26 11 30 9 17

OPERATIONAL RATIOS AND INDICATORS

Number of Staff n.a. 1,782 na. 1.946 1.280 2,070 1.283 2,346 1,454 2,359Average Personnel Cost (DA 000) - 31 - 37 45 45 47 41 46 46Water Production (000 m3) 144 127 150 126 150 131 150 141 160 187Water Sales (000 m3) 92 85 98 83 go 85 101 95 102 105Unaccounted-for Water 36% 33% 36% 34% 34% 36% 33% 33% 32% 44%Salary and Wage Expense/Revenues 42% 36% 36% 46% 30% 47% 29% 40% 28% 48%Salary and Wage ExpenselOperatingExpenses 40% 34% 39% 46% 386% 44% 36% 44% 31% 43%

Revenue per m3 Sold (DA) 1.20 1.08 1.40 1.31 1.81 1.78 1.70 1.08 1.83 1.90Operating Cost/m3 produced (DA) 0.90 1.29 0.94 1.29 1.01 1.64 1.12 1.56 1.40 1.38Personnel Costa/m3 produced (DA) 0.30 0.44 0.37 0.58 0.38 0.72 0.40 0.68 0.44 0.50Cost of Energy/m3 produced (DA) 0.18 0.14 0.16 0.18 0.17 0.18 0.18 0.20 0.20 0.18

0.56 0.40 0.45 0.41 0.43

- 24 -

OWAOCRATIC AlND POPULAR REPUBUC OF ALGERIA Page a d a


TABLE 6: EPEAL'S INCIAL STATEMENTS, 1914-f

(DA MiAn)

PERFOIWAANCE INDICATORS

1989 1990 1991 1992 1993Proetd AlU Proiedcd Achl Pioted Actual PrdeSd Adual A1

FINANCIAL INDICATORS AND RATIOS

Current Ratio 1.3 5.6 1.1 5.1 1.1 1.7 1.2 1.5 1.7Operating Ratio 86 122% 106% 119% 102% 116% 95% 96% 97%DebtEquity Ratio 29 8 32 10 33 10 31 9 11

71 92 68 90 67 90 e9 91 89Debt Service Coverage Ratio 3.4 0.1 1.1 0.1 1.1 0.0 1.3 0.2 0.3Collecdon Period (months) 4 22 3 21 3 16 3 13 15Payment Period (months) 7 14 8 16 9 35 9 46 41

OPERATIONAL RATIOS AND INDICATORS

Numberof Staff 1,454 2,411 1,454 2.421 1.454 2.412 1.454 2.400 2.56Average Personnel Coat (DA 000) 63 53 56 eo 58 79 61 103 106Water Producton (000 m3) 266 192 274 183 288 208 291 214 220WaterSales(000m3) 183 108 192 112 202 113 213 118 130Unaccounted-for Water 31% 44% 30% 39% 29% 45% 28% 45% 41%Salary and Wage Expense/Revenues 18% 53% 16% 56 15% 51% 14% 42% 41%Salary and Wage Expenee/OperatingExpenses 23% 44% 20% 47% 20% 46% 20% 47% 47%

Revenue per m3 Sold (DA) 1.95 1.90 225 1.86 2.50 2.77 2.60 4.09 4.63Operating Cost/m3 produced (DA) 1.24 1.41 1.48 1.69 1.48 1.99 1.49 2.43 2.86Personnel Costs/m3 produced (DA) 0.29 0.66 029 0.80 0.30 0.91 0.30 1.15 1.24Cost of Energy/m3 produced (DA) 0.20 0.19 0.24 0.21 0.24 0.38 0.25 0.50 0.54

0.45 0.48 0.76 0.95 1.09

- 25 -DBAOCRATIC AND POPULAR REPUBLIC OF ALGERIA


ISSER-KEDDARA PFRODUCTION SYSTBE

Table 7: Ectnomnk Rats ot Return

ERR - 10%

Cw Cokmumnt- E-

al Sawe Wawpr & Opeang RPM_ Total Notm3 Works Coots Cost Cost Benelt

(DA mWn)

1904 116.6 a 1 816.6 (816.6) 1.00 (816.0)198 840.8 540.8 (640.8) 1.10 (480.9)1966 89.7 880.7 (809.7) 1.22 (730.0)1967 271.9 271.9 (271.0) 1.36 (202.1)1968 41.2 41-2 (41.2) 1.49 (27.8)1969 338.7 22.7 22.7 316.0 1.64 192.719W0 366.8 25.9 25.9 339.9 1.81 187.71991 392.8 43.8 43.8 340.0 2.00 174.61992 413.2 58.1 56.1 365.1 2.21 160.91993 433.5 69.6 69.8 363.9 2.44 148.41904 433.5 69.6 69.6 363.9 2.09 136.31996 433.5 69.6 69.8 363.9 2.97 122.5199 433.5 69.6 69.6 363.9 3.28 111.01997 433.5 09.6 69.6 363.9 3.62 100.51990 433.5 69.6 69.6 363.9 4.00 91.11999 433.6 69.6 69.6 363.9 4.41 82.52000 433.5 69.6 69.6 363.9 4.87 74.72001 433.5 es9.6 9.6 383.9 8.38 C7.72002 433.5 69.6 69.6 363.9 5.94 61.32003 433.5 s9.6 69.6 363.9 6.66 56.52004 433.5 o9.6 69.6 363.9 7.23 50.32006 433.5 69.6 6.0 76.6 387.0 7.90 44.72006 433.5 69.6 7.5 77.1 36e.4 8.82 40.42007 433.5 69.6 7.2 76.9 356.7 0.73 36.62008 433.5 69.6 69.6 363.9 10.75 33.92000 433.5 s9.6 69.6 303.9 11.86 30.72010 433.5 6s.6 69.6 363.9 13.10 27.8

2011 433.5 69.6 69.6 363.0 14.46 25.2

2012 433.5 69.6 69.6 363.9 15.906 22.a2013 433.5 69.6 69.6 363.9 17.62 20.62014 433.5 69.6 7.8 77.4 380.1 19.46 18.3

2015 433.5 69.6 69.6 363.9 21.48 16.92016 433.5 69.6 69.6 363.9 23.71 15.32017 433.5 69.6 6.6 363.9 26.18 13.

2018 433.5 9.6 69.6 363.9 28.90 12.6

2019 433.5 69.6 69.6 363.9 31.91 11.4

2020 433.5 69.6 69.6 363.9 38.23 10.32021 433.5 69.6 69.6 3S3.9 38.80 0.42022 433.5 69.6 69.6 363.9 42.94 8.62023 433.5 69.6 69.6 363.9 47.40 7.72024 433.5 69.6 69.6 363.0 52.33 7.0

2025 433.5 69.0 69.6 363.9 57.77 6.32026 433.6 69.6 69.6 363.9 63.78 5.72027 433.5 9.6 69.6 363.9 70.42 5.22028 433.5 ao.6 10.4 80.0 3s3.5 77.74 4.52029 433.5 69.6 7.2 76.9 386.7 86.82 4.22030 433.5 69.6 69.6 363.9 94.76 3.82031 433.5 69.6 69.6 363.9 104.60 3.52032 433.5 69o. 69.6 363.9 115.48 3.22033 433.5 19.6 (11.7) 58.0 375.6 127.48 2.9

1/ All values In the coat and revenue treame are expressed In 1994 prices.

Table 8: Status of Compliance with Covenants

I: .::t.. ..V. t. t ;. At E ;... t V- - .!.0 .ft ....... .. .. .. ........i....t :;.; .,.;

Loan Agreement::.... ..

Agreement (A) Descrptio St'tus of aComplianc

LA 2.01 (b) Borrower to open special account. Complied with.

LA 3.02 Borrower to enter into a reimbursement agreement with EPEAL. Complied with.

LA 3.02 (a) Borrower to transfer project-financed facilities to EPEAL on completion and charge EPEAL Partially complied with. See Part 1,with their management and operation. para. 6.6.

LA 3.02 (b) EPEAL to reimburse the over a period of 20 years, commencing July 1, 1990. In default. See Part 1, paras. 6.5 and6.6.

LA 3.03 (a) Ministry of Equipment/AGEP to employ:

(i) engineering and construction supervision consultants, by January 1, 1985; Complied with.

(ii) water supply and sewerage consultants to assist in carrying out a sector survey, by July 1, Deferred. See Part I, para. 5.3.1985;

(iii) management consultants to assist in carrying out project-financed studies, by January 1, Deferred. See Part 1, para. 5.3.1986; and

(iv) engineering consultants to assist in annual inspections of the Keddara Dam and Beni Complied with.Amrane dams and their related structures, by July 1, 1988.

LA 3.04 (a) Borrower to make adequate provision for insurance of imported goods financed under the loan. Complied with.

LA 3.05 (b) Borrower to furnish the Bank with quarterly progress reports. In default throughout the Complied with.implementation period.

Table 8: Status of Compliance with Covenants

oan A'reem.ent . ... ...(LA) and Project

Agreement(PA Descr-npto ... oplac

LA 3.08 (a) Borrower to maintain a panel of experts to carry out periodic reviews of the design adequacy of Complied with.the Keddara and Beni Amrane dams until completion of construction.

LA 3.08 (b) Ministry of Equipment, with consultant assistance, to inspect the Keddara and Beni Amrane In default.darns and related structures annually from 1988 to 1992, furnish the Bank with a report, andtake any necessary remedial action.

LA 4.02 Borrower to have the special account and other project expenditures audited for each fiscal year Complied with.and furnish the Bank with an audit report, by September 30.

PA 2.02 EPEAL to employ management consultants to develop and implement organizational, In default. See Part I, para. 5.4.managerial, and financial structures and procedures.

PA 2.04 (a) EPEAL to make adequate provision of the insurance of imported goods. Complied with.

PA 2.04 (b) EPEAL to furmish the Bank with quarterly progress reports. Complied with.

PA 2.09 EPEAL to furish the Bank with its proposal for the establishment of its organizational, In default.managerial, and financial structures and procedures together with a timetable for theirimplementation, by November 1, 1986.

PA 3.05 (b) EPEAL to fumish the Bank with quarterly reports on its operational performance in terms of In default.indicators and targets.

PA 4.02 EPEAL to have its financial statements audited for each fiscal year and furnish the Bank with Complied with.audit reports, by September 30.

PA 4.03 (b) EPEAL to review the results and estimates of its operations for each fiscal year and the two See Part 1, para. 6.6.following fiscal years on the basis of indicators and the percentage of its capital expendituresincurred or expected to be incurred during that period and financed from internal cashgeneration, by October 31 of each year.

- 28 -Table 9: Missions

Stg of No of No ofi D aysiE;V ! i7-0iE - ;;i-TE-T7 Spe- aliatio Naur .f Probki

ojec Syl Month/Yar;-i St af in0 :-3 ;0-V- -Fiel;d 0 Rersned' f Rat 00:--0i ng js-:-N

Identifil ... on 3/81 2 7 FA, SE

Prepean 1/82 2 21 FA, SE10/83 2 7 DC, SE

Appraisal 3/84 2 14 FA, SE

Supervision 6/85 2 12 FA, SE 1 PM10/B5 1 17 SE 2 Dl, PM9/86 1 10 SE 2 DI, PM2/87 1 7 TS4/87 1 11 TS6187 2 27 FA, SE 2 DI, PM9/S7 1 7 SE 2 DI, PM3/88 1 10 TS4/88 2 8 PA, SE 2 DI, PM7188 2 10 FA, SE 3 DI, PM

.0/88 1 7 FA 3 DI, PM12/88 2 12 PA, SE 3 DI, PM2/89 2 10 PA, SE 2 DI, PM4J89 l 3 SE 2 DI, PM

10/89 2 10 PA, SE 2 DI, FP, PM, ST, TA, TR4/90 2 17 PA, SE 2 DI, FP, PM, ST, TA, TR7190 2 16 FA, SE 2 DI, FP, PM, ST, TA, TR

11/90 2 14 PA, SE 2 DI, FP, PM, ST, TA, TR4/91 3 16 PA, SE 2 DI, FP, PM, ST, TA, TR

10/91 2 4 PA, SE 2 DI, FP, PM, ST, TA, TR11/92 1 13 SE 2 DI, PP. PM, PR, ST, TA, TR

Completion 5/94 3 11 PA, SE

Total days iD.field 301

11 DC - Division Chief 2/ 1 - Problem free or minor problemsFA -Fmnancial Analyst 2 - Moderate ProblemsSE - Sanitary Engineer 3 - Major problems; which are being addressedTS - T raining Specialist 4 - Major problems; which are not being addressed

3/ D:I - D)evelopmnent ImF actFP - Financial PerformancePM - Project ManagementPR - Procurement ProgressST - Studies ProgressT.A - Technical Assistance ProgressTR. - Training

- 29 -

Table 10: Staff Inputs

(Staff Weeks)

FY 84 10.6 35.5 10.3 1.3FY 85 6.2FY 86 5.2FY 87 5.1FY 88 9.1FY 89 14.7FY 90 8.7FY 91 12.3FY 92 4.6FY 93 6.6FY 94 4.6FY 95 _ _ _ _ _ _

IBRD 16088R

ALGERIAALGIERS REGIONAL WATER SUPPLY PROJECT

URBAN AREAS SERVED

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