Adb Bd if 2008 184 en Egypt El Ain Sokhna Gas Oil Thermal Power Project Esia Executive Summary
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91
AFRICAN DEVELOPM ENT BANK
REPUBLIC OF CONGO
PROJECT COM PLETION REPORT
REHABILITATION OF DRINKING W ATER SUPPLY
INSTALLATIONS IN BM ZZAVILLE
DEPARTM ENT OF INFM STRUCTURE AND INDUSTRY
SOUTH REGION M ARCH 1995
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*
TABLE OF CONTENTS
BASIC INFORM ATION
1.
Pages
i-v
1
1
1
1
2
INTRODUCTION
1.1 Geographic Setting
1.2 Bank Group's Commitment in the Sector
1.3 Project Background
1.4 Sources of Infonnation
SECTOM L OBJECTIVE AND PROJECT AlM
PROJECT DESIGN
3. 1 Origin of Project
3.2 Preparation, Evaluation, Negotiation and Approval
PROJECT IM PLEM ENTATION
4. 1 Entry into Force of the Loan and Start-up
of Project
4.2 M odifications
4.3 Implementation Schedule
4.4 Procurem ent of Goods and Services
4.5 Costs and Disbursements
OPERATIONAL PERFORM ANCE
5. 1 The Contract
5. 1 Role of the Project
5.3 Other Factors
INSTITUTIONAL PERFORM ANCE
6. 1 Legal and lnstitutional Framework
6.2 Organization and M anagement
6.3 Personnel and Training
6.4 Accounting and Auditing
6.5 Tariffs
6.6 Billing and Collection
6.7 Perfonnance of Consultants, Entrepreneurs
and Suppliers
6.
6
6
7
7
8
12
13
13
14
14
14
15
16
16
17
18
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FINANCIAL PERFORM ANCE
7. 1 Operational Analysis
7.2 Analysis of Financial Structure
7.3 Financial Rate of Return
7.4 Financial Conditions and Clauses
19
19
20
20
21
22
22
22
23
24
8. ECON9MIC AND SOCIAL PERFORMANCES
8.1 Econom ic Perform ances
8.2 Social Incidences
9. SUSTAINABILITY
10. PERFORM ANCE OF THE BANK AND TI'1E BORROW ER
10. 1 General and Specific Performance
10.2 W orking Relations
CONCLUSIONS AND LESSONS
24
25
26
26
26
11.1 Conclusions
11.2 Lessons Learned from the Project
MAPIS)
ANNEXES
This report has beén written by Messrs HOUSSEIN Y.A (Hydraulics Engineer) and Keba 'BA
(Consultant. Financial Analyst) following their mission to CONGO in February 1995. Al1
enquiries should be addressed to Mr. S.C DESAI, S1SI.2 Ext.4120
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r
EOUIVALENTS. ACRONYM S AND ABBREVIATIONS
CURRENCIES
(1st Quarter 1995)
Currrncy unit
UA 1
UA 1
UA 1
CFA.Franc
'
CFA .F 780.436
US$ 1.45985
FF 7.80436
On evaluation
(3rd Quarter 1982)
UA 1
UA 1
UA 1
W EIGHTS AND M EASURES
ha
km
I/d/inh
lm
m/h
m 3/h
m 3/d
m3/s
m m
hectare
kilometre
litres per day per inhabitant
linear metre
metre prr hour
cubic metre per hour
cubic metre per day
cubic metre per second
m illimetre
CFA.F 372.945
US$ 1.00601
'FF 7.4589
ABBREVIATIONS
Aid and Cooperation Fund
African Developm ent Bank
Competitive Bidding
Caisse Française de Développement
Drinking W ater Supply
Drinking Water Sgpjly and Sanitation
European Development Fund
German Technical Cobperation Agency
International Fund for Agricul'ural Development
ACF
ADB
CB
CFD
DW S
DW SS
EDF
GTZ
IFAD
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k
IRRI
JIC)V
fD
j
PC:
TD 1
ENPN
N EF
i
i
= Internal Rate of Rettlrn
Japanese lnternational Cooperation Agency
=
M edium Voltage
Not Determined
=
Project Completion Report
Tender Document
=
Société. Nationale de Distribution d'Eatt
= Uàited. Nations Children's Fuhb
' Fiscal Year
1st January - 31 December
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LB T 0F ANNEXES
NO Description N O of pages
Map of Congo / project qrea
lmplementation Schedule
Comparative table of costs
Loan granting conditions
Comparative status of SNDE'S income statement
Surnm ary of SNDE'S balance sheets
3
4
5
6
Assumptions of financial projections
Calculation table of IFRR
Calculation table of IERR
8
9 1
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=>
BASIC PROJECT INFORM ATION
1.
2.
COUNTRY
PROJECT
Republiq of Congo
Rehabilitation of drinking water supply installations
in Brazzaville
CS/CN/SP/83/010
Govermnent of Congo
3.
4.
5.
LOAN NO
BORROW ER
EXECUTING AGENCY Société Nationale de Distribution d'Fmu (SNDE)
A. LOAN
Amount (in UA million)
Interest rate
Period of reimbursement
Grace period
Date negotiated
Date approved
Date signed
Entry into force
B. PROJECT INFORMATION
1.
2.
3.
4.
5.
6.
7.
8.
EVALUATION
26.59
CURRENT
23.84
9.50%
20 years
3 years
18/11/82
21/12/82
07/01/83
M ay 1983
EVALUATION
39.52
CURRENT
31.010.
2.
Total cost (in UA million)
Financing plan (in UA million)
ADB
Govt.
Total
F.E L.C Total
26.59 - 26.59 '
12.93 12.93
26.59 12.93 39.52
F .E
23.84
23.84
L.C Total
-
23.84
7. 17 7. 17
7 . 17 31.01
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3.
4
5.
6.
j
2.
3.
4.
5.
6.
7.
8.
9.
ii
EVALUATION CURRENT
Effective date of 1st disb. 13/04/83
Effectkve date of last disb. 31/12/94
1tart
up of project
implelj ntation activities April 1983 7/07/83
Completion of project
impleml entation activi
ties April 1985 07/90
C. PERFORM ANCE INDICATORS
EVALUATION CURRENT
Bâlànce % 10%
Dèlay lin relation to schedule
-
Dela' in rel. to entry into force 3 month:
-
Delaly in rel. ttj completion date 60 months
-
Delal in rel. to last disbursement 34 months
Numbpr of extensions of deadline
at lajt disbursement two (2)
Status o'f project execution Compléted
List of verifiable indicators
nd stlges of completion
(% of envisaged stages): Evaluation Current
Production (m3/d) 90,000 61,000
-
Subscribers 17,038 50,000
lnstitutional perfbrmance Inadequate
Petfôxance of firms satisfactory
Ierforrizance of Consultants Inadequate
EVALUATION CURRENT
IFRR (%) 20.48 7.54
lERR (%) nd 18
48
D . M ISSIONS
I DATE Noof pers. > G
-
Iden 'ification nd nb nd
l d ndreparation nd n
1 ion 09/1982 2 Eng
.
+ Fin. an. 4valyat
- M onitoring nd nd nd
supelvision 04/1984 Eng. 2
12/1986 Eng. + Fin. an. 4
04/1987 ' Eng. + Fin. an. 4
02/1995 Eng. + Fin. an. 4
< N 'U
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' ' - 1ll -
. DISBURSEM ENT
(in UA million)
-
Total disbursed
-
Balance
-
Amount reallocated
-
Amount cancelled
-
Annual disbursement
(in UA million)
23.836
2.754
2.693 (PARESO)
0.061
1983 1984 1985 1986 1987 1988 1989 1990 1994 Total
4.46 8.71 6.76 3.03 0.38 0.31 0.09 0.04 0.06 23.84
2.45 2.77 - 0.69 - 0.64 0.62 - 7. 17
6.91 11.48 6.76 3.72 0.38 0.95 0.71 0.04 0.06 31.01
ADB
Gvt.
Tot.
% 22.2 37 22 12 1.2 3 2.3 0.1 0.2 100
F. ENTREPRENEURS / SUPPLIERS
Civil encineerinc (lot 1) and enuipment (lot 2)
Name
Responsibility
Contract signing date
Contract expiry date
Am ount of basic contract
Amount of contract amendmtstz)
Total amount of contract
Supply and Iaying of supply nipes and
primary distrtibution network tbatch 3)
Name
Responsibility
Contract signing date
Contract expiry date
Am ount of basic contract
Amount of ctract amendtst4)
Total amount of contract
Société Générale d'Entreprise-congo (SGE)
-
France
lot 1; lot 2 hydraulic and electro-ptimp
equipment subcontraeted to DEGREM ONT
8/03/83
8/09/84 (lot 1); 8/03/85 (lot 2)
CFA .F 4, 130,989,900
CFA .F 1,731,437,944
CFA .F 5,862,427,844
SPIE-CAPAG - France
lot 3
24/03/83
24/03/85
CFA.F 3,333,517,500
CFA.F 1,632,921,175
CFA.F 4,966,438,675
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Secondary distribution network + connections (batch 4)
Name SAVCONGO - France
Responsibility lot 4-1 PVC Pipes and accessories
Iontrad signing date 23/06/85
1
ontract expiry date -
Duratibn of contract 1 year
Amoun/ of basic contract CFA.F 125,171,339
Amount of ctract amendts CFA
.F .177, 143,600
Total aiount of contract CFA.F 502,314,939
Name PONT A M OUSSON - France
Responsibility lot 4-3 connection equipment; lot 4-2, water
l metres
Contrac' signing date 30/06/85
Iontract expiry date
1 of contract CFA
.
F 679,227,346mount
Name S.C.K .N France
Responjibility Iot 4-4, rolling stock
Contract signing date 30/05/85
lontract expiry date
lur
ation Of contract 1 year
Amountlof contract CFA.F 154,741,000
Name I.M .C. - France
Responjibility lOt 4-5, tools
Contract signing date 24/06/85
lontract expiry date
Iuration of contract 1 yenr
Amountl of contract CFA.F 57,871,115
èöxst
tvax,r.
Name SAUR-AFRIQUE - France
Responjibility Supervision and inspection of works
Contract signing date 16/11/82
lontract expiry date
-
Iuration of contract 2 years
Amoun? of basic contract CFA.F 465,369,200
l of ctract amendmt CFA.F 47,750,000mount
' bunt of contract c#A
.F 513,119,200otal am
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Nnm e
Responsibility
Contract signing date
Contract expiry date
Duration of contract
Amount of contract
SGI - Switzerland
Tariffs study
08/1988
08/1989
8 months
CFA.F 49,200,000
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N M
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' INTRODUCTION
Geographic Setting
Situated astride the Equator, the Republic of Congo covers an area of 342,000 square
kilometres. It is bordered on the north by the Central African Republic and the Republic of
Cameroon, on the south by Zaire and the Atlantic Ocean over a distance of some 200 km , and
on the east by the Obangui and Congo rivers which separate it from Zaire, and lastly on the west
by Gabon. The population of Congo was estimated at 1.9 million inhabitants in 1987 with an
annual growth rate of 2.7% . The towns of Brazzaville, political and adm inistrative capital and,
Pointe Noire, economic centre and port town, alone have 40% of the total population.
Bank Group's Comm itment in the Sector
The Brazzaville drinking water supply reinforcement project whose loan amounts to UA
26.59 m illion is the Bank Group's second comm itment in the sector. The ADB had previously
financed, in 1972, to the tune of UA 1.2 million the extension works of the Brazzaville DW S
system from the Djoué plant built in 1954. Two other projects financed by ADB (rehabilitation
of Brazzaville DW S installations am ounting to UA 16.76 m illion and Brazzaville rain water
sewage the loan of which amounts to UA 32.97 million were not ilpplemented and were
reallocated in 1994 as part of a plan to pay Congo's arrears. The total am ount of the Bank's
operations in the sector in Congo is UA 27.79 million, representing 15% of the country's
portfolio. Apart from ADB, the other m ain external support organs are the German Technical
Cooperation Agency (GTZ). Japanese International Cooperation Agency (JICA), International
Fund for Agricultural Development (IFAD), European Development Fund (EDF) and UNICEF.
These organs mainly take part in DW SS programmes in the rural areas.
Proiect Background
1.3. 1 At the time of evaluating the present project, the Brazzaville DW S system had a
production capacity of 36,000 m3/d following the extension Of the former installations of the
Djoué water treatment plant financed by the ''Fonds d'Action et de Coopération (FACI'' and
ADB. However, this increase was still inadequate in the face of the town's water requirem ents
estimated at 63,048 m3/d, i.e. a shortfall of 27,048 m3/d and a water coverage of 40% . Major
quarters of the town (M'fi1ou, Talangai, Mpissa and ''Cité des 17'') with a population of nearly
81,000 inhabitants were totally cut off from the corporation's DW S system .
water.3.2 Following the proclam ation by the United Nations Of the international and
sanitation decade in 1981, the Congolese Governm ent drew up a development programm e for
this sector. This programme was included in the first five-year development plan (1982-1986)
whose investments envisaged for the sector aimed, as a m atter of priority, at improving DW S
in the urban centres and Brazzaville in particular. In 1981 the Congolese government financed
a study of the Brazzaville DW S master plan up to the year 2000 including detailed technical
studies of a first phase aimed at meeting water needs by 1990. The Plan was finalized in
October 1981 and its results enabled the Government to submit a request to ADB for financing
this project.
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2
1.3.3 The project was evaluated in 1982 and implemented between 1983 and 1986 under the
respondibility of its executing agency, the ''Société Nationale de Distribution d'Eau (SNDEIi'.
1.4 Sources of Information
This Project Completion Report (PCR) was based on information obtained from the
. .
project evuluation report, archives of ADB q.npytthe executing agency as well as the outcome of
dilcusslons held during project site visits with variouis officials of SNDE departments.
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; 3
ECTOM L OBJECTIVX AND PROJECT AIM
2. 1 W ithin the context of the international water and sanitation decade, the Congolese
Government set itself the following sectoral objectives;
i) Drirlkinc Water Supply
In urban areas, raise the drinking water supply rate of 40% in 1982 to 90% in
1986 to reach 100% in 1990;
ln rural areas, raise the drinking water supply rate of 6% in 1982 to 50% in
1990.
ii) Sanitation
The objectives aimed at a substantial improvement in the level of sanitation
services in urban centres and providing them in rural areas.
2.2 ln response to the above-mentioned sectoral objectives, the Brazzaville DW S
reinforcement project aimed at enhancing the water supp.ly capacity of the town by building new
roduction, transportation, storage and distribution facilities from the Djirl river. The
lmplementation of the project was partly to help satisfy water needs up to the year 1990 and
cover at least 99% of the estimated needs as soon as it became operational in 1985.
Furthermore, the project aimed at erlhancing SNDE'S capacity in operating and maintaining the
DW S installations with the procurement of operating vèhicles and training of persormel to run
the treatment plant. taastly, the conduct of a tariffs study within the context of the project wöuld
help to detennine tariff levels that would ensure the viability of the project and that of SNDE.
2.3 In the early 1980's, the development of the DWSS sector formed jart of the first five-
year development plan (1982-1986) whose operations were designed under a master plgn of the
Brazzaville DWS over a twenty (20) year period (1980-2000). At the beginning of the planning
period, the situation of the sector was as follows:
Urban
Rural
DW S
40%
6%
Sanitation
2.4 Under the five-year plan, the aim was to attain in 1990 a drinking water supply coverage
of 100% in urban areas and 50% in rural areas, and provide adequate sanitation for the
populations.
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4
2.5 Based qn the estimates of an average growth consumption per inhabitant from 83 l/d/inh.
in 1980 to 106 l/d/inh. by the year 2000, the water production and distribution plan adopted
consisted in the construction of a new intake structure on the Djiri river with a rate of flow of
about 40 m3/s at all times. The plan was based on the construction in two stages of the Djiri
water treatm e t plant.
2.6 Wxith rggard to sanitation and drainage of rain waters in particular, a master plan and
feasibility study was conducted in 1986 and hetpçd to define a programme of works in three
phases over a jls-year period. The first phase which takes into account the most urgent works
(sâtlitation in 'ost densely populated quarters, protection of major heavy infrastructures, halting
of the most se ious erosion phenomena in the urbanized sectors) was the subject of an ADB loan
in 1989. This could not be started as a result of the slow attitude of the authorities to make the
loafl enter into force, to launch the various tender documents and also of the fact that the countly
was under sanction following payment arrears. In 1994, this loan was reallocated as part of a
,lan to pay Cmngo s arrears.
l
.
7 The myin components of the Brazzaville DWS strengthening project, as defined and
evàluated by ADB, are the following:
A . Construction of a water intake
structure of 4,500 m 3/h ;
B. Building of a treatment plant with a capacity of 2,250 m 3/h during the first phase;
Construction of a 10,000 m3 treated water storage tank and reequipm ent of two
previous ones;
D. Building of 14 houses for the personnel;
E. lm plementation of road works comprising a bitumized section Qf 2.3 km and a
track of 6 .36 km ;
F. Laying of supply and primary distribution pipes of a total length of 41.8 km ;
G. Building of a secondary distribution network of 200 km and 25,000 individual
connections;
H . Supply and installation of hydraulic equipment and electro-pumps;
1. Supply and installation of electrical equipment;
J. Supply of operating vehicles
K. Training of personnel;
L. Engineering-consultancy services for works supervision and inspection'
M . Conduct of a tariffs study.
.. r1 .'.ik a..'.'@r; ., b :kkk
...
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5
PROJECT DESIGN
3. 1 Oricin of Proiect
The Brazzaville DWS reinforcement project was identified within the context of a master
plan sm dy on the Brazzaville DW S system conducted in 1982. The Plan included a feasibility
smdy which helped to select the most appropriate site for harnessing the water and construction
of a water treatment plant. The detailed feasibility study on the first phase of the Plan helped
in the preparation of tender documents Of structures to be built. On the basis of the results of
the Plan's study, the Congolese Government subm itted an application for financing works for
the first phase of the Plan.
Preparation. Evaluation, Negotiation and Approval
3.2.1 The project preparation consisted in the implementation of the master plan and detailed
prelim inary studies as well as the drafting of tender documents by a consultancy finn recruited
by the government. The project was evaluated in September 1982 and approved by the Board
of Directors in December 1982. The ADB loan agreement for an amount of UA 26.59 million
was signed in January 1983.
3.2.2 In view of the critical situation of Brazzaville's DW S system , the various phases of the
smdy, i.e. the Plan, feasibility study and detailed preliminary plan of the first phase and drafting
of the relevant tender documents were undertaken within a very short period (less than 7 months)
to enable works to be started quickly. This situation did not make it possible to carry out,
among others, a detailed study of the main physico-chemical aspects of the Djiri river in an
adequate hydrologic cycle (at least one year). The Bank did not participate in the preparation
process. AIl these factors explain the m odifications and contract amendments which occurred
during the project works (para. 4.2). However, during evaluation, the Bank recommended a
tariffs study to ensure SNDE a sound management and thus supplement the study of the master
Plan which dwelt mainly on the technical aspects.
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A . ' '
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.
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,' ''i 4. PROJECT IM PLEM ENTATION, OPERATION AND COSTS .?
.
' t .
.
I
.
'
il'
,. 4. 1 Entry into force of the loan and start-up of pro
-
iect ';
.
.
t .k j j).). .
.
j
.
yr 7 1 4. 1. 1 The lo 'p agreement was signed on 7 January 1 983 and enteied into force in May 1983, )
.'
.
i.e. less than 5 months after it had been signed. Th shbrt period. between tke signi ng of the . '
.
.
l -
.
loân and its entry into force is mainly due to the fact thàt, ahart from the general condkitions, the ',
'
'
'' dent condlitions only included the Bortower'd comtjj itntent letters as well as the prbsegtation
r
( #. PIXCCt
;' .: 1 . .
v
'
ë
,
of SNDE'S debt recovery plan. The conditiohs of entry into force are provided as anlex 4. No =.
.
I
.
.
.
v
$. delay waj therefore attributed to the fulfilment of condittioùs of entry into force. :
.)
' I '
;: 4 1 2 W ork started in July 1983 i
.
e. a slight delay of three months in relation to the schedule. '.1j,
'
:
. ,,
j :j, .
k : y. j j , , ,; , This slight delaly can be attributed to the fact that at the time of prolect evaluatibn in S'eptember
j:l ' ' I
.
:
; ' 1982, the seleotion process of firms for works and the engineering consultant had already been à-
1 M '' '1t3.: finâlized. The quick start-up of works is explained b#'the critical situation of the Btazzaville /,
j ' '
,
:
DW S system . (
;
,
'
.
':
)('.. ' 7'7
;.:, (( ,,kjj.
tq 4.2 M odifications .
-
.
'
.ï
. .
-'
.
Jj . . ;g.j;. qq
j ., 4.2. 1 During prolect implementation, the most significant modifications concerned the ;
jy( e twy
.
following aspeets: .i.,
..c ç j . . ..'ç'ay ' .,
, :ç
i) the 15 km long 20 kv MV line envisaged for the electrification of the installations t
: .r 1
.
. i ' ; . l
; k
,
Was modified. Indeed, the vottaje Waj tàised to 30 kV' ih. view of the elee.ri-clty ;':
; r . supplv fèr installations of the 5#atei' treàtment plant à' well ad. thi Mi , .
'
-
'
- ,
'
.
.
-
I a'' a''--' ; z'' ' h '
'
.
Academy situated about 1.5 km from the glte of thé 'plànt. The cojt of wotk on ';.
,,
.
:, ,,
jhe Brazzaville-Military Academy section was fully born: by the Conjolege pady .:.'
:.
.
; ,
which also carried out the adjudication process. The extension of the 30 kv line '
J j
,v : to the treatment plant was financed by ADB; 'ï
.
: .
4
j . .; -'
r .'.' l '
..
ii) 'dditional works and equipment due to poor preparation of the tender documents ?
'
?? ' . l :''
. ', and those imposed by actual site conditions and difficulties in implementing the
.
.
kg . j -tk:
.
) ' terms of the various contracts. The additional works and equipment represented
.
l .4.t
k. 1 1 . 5 % Of the total cost of the project. ;'.,n
y .. j , t. .tk ,
4 2 2 W ità regard to the implementation schedule, these modifications caused an extension by o-:
, * * .;.
15 months of ihe initial programme envisaged for civil engineering works with the induced '':'
I ktj) tjw .ffects on works inspection and supervision
.
In any case, these modifications coupled w
..
l @
7 attendant slow administrative procedures (signipg of contract ame dments) explain the extension '
l f ks supervision
.
J
@
,
x by 39 months of the serivices of the bureau in charge o wor ,
g j . k-,.,' ); t.: - .
'
4 2 3 M oreover, the change made in the financing and implementation of electritication works '''?
( . .
.' had a siguifican't impact on the operation of the treatmen't plant
The frequent power cuts at the .4'
l :j ).
Brazzaville eleetric plant, the simation at the subscriber s end and the fact that the national
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N
electricity corporation (SNE) was not involved in the inspection of these works are the cause of
current difficulties observed in the plant's power supply. Hence, the poor connection of
lightning arresters disrupts, in case of storm, electricity supply to the plant (rather many blow-
outs of transformers at a rate of 4 to 5 a year always during stormy weather).
4.3 lm plementation Schedule
4.3.1 W ork actually started on 7 July 1983 and there was provisional acceptance of civil
enqineering works, hydraulic equipment and electro-pumps on 6/09/85 and that of works on the
Iaylng of pipes of the prim ary network on 11/05/85. The acceptance of a section of the pipe
laying works of the secondary network took place in August 1988. To date, connection works
have not been com pleted as a result of the cancellation of the relevant contract for non payment
by the government of bills issued by the corporation. Besides, part of the connection equipment
had disappeared for lack of adequate storage. Lastly, the final report on the tariffs study ending
the project activities was only sublnitted in July 1990.
4.3.2 Compared with estim ates of the appraisal report, therefore, there was a delay of nearly
60 months due particularly to the completion of the tariffs study. The delay is 44 months if one
considers the completion of works on the laying of pipes of the secondary network.
4.3.3 According to SNDE officials, quarterly reports were prepared during the project
implementation period. However, neither the m ission could be provided with a copy nor could
one be found in the Bank's archives. The same goes for the final report on completion of
works. M oreover, this problem was not pointed out in the reports of the Bank's supervision
m issions. On the other hand, reports of site meetings were made available to the mission and
served as sources of information in the preparation of the present PCR.
4.4 Procurement of Goodsand Services
4.4. 1 The project was implemented on several contracts. The various components as described
in the appraisal repol't, with the exception of the training (K), inspectiolz/supervision works (L)
and tariff study (M) components, were regrouped in lots as follows:
lu7t 1: Civil engineering works include components A, B, C, D, E, 1.
Lot 2: Supply and laying of hydraulic and electro-pump equipment, com ponent H .
Lot 3: Supply and laying of main supply pipes and primary distribution network, component H .
Lot 4: Supply of equipment for secondary distribution network, components G,J. This lot,
subdivided into 5 sub-lots, was the subject of the following separate and individual
contracts: i) sub-lot 4-1, pvc mains; ii) sub-lot 4-2, connection materials; iii) sub-lot 4-3,
metres' iv) sub-lot 4-4, operating vehicles' v) sub-lot 4-5, tools. Pipe laying works of
the secondary network, the subject of component G, were to be carried out by SNDE on
force account according to estimates of the appraisal report. However, in view of
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8
technical and financial diffiçulties, SNDE wao ungble to im plement them and they
' h ubject of a mutually agreed contract with a French finn with the approvalecamq t e s
of the Bank.
l
.
4.2 The procurement of goods and services for civil engineering works and major equipmetlt
.
was done throuch international competitive biddinc (ICB). At this stace. in view of the
- - - - - -'-' '
, .
.
emergency situation mentioned by the Congolese authorities (para 3.2.2), the Bank à evalbation
done on tlhe basis of results of firm's tenders
The evaluatibn mission tim ited itself toas
lonformity of tender launching operations and award of contracts in accordancehecking the c
l
with Bank guidelines.
4.4.3 Lots 1, 2 and 3 were awarded on the basis of advance procurement procedures. Lot 1
and 2 were allocated to a French firm which sub-contracted 1ot 2 to another French firm while
1 d French firm
.
ot 3 went to a thir
l
.
4.4 Engineerin/ consultancy services on works supervision and insp. ection (component L) *-' '''
'
financed by th ' Government formed the subject of a contract awarded under a mutual agreement
.
had previously conducted the master plan, feasibility and detailedo a French fi 1u. The Iatte
l dies and prepared the tender documeats. The contract on petsonnel trainingreliminary sty
(component K) was allocated to a firm which sub-contracted lot 2. Lastly, a Swiss firm was
warded the clntract on tariffs study.
l
.
5 Costs and Disbursements
lroiect costs .
I
.
5. 1 The acqual project costs were quoted in UA worked Out from amounts quoted in CFA for
purposes of co'parison. The final total project cpst was calculated on .the basis of the exchange
rates in force i(n September 1986. At that time, the dollar was equivalent to CFA.F 380.62327
and the rate of UA in terms of the doll@r Fas 1.0846% Cplpparçll with the êF, the UA was
ivalent to 7.60465 i.e. 412.824 in relation to the .CFA. 'fhe tabie below shows thequ
comparison of cost estimates, contract and actual costs or the project at the end of works.
-
1. ua-rll..zn 4::.
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' #
K.q
.
9
Table 3. 1
Comparative Table of Costs
(in UA million)
Eval. Contract
10.23 10.46
Contract
Amendm ent
3.71
Actual
Civil eng. Hyd equip/elect.
(components A,B,C,D,E,I,H)
Primary supply pipes (F)
Secondary distrib. network (G)
Operating vehicles (J)
Training of personnel (K)
14.17
9.07
8.39
0.34
8.06
2.57
0.37
0.12
1. 12
0.12
0. 16
Works superv. and inspection (L) 0.32
Tariffs study (M)
3.94
0.42 2.99
0.37
0. 12
1.24
0.12
0. 12
0. 19
10.82
39.52
Contingencies
Total 22.80 8.19 31.01
NB. Contract costs as well as actual costs include risks and contingencies.
4.5.2 A study of the table shows that the actual project costs are On the whole lower than those
estimated on evaluation. This difference is mainly due to an Overestimation of costs of works
and supplies as a result of poor preparation of the project. Furthermore, it is noted that the
actual costs are much higher than the costs of contracts. This is due to the Iarge number of
contract amendm ents negotiated for additional works and supplies.
B. Disbursements
ADB and Government contributions to the financing of the project are shown in table 3.2 .5 .3
below:
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10
Tabls 3.2
Financing Plan
(in U'A million) .
Sources On Evaluation At the end of W orks
F.E. L.C. Total F.E. L.C. Total
ADB 26.59 - 26.59 23.84 - .23.84
Gokt. 12.93 12.93 7.17 7. 17
lbtal 26.59 12.93 39.52 23.84 7.17 31.01
t 1 4 An analysis of the above table shows that, coppared to the final cost of the project,
'
'
-
è timates made on evuluation. Indeed,bB s participation was higher in relative value to tk es
although lowel in absolute value than the loan amounf, ADB'S contribution reptesçnted 76.'87 %
of the projecl cost as against 67.28% envisaged on evaluation. At the same time, the
Goverrlment's contribution declined by nearly 9.6% cömpared with the estimates made tm
evaluation. Jhese differences in the case of ADB are due to the poor quality of the tender
ocuments w 'ich brought about a Iarge number of amendment to contracts, for a total amouht
1
of UA 8.7 million representing nearly 28% of the overall cost of the contracts.
Table 3.3
Estimated Schedule of Expenditures per Source of Financing
(in UA million)
Source 1983 1984 1985 Total
ADB 14.96 10.51 1. 12 26.59
Govt. 3.63 7.67 1.63 12.93
Total 18.59 18.18 2.75 39.52
Table 3.4
L
Actual Schedule of Exnendtttlrts pef Source of Financing
.
'
(in UA million)
1983 1984 1985 1986 1987 1988 1989 1990 1994 Total
ADB 4.46 8.71 6.76 3.03 0.38 0.31 0.09 0.04 0.06 23.84
Gvt. 2.45 2.77 0.69 0.64 0.62 7. 17
Tot. 6.91 11.48 6.76 3.72 0.38 0.95 0.71 0.04 0.06 31.01
% 22.2 37 22 12 1.2 3 2.3 .0.1 0.2 100
*
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4.5.5 Tables 3.3 and 3.4 above show the estimated and actual schedule of expenditures per
source of financing.
4.5.6 The analysis of these tables shows that the Bank's disbursements initially planned over
a three-year period did spread over 9 years (excluding the 3 years when the country was under
sanction). However, over the first four years during which physical works had practically been
completed, disbursements already represented 93% of the project costs. The indicated
expendimres from 1987 to 1990 represent especially payment for additional works already
carried out between 1983 and 1986 and for which amendm ents to contract had been signed.
1994 expendimres represent outstanding payments as a result of sanctions against the country
between 1990 and 1994.
4.5.7 Disbursements made by the Bank represented 89.6% of estimates made at the time of
evaluation (UA 23.84 million against UA 26.59 million) while those of the Government were
only 55% of the estimates. In the case of the Bank, this gap is explained by the fact that the
costs on evaluation were overestimated given the poor project preparation with the result that,
in spite of the numerous contract amendments, the loan yielded a balance. The low level of
government disbursements is especially due to fiancial difficulties which did not enable it to
honour its commitments (a shortfall of 10,000 connections).
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12
5. OPERATIONAL PERFORM ANCE
5. 1 The Contract
ljor objective of the Brazzaville Dws strengthening yroject was to improve the.1. 1 ne m
water supply ckpacity through the establishment of new water productlon, trailsportation, storage
d distributionl facilities from the Djiri river. The proj çct therefore made it possible, amongn
her things, to build a water intake structure of 4
,
500 m 3/hour, a tteatment plant of 2,250t
m3/hour and a storage tank of 10,000 m 3.
5.1.2 On evaluation, it was envisaged that the plant would attaln its full capaçity as soon as it
became oyeratibnal, i.e. 54,000 m3/day. With the already existing plant, the d'aily production
of water In Brazzaville was around 90,000 m 3, i.e. 32,400,000 m3/year. Howeyer, annual
I
production was lower than that envisaged on evaluation as shown in the table below:
Table 4. 1
Comparative Status of Actual and Estimated Ammal
W ater Productioh in B'razzaville
(in '000 m3)
Estimated Produced D iff.
1286 32,400 17,530 -46%
1987 32,400 21,370 -34%
1988 32,400 21,000 -35%
1989 32,400 25,550 -35%
1990 32,400 22,020 -21%
1991 32.400 22,000 -32%
1992 32,400 24,811 -23%
1993 32,400 25,362 -21%
5.1.3 This poor jerfonnance can be explained by two factors. First of all, the assumptions that
the Djoue and Dliri plants would attain their fMll capacity were rather optimistic under the
technical condqtions of operation. Then, the structures built under this project have major
defects which 're both due to the design, implementation and operation of the installations.
Indeed, the Djjl i plapt had major operatlng difficulties caused by: i) sand deposit at the water
intake point; ii) deficiencies of the electric jower supply system; iii) lack of sewerage for rain
ters around lhe 10,000 m3 reservoir and lv) inadequate stock of spare parts for maintenancea
of the facilities). AIl these defects mentioned by the monitoring and audit missions carried out
n 1992 stem from the short period within which the project was evaluated and financed.
iorated very fast for Iack of m aintenanee.oreover
, the vehicles procured under the project deter
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13
5.2 Role of the Proiect
5.2. 1 The Brazzaville DWS reinforcement project is the first component of the emergency
phase, the outcome of the study of the M aster Plan ''horizon 2000'' financed by the Congolese
government. lts implementation was to help reduce the water production shortfall estim ated at
83, 160 m3/day in 1990. The daily production of the new plant (54,000 m3/day) was therefore
to bring the shortfall down to 29, 160 m3/day.
5.2.2 Alongside the increase in water production, the project enabled the comlection of a large
part of the population to the network. The number of subscribers in Brazzaville therefore rose
from 26,700 in 1986 to 50,000 in 1994, i.e. an increase of 87% (there have been 15,000
connections under the present project).
5.2.3 Lastly, this project is the first phase of a DWS development strategy in Brazzaville. The
implementation of the secönd phase and rehabilitation of the former network will enable the
people to have easy access to drinking water.
5.3 Other Factors
5.3.1 The project's contribution in tenns of training of SNDE personnel was appreciable.
Indeed, two engineers and three senior technicians have had a two-m onth training with the firm
that supplied hydraulic equipment. Besides, 13 pump operators have had a nine-month training
locally. The mission observed, however, that none of the executives sent on training currently
works at the Djiri plant. W hat is more, the staff do not seem to be quite satisfied with their
training course, apparently due to the fact that it was rather simple and not quite adapted to the
operating conditions at the Djiri plant. In any case, this situation poses the problem of judicious
choice, on the one hand of the training courses provided the Staff of the project implementation
organs and, on the other the workers who benefit from them .
5.3.2 The management of such a project by SNDE'S technical units has been quite a valuable
experience for future operations of the donors in this sector. lt is, however, regrettable that w ith
the numerous changes in which the firm 's staff have been involved, none of the officials who
participated in the project is currently at post in the Technical Division.
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14
6. INSTITUTIONAL PERFORM ANCE
Legal and Institutional Framework
6.1.1 SNDE'S legal framework has undergone grofounà changes since the project's evaluation
in 1982. lndeed, by decree 83/668 of 30/08/1983, SN DE was made a Pilot State Entreprise
1 o
managed under terms and conditions defined by legislation N 54/83 of 6 July 1983.
l
.
t .2 Under this legislation, a qerformance contract was concluded between the State and the
pilot Entrèprisg, among other thlngs, on the injtiul 'material infrastrucmre to be placed at the
disposal of SN E, definition of an investmeht programme necessary for the entreprise, its price
policy and al1 other specific clauses on the activity of the entreprise. This legislation clearly
outlines the prerogatives of the supervising M inistry wh ich should exercise a permanent power
of policy and 'nspection over the entreprise. M oreover, this legislation provides for the setting
up of a Board of Directors as well as its composition and powers.
6. 1.3 Also, by decree 84/401 of 23/04/84 voted by the Council of Ministers, SNDE'S Articles
of Incorporation were armroved. difinine its orzanization and functioning. Although the
'
* * ' ''''' '-'''
.
objective of thq company has remained unchanged, the new Articles of Incorporation henceforth
provide SNDE with an authorized capital fully held by the State and define the financial and
Iccounting provisions applicable to the entreprise
.
.2 Organization and M anagement
6.2.1 In lieu and place of the Steering Committee which existed at the time of proj ect
evaluation, SN E is henceforth administered by a lz-member Board of D irectors appointed for
a three-year tenh of office by decision of the supérvising M iniistry. Presided over by the
Ianaging Director of SNDE
,
this Board is inkèsted wirth the most extensive powers to act on
behalf of and jfor the account of the firm withtn the framework of the legislation in force.
oreover? in view of the new socio-politicâl context, b'f the three organs of 'the dderm inaht
tèllogy which existed in 1982, only the jromoiion' atld social lectlrity committee ls xtill
bjèràtilmél.
6.2.2 The S PE Head Office is run by a Managing Director appointed by decree voted by the
Council of M ihisters on the proposal of the supervising M inistry. This D irector is ass:isted in
Iis duties by cqntral Directors appointed by decree voted by the Cabinet Council on the proposal
of the supervising M inistry after consultation with the Managing Director. Departmental Head's
l
'
i Director's proposal. There appointed by decision of the supervising M ini#tl'y o.n the M anag ng
.
M inistry therefore hps great intluence in the establishment of management organs.
l
.
2.3 SNDE'S organization has improved substantially since the project's evaluation. Apart '
from the general management office, the organization chart comprises six (6) central divisions
(instead of foyr (4) in 1982) and four regional directorates (instead of two at the time of
evaluation). Two new units (Data Processing and Supplies) have been set up and directly
.
.z.. ,=.ex % ,.:x- . g
.z.- :.œ. ...=x. -.
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'D
attached to the general m anagement office.
annex 6.
6.2.4 lnitially, the restructuring of the organization chart was to help reduce structural and
personnel expenses while at the same time providing the M anaging Director with the necessary
support structures to carry out his tasks. It should, however, be noted that the present
organization is ineffective in that the prerogatives and duties of the various units are not always
clearly defined. For example, the Cornmercial Department is, in reality, only responsible for
commercial studies. It is neither involved in billing nor debt collection operations entrusted to
regional offices. This situation poses a problem of competence between this departm ent and that
of research and planning. M oreover, several departm ents do not have the human and m aterial
resources to enable them fully play their role in the entreprise.
15
SNDE'S current organization chart is provided as
6.3 Persolmel and Traininc
6.3.1 As of 31 January 1995, SNDE'S staff numbered 669 employees as against 678 at the tim e
of project evaluation, i.e. a decline of only 1% . However, it should be stated that the staff
strength evolved in a saw-toothed manner. In fact, up to 1993 the number of pennanent
employees declined steadily from 678 perm anent employees to 571 as of 31/12/93, i.e. a
decrease of 26% . During this same period, SNDE resorted to temporary staff paradoxically
assigned to pennanent duties. In 1994, therefore, the regional labour inspectorate insisted that
the 127 workers then engaged temporarily be rçcruited.
6.3.2 The table below gives a comparative status of staff distribution per category at the tim e
of evaluation and drafting of the completion report.
Evaluation
59
192
427
678
Executives
Foremen
W orkers
Total
87
249
333
669
The current staff structure of the firm shows overstaffing of the executives and foremen
category. Indeed, SNDE has 1 executive to 2.8 foremen, 1 executive to 3.8 workers and 1
foreman to 1.3 workers. This trend is especially related to a recruitment policy not in line with
any objective criterion, reclassitication of certain employees after non vocational training courses
(ideological and trade union affiliated) and an automatic promotion system which does not in any
way encourage the spirit of competition.
6.3.3 After the project evaluation, SNDE established a training centre built through financing
from the Germ an cooperation. Up till 1992, this centre had trained nearly 450 SNDE employeej
in the production units and secondary centres. The trainng courses were provided by a Gennan
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16
company. However, with the suspension of external assistance, this centre no longer receives
financing and has therefore suspended its activities. To date, the entreprisé has no training
policy reflected by the drawing up of a training scheme in response to its needs. Oj.e of the
reasons for thls shortcom ing is that it has no executive staff capable of drawing up a training
program me.
6.4 Accounting and Auditing
6.4. 1 There is a teal bottleneck in the management of SNDE'S accounts. In organizational
lcture of the accounts department seems to be ojerational with the accounts unitserms, the stru
I
of the regional offices and a centralization at the head Ofhce. However, this function is
l
. ,haracterized by: i) inadequate control and monitoring. of operations within the accounts units
of the regional offices; ii) inadequate internal control Of procedures; iii) a manual accounting- -
.ystem that requires several manipulations and reveals a poor application of Iaid down
1 dures
.
Moreover, the data processing system currently being designed has noccouhting proje
lirlk between the headquarters and regional offices.
'
1
6.4.2 The an'lytical accounting system mentioned in the appraisal report does not currently
exist at SNDEI It started with the financing of the ADB 11 project, but was interrupted with the
departure of t 'e technical assistant recruited for that purpose because of the sanctions againgt
Congo.
6.4.3 The accounts are still certified by the State audit service in accordance with the firm's
' lt of anomalies detected a
'
t several accounting posts, the atlditor hasylaws. Howeyer, as a resu
never been able to certify the regularity and sincerity of SNDE'S financial statements. The
I h Board of Directors forinancial docu ents of the fil'm have not even been subm itted to t e
approval since 1991 .
6.5 Tariffs
l
.
5.1 The water tariff structure has remained similar to the one that prevailed at the time of
l (j to prices whichvaluation
,
characterized by the existence of three tranches that correspon
i There was
,
however, an improvement in 1984 with thencrease with tpe level of consumption.
scrapping of t 'e 20% rebate until then applied to a water volume over 300 m3. SNDE'S tariff
system is therefore very simple and facilitates billing.
l
.
5.2 There have been four increases in water tariffs since 1982 of which, the last, 20%
lble in the second quarter of 1994 after the devaluation of the CFA Franc
.
Theecame applica
' from CFA
.
F 81 in 1982 to CFA.F 131 in 199 5, i.e. anverage tariff qf m3 of water went up
increase of 63 '. Until 1987, the tariff increase was only 34.3% whereas, according to the loan
l
conditions. it should have been 50% minimum. ln terms Of US dollars, the average rate of m3
.
.- l
of water rose from 23 cents in 1982 to 26 cents in 1995, i.e. an increase of 13% over the
pefiod.
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18
6.7 Perform ance of Consultants. Entrepreneurs and Suppliers
Consultant
6.7.1 In all respects, the services of the engineering consultancy firm were very poor. The
Iirm
,
a branch of a water supply company, is not recognized in the study and design of DW S
ivities. Therefore, the lack of reliàble data on the Djiri river did not enable theroject act
1
consultant to design an adequate raw water catchment structure. The sand deposit at the intake
I
structure as rell as a1l other structures (decanters, filters) noted right from the first operation
' ld be solved, among other solutions, by stabilizing the steep banks of the riverf the plant, cou
and constructing a primary decantation channel with an evacuation system of the deposited sand.
Ihe consultant could not find any solutions to the specitk technical difficulties that cropped up
during works implementation (electrical and secondary network). It is the same with problems
regarding the procurement of goods and services where the consultant's contribution was nil.
Entrepreneurs and Suppliers
I
6.7.2 The firm awarded the contracts for civil engineering works, supply of hydraulic
I
equipment and electro-mechanical pumps was noted for average quality work in view of the poor
l ion problem s at the factory
,
the poorngineering consusltancy services. Rain water evacuat
quality of the access track to the 10,000 m3 reservoir, and Ieakages noted at the reservoir built
under the project which never went into operation were not solved by this firm.
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19
FINANCIAL PERFORM ANCE
7. 1 Operational Analvsis
7. 1. 1 This analysis was made I'rom the table provided as annex 5 which gives a comparative
status of estimated operating accounts prepared at the time of
qyaluation and those on SNDE'S
financial status for the period 1986-1993. However, we hakç. reservations on the financial
documents as of 31/12/92 and 31/12/93 which are only provisional.
7. 1.2 SNDE'S operational earnings were quite below the estimates m ade at the time of
evaluation and based on the optimum production of the plant built under the project (32.4 million
m3 per year) and annual sales of 27.54 million m3. Over the period under review, SNDE'S
mrnover grew by 32% from CFA.F 2,958 million in 1986 to CFA.F 3,907 million in 1993 for
an estimated annual amount of CF A.F 4,817 million. The rise in the turnover is m ainly due to
the tariff increases between 1986 and 1993 (34%). Indeed, in terms of quantities of water,
SNDE'S annual sales were practically sim ilar over the entire period whereas its production rose
from 17.5 million m3 in 1986 to 25.3 million n43 in 1993, i.e. an increase of 44% . Thus,
neither the production levels nor those of sales envisaged on evaluation were achieved as a result
of technical and institutional shortcomings. Technically, problems connected with the design,
implementation and operation of the project's structures caused several breakdowns at the plant
which had several interrtlptions in its functioning with tlle result that the optim um capacity was
never attained . Besides, in view of the state of the network, technical losses keep On rising.
Institutionally, the absence o17 any com mercial strategy has Ied, on the one hand to an almost
systematic lump sum billing which does not reflect actual consumption and, on the other, a rise
in fraudulent connections. Consequently, the increase in the number of subscribers (80,000 in
1993 as against 45,240 in 1986) was not reflected by an increase in water sales.
7. 1.3 At the same time, operating expenses increased by 78% from CFA.F 4,302 million in
1986 to CFA.F 7,648 million in 1993 and are quite above the estimates made on evaluation
(+98% in 1993). This rise is mainly attributed to personnel expenses the level of which. quite
above forecasts, account fbr nearly 60% of the turnover. M oreover, depreciation and stocks
rose by 98% between 1986 and l 993 given that account was taken of fixed assets of the
secondary centres in 1989 and trend of bad debts.
7. 1.4 In any case, contrary to estilnates made on evaluation, SNDE'S results show a structural
deficit and cumulative Iosses reached CI7A.F 17,976 million in 1993, i.e. 143% of the
authorized capital. The operating ratio is higher than 1 over the entire period. Apart from
technical problems, SNDE operation has suffered from: i) a low Ievel tariff unable to ensure the
comoration's viability' ii) an incoherent recnlitment policy especially guided by political
considerations; and iii) total lack c)f control Over financial and commercial aspçcts.
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20
7.2 Analvsis of Financial Structure
l
.
2.1 The appraisal report contains no estimated analysis of SNDE'S financial structure. The
a
.nâlysis beloj was made from the table in annex 6 presenting a summary of balance sheets for
the period 1986-1993.
,.2.2 The fi s net situation sharply d
eteriplvted as a result of the cumulated lossçs. It
declined from CFA.F 8,236 million in 1986 to CFA.F -5,392 million in 1993 with the result
that SNDE is currently totally insolvent. Therefore, the debt ratio eventually reached 25 in
1991, the last year the firm had a net positive situation.
7.2.3 Howeyr, the sharp rise in medium and long term debts (MLTD) helped to ensure a
balanced structure over the entire period except the year 1991. Field investigations did not help
tb explain the rise in M LTD between 1992 and 1993.
7.2.4 ln any case, SNDE is currently in a critical financial situation which jeopardizes water
supply in Congo. Rehabilitating the firm callsxat thr same time for the injection of financial
re:burèej and redefinition of a new institutipnail, and statutol'y i-ramework. This is why the State
à-ij Itllilâtéd â privatization process of SNDE which will help to ensttr: the viability of the new
éhtlty tb be sjt up through: i) the redefinition of an .pp p ropriate framework; ii) the restofation
of thè fhéjor financial balances' and iii) the application.,of real market prices. To thig end, a - - -
,onsultant will be recruited in December 1995 to pave tthe way fQr the finn s privatization and
j .
'
ensure the transitional management of the sector until the resumption of activities by the private
6 ltant
,
to be financed by the W orld Ban:,, witll work in close collaboration withector. The yonsu
the privatizajion committee set up to implement the programme of state withdrawal and
restructuring bf the public entreprises sector.
t.3 Financial Rate of Return
7.3. 1 The assumptions for calculating IFRR on conlpletion of the projecy are provided as annex
ditional production of water in Brazzavitle without. Aseribing to the project the entire ad
taking accoult of the current operating conditions of SNDE gives the project an IRR of 7.54% .
lonsidering the actual operating conditions of this seotor
,
characterized by a level of overall
' ' IRR is 0
.
47% . The table for calculating IFRR is providedosses of at least 50% , the project s
as armex 8.
7.3.2 These rates are quite below the estimates made on evaluation, where according to the
assumptions, the IFRR would be 9.21 %, 13.80% or 20.48%. The rate of 0.47% perfectly
reflect the Yality and is explained by the project's poor technical and.financial performances.
In view of the average weighted cost of capital of abput 7.2 % , the project is not financially
viable.
;.
. ,: . .a . .k, x.
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2 1
7.4 Financial Conditions and Clauses
7.4.1 On evaluation, the financial conditions of the loan provided on the one hand, for tariff
increases of at least 50% over a five-year period as well as the application of the conclusions
of the tariffs study in default of a State subsidy and, on the other, the submission of a plan to
recover SNDE'S debts from its subscribers including the State and its departm ents.
7.4.2 These conditions were perfectly appropriate and their strict application would have saved
SNDE from finding itself in a cessation of payment situation. They were, however, not applied
by the Borrower. The first reason stems from the fact that in their formulation, the conditions
did not have any binding nature. In fact, since the conditions of entry into force of the loan
were limited to the subm ission Of commitment plans and letters, it would have been necessary
to provide in the other conditions for deadlines before the end of works to put pressure on the
Government. M oreover, the delay in the start-up of the tariffs study rendered its conclusions
for the socio-political reasons inapplicable.
7.4.3 Furthermore, by insisting on the drawing up of a plan to recover SNDE'S debts, the
evaluation mission tried to find a solution to one of the company's major problems. lt would
have therefore been necessary to set up a debt recovery unit capable of implementing this plan.
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22
. ECONOM IC AND SOCIAL PERFORM ANCES
I
8. 1 Economic Performances
8.1.1 The teo nical conditions of drawing up, implementation and operation of the project's
,tructures as well as SNDE s socio-econom ic environmpnt have strongly lim ited thq results
expected from the project. Indeed, although access to water has been facilitated for a larger
proportion of the population of Brazzaville, the DW S situation is still preoccupying and
characterized by quite long untimely interruptions in water supply. Several quarters receive
1 1 Jr 2 hours per day, generally late at nigàt.ater on y
8. 1.2 Moreover, the industries targeted at the time of evaluation (breweries, soft driA s...l
resort to wells for their drinking water supply and therefore fully escape SNDE. The project's
impact on the development of economic activity is therefore very little.
8. 1.3 Given jhat most of the project's indirect benefits were not quantifiable, the evalùation
' ' ic rate of return (ERR). However, under SNDE'Sission did nqt calculate the project s econom
current operating conditions, and considering the 1143 of water as an economic tariff, the m ission
1 ' ERR at 18
.
48% . The table for calculating IERR is provided as annex 9.ssessed the project s
8.2 Social lncidences
8.2. 1 In health terms, SNDE'S totally insolvent situation renders very difficult the supply of
1
chem ical products for treating water. The water consum ed by the population of Brazzaville is
therefore not jfully guaranteed, since it is not adequately treated. Consequently, the project's
mpact on reducing water-borne diseases is very low.
l ' i
plementation has helped to provide training tbr ab
.
out twenty:2.2 However, the project s
hNDE employees and contributed to improve the living conditions of SNDE staff through t e
construction lf twelve houses at the site of the plant.
*
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.0....
24
10. PERFORMANCE OF THE BANK AND THE BORROW ER
General and Specific Performance
The Bank
10. 1. 1 Generally, the Bank's contributitm was just average both in the project design and
implementatio .
10.1.2 As regards the project design, the Bank did not escape the rush on the part of the
Congolekè party. If it is admitted that the sittlation of tlje DW S sub-sector in 1982 called for
a fépid interv'ntion, the Bank could have taken time é1,l the same to detect the inadequaciews of
ï by following laid down proceduies in p roj eet financing
.
Therefore, a prè-prejecthe basiç study
J tion mission would have perhaps avttided some of the problems currentlyvaluation pr para
facing the Djilri plant
10.1.3 Moreover, still for the sake of paéidity, th conditions stipulated for granting the
loan had no jinding nature, being limited to 'fôittï . aj e àl Mitments and presentâtion of recovery
' i è eases eiwisaged were not fully carriednb reimbursrment plans. Consequently, the tarjff ili r
otlt and the SNDE debt recovery plan was not implzmented.
10. 1.4 On project imjlementation, no mcommendation was made by the evaluation
mission for adenuate t'inancial manacement of the proiect throuch the keeoing of separate
* -'' '*' - *'-' ;ccounts whose audit would have been financed under the project
SNDE s poor financial
time of evaluation called for greater caution. Lastly, the Bank neither dem andedituation at t e
:or received quarterly reports from the executing agency and the consùltant responsible for
supervigion a;s indicated in the Ioan agreement. The fact that the Bank did not finance works
inùpection a 'd supervision caused it preiudice and it did not even receive the final project *'
.
èdmpletloh report.
r
k '
.
id i à The two technical supervision missions cartied out in 1984 and 1986 turned out *
to be inadeuuate. lndeed. in view of the narttcvlar condtilticms of implementation, it would have
'
*' 1 ' *' ,een necessary to monitor the project's activiiies ort à mûre regular basis
Furthennore, given
1he Government's contribution to this ftoject (32.7%), there should have beenhe volume of t
fipancial supervision missions.
10.1.6 However, within the context of this project, the Bank carried out in November
1992 an audit m ission which helped to identify all the problem s related to the implementation
t
of this projec
10.1.7 In the absence of a completion report written by the Borrower, the above views
were obtained on the spot by the mission. For the Congolese parçy, the project suffered, on the
he Bank's procedures regarding the s'igning of the contract amendments and, onne hand fr m t
' ions did npt take account of the status of implementationhe other, from the fact that the sanct
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25
of certain com ponents. Adm itting that there were delays in payments for additional works done
by firms, the mission observed that in any case these works should have been the subject of
contract amendments approved beforehand by the Bank. M oreover, the Borrower raised the fact
that because of the sanctions, the balance of the loan could not be used to carry out the plant's
technical audit, to repair the electricity supply system and carry out drainage works on the
platform of the water storage tank.
Borrower
10.1.8 The Borrower's performance is hardly any better. Apart from the general
conditions of entry into force of the loans, the Borrower did not honour any of the com mitments
made regarding the payment of its debts and those of its departments to SNDE, and particularly
regarding the increase in water tariffs.
10. 1.9 Furthenmore, in view of its financial difficulties, the Borrower was unable to fully
pay up its share of the project's financing. W ork on the laying of the secondary network was
therefore suspended and its relations with the consultant in charge of supervision and inspection
of works were strained in the final year of project implemehtation. Besides, in spite of the
urgent nature of the works, the Borrower could have spared itself many inconveniences by
avoiding to have the works carried out without the prior agreement of the Bank.
10.2 W orkinc Relations
W orking relations between the Barlk, the Borrower and the executing agency were
very poor. None of the partners fully played its role. There was no regular exchange of
information, observations or suggestions on the various aspects of the project implementation
with the result that certain problems did not come to Iight nor could solutions be found to them
(government counterpart, technical defects of structures.. .). In any case, the specific conditions
under which the project was implemented should have called for much closer working relations
in the interest of the project.
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26
11. CON USIONS AND LESSONS
11.1 Conclusions
11. 1. 1 The Brazzaville DWS strengthening projejt was designed and implemented under
technical and fiancial conditiöns which seriously compromised its success. Indeed, for 'the sake
1f rapidity
,
lt was implemented with many shortcomings in the feasibility and detailed
I
preliminqry studies, and preparation Of the tender documents. The initial contractj therefore had
.
.
lp
t,
ie àiflended for supplefnentary works. Technically, the stmctures bu'llt have sekeral
i'Zll-V'iilèt ànd cannot achieve their operational tatgets set on evaluation
Finariclallyi the
kdertiifl ent did not attain the envisaged level of its financing with the result thàt the laying Uf
1he secondary network could not be carried out
.
M oreover, in spite of the many contract
amendments mainly financed by the Bank, the ADB loan had a balance representing over 10%
of the loan am ount.
11.1.2 ln terms of financial results, the projeçt's objectives have not been achieved.
Apart fmm technical oroblems, this is due, on the one hand to the fact that the financial
.
k
'
'
''
,onditiohs lald down were not fulfilled by the Borrôwer, and on the other, to SNDE s
1 l this firm is totatly banknlpt and
,
therefore, incapable ofnstitutional environment. Current y,
maintaining the structures placed at its disposal. Consequently, the privatization process initiated
by the Gover lnent is absolutely necessary for the rehabilitation of the firm and its production
facilities.
11.2 Lessons Learned from the Proiect
The Borrower
11.2. 1 The Borrower's financial situation has seriou@ly affected the project. Indeed, it
would be necessary to ensure that comm itments m ade for the financing of local counterpart are
I
actually budgeted for or if possible made available before the start of project works. Moreover,
it is importknt that adequate allocations are made in annual budgets to ùöver not only the
maintenance of vehicles but also spare parts for the facilities built.
The Bank
11.2.2 The project implementation has mainly suffered from inadequate preparation. In
our view, it is important to stress that a strict compliance with project financing procedures
would have helped to avoid many problems in its im plementation. In the future, the Bank
should avoid financing projects without conducting its own preparatory studies.
11.2.3 The Bank's poor supervision has also affected this project. In fact, regular
supervision missions (1 to 2 per year) would have made it possible not only to ensure
compliance rith the financial conditions but also to detect timely certain technical anomalies.
The Bank s 'ould therefore monitor ongoing projects regularly.
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. 27
11.2.4 The mitigated results of the training course abroad financed under the project are,
to a large extent, due to the fact that the course beneficiaries did not have adequate basic
training. On its part, the Bank did nOt carefully examine the curriculum vitae submitted by the
executing agency. Consequently, the Bank should in the future see to it that there is a perfect
correlation between courses proposed and the basic training of prospective beneficiaries.
Furthennore, the Bank should take measures so that as much as possible, beneficiaries of
training courses are maintained at their post for a number of years. This 'would help to ensure
s/00th implementation of projects and training of other staff.
11.2.5 It is important to ensure compliance with Bank procedures on loan administration.
There were serious shortcomings in both the monitoring of com pliance with other loan
agreement conditions and financial implementation of the project as well as in the technical
supervision of this project. In this regard, the implementation Of recommendations made by the
internal audit service especially in the preparation of a log book for the dispatch and receipt of
various documents, registers and technical or financial reports would help bring about a better
adim inistration of loans granted by the Bank.
11.2.6 Another lesson Iearned from this project concerns measures to be taken by the
Bank to get the Borrower pay up its share of the financing of projects. Furthermore, provisions
could be included in loan agreements to demand from the Borrower a commitment to cover the
maintenance costs of equipment procured under projects as well as spare parts needed for built
structures.
11.2.7 Lastly, the public utilities sector in Africa is still managed by operating companies
with many institutional, accounting and financial shortcomings. Therefore, in view of the
importance of its interventions, the Bank should take the necessary measures to draw up a policy
on the privatization of such companies. In the case of the present project, the study initiated by
the W orld Bank will propose a form of privatization as well as a management structure of the
water sector. ln its position as major donor in the sector, the Bank should take an active part
in aIl phases of this study.
b:congo.pcr
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'
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@
ANNEX 3
REPU
BLIC OF CONGO
COMPLETION RtPORT
REHABILITATION 0F BRAZZAVILLE
DRINKING HATER SUPPLY PROJECT
%
Costs on evaluation
(ln UA million)
Component
-
C1v11 eng., Hdr. equip./elect. 6,27
(Components A, B, C, D, E, 1, 8)
-
Supp14 pjqes (F) (Primary) . 6,23
-
Dlstrlbutlon network (G)(:ec'dan)6.62
-
operating vehlcles (J) 0
.
34
-
Training of personnel (K) 0
,
13
-Horks superv. & lnspection (L)' r-
Tarlffs study (M) o 19'
.
Rlsks & contlngencles 6 8j
a
v *
F a L .C . Total
1 0 , 23
9,07
8 ,39
0,34
0. 16
0.32
0.19
10.82
39.52
2.84
1 .77
0.03
0 32
4.01
12.93otal 26.59
Current costs of nrol'ect
(1n UA million)
Comnonent F k E . L r C . Totale
-
civip eng., Hdr. equip./elect. 12.09
(Components A, B, C, D, E, 1, 8)
-
sqpplt piqes (F) (Prlmary) 0.:0
-
ulstrlbutlon netWork (G)(Second.)2.65
-
operating vehlcles (J) 0.37
-
Tralning of personnel (K) 0.12
-
Horks superv. & lnspection (L) 0.10
-
Tariffs study (H) 0.12
Total 23.836
(*) lncledlng risks + contingellcùes
2.08
0.68
0.34
1 . 1 4
14.17
12.00
2-99
0.37
0, 1 2
1,24
0. 12
31.01.174
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ANNEX 4
REPUBLIC OF CONGO
PRoJEcT
co/pLiTIl:iN.uR,E,oRT
REHABILITATION OF DRINKINd' WATER SUPPLY
ju kt zkvjj
-j.nNSTALLATION IN B
Loan Grantiàg
CoAdli/ions
) ' '
Conbitions Precedent to First Disbursefnent
lrior to first disbursement
,
the Borrower shall:
1. undertake to make annual budget allocations to meet its share of the projdct costs
:
in accordance with the financing plan;
2. undertake in writing to find additional fttnds in the event of the 'project's currènt
cost overruns;
3. uhdertake in writing not to use thç prpcyeds of the loan to pay various djutikq ànd
'
ired for the tmpletentation of the prbjçct;axes on goods and services reqp.
4. undertake to on-lend the loan to SNDE on the same conditions as the ADB loàn;
. cause SNDE to submit a recovery plan of its arrears from subsctibers and
measures envisaged to ensure the recovçry of the sai.d arrears over a fivé.-year
period from the date of the ajreement;
6: submit a plan fOr the payment of its d#bts and those of its departments to SNDE
for the said debts to be wiped off over a five-yeat period from the date of the
agreement.
Other Conditions
I
The Borrower shall also:
authorize a m inimum increase in tariff of m3 of water by 50% over a five-year
period from 1st January 1983 upless it prefers to grant an eqdivalent subjidy tb
SND E.
2. take account in any case f0r future increases in tariffg and grantg, of the
conclusions of the tariffs study to be conducted.
. .,1. :..u1 . . î,âd. ... .
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9
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