Report No. 425a-GH FILE COPYAppraisal of the Accra/Tema Water SupplyProject - Second StageGhanaMay 31, 1974

Western Africa Regional OfficePublic Utilities

Not for Public Use

Document of the International Development Association

This report was prepared for official use only by the Bank Group. It may notbe published, quoted or cited without Bank Group authorization. The Bank Group doesnot accept responsibility for the accuracy or completeness of the report.

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CURRENCY EQUIVALENTS

Currency Unit = Cedi (%)0 1.00 = 100 PesewaUS$ 1.00 = % 1.15US$ 1 million = ¢ 1,150,000¢ .oo= us$ 0.869% 1 million = us$ 869,0ooo

MEASURES AND EQUIVALENTS

gallon Imperial gallon (1 gallon 4.5 liters or1.2 U.S. gallons)

Mgd million Imperial gallons per day(1 IMgd 14.56 cubic meters per day)

gpcd OsallonsApAr capita/per day

gpd = gallons per day (1 gped = *55 liters per day)mg million Imperial gallons

PRINCIPAL ABBREATIONS AND ACRONYMS USED

ADB = African Development BankATMA Accra/Tema Metropolitan Area Organization

of GWSCCIDA = Canadian International Development AgencyGWSC = Ghana Water and Sewerage CorporationMetropolitan Area = Accra/Tema Metropolitan AreaPAS = Public Administration ServiceUNDP = United Nations Development ProgramWHO = World Health Organization

FISCAL YEAR

July 1 - June 30

GHANA

APPRAISAL OF THE ACCRA/TEMA WAT3R SUPPLY PROJECT--SECQND STA3E

TABLE OF CONTENTS

Page No.

SOlA°RT AND CONCLUSICI S ............ II -I

I. INTROIXJCTION . . . . * .. . . . . . . . . . . . . . . . . . . 1

II. THE 5ECTE .. ....R . . . . . . . . . . . . 2

General . . . . . . . . . . 2Level of Development . *.. ..... . a....... . . 2Sector Organization . .. *....... ... . a.... 2Seotor Development Plan . . . . . . * ***. 3WaterSupply Tariff a .................... 3

III. THE PROJEpT . . . . . . . . . . . . . . . . . . . . . . . . . . 5Description . . . . . . 5 . * * a * * * * * * * * * * * * 5Cost Estimates ... . . . .. . . . .. * * *. a * a * * * 7Propo3ed Parallel Financing. . . . . . . a .. * . . . . . 8Financing of Foreign Exchange Components . . . . . . . . . . 9Construction and Supervision of Construction . . . . . . . 10Procurement .. . . . . . . . . . . . .* . . . . . . . . . . 11Disbursement . . . . . . . . * * * * .* * * * . .* C C 11Resettlement and Land Acquisition . . . . . . . . . . . . . . 12Ecological Aspects . ........ ........ e.. .12

IV. JUSTIFICATION . . . 1 . . . . . . . . . . . . . . a . . . 13

Demand and Production . . . . . .1 . a . . . . . . . . a . 13Selection of Project . . .. . .. .

Econcnic Return . . . . . . . .l. . . o 0 0 0 0 0 0 ' 0* .1

V. THE BORROWER AND THE BENEFICIARY .IAR...... . . .. . 16

The Borrower 1 a . . . . a . . * . . * . . . * * * * * * * 16The Beneficiary . . . . . . . . . . . . . . . .* 16Training . . *. & .. . . .. oo .. . .. .. oo 17Management Systems .t.e.m. . . . . . . . . . . ....... a 18Audit # ..... .. .. .. .. o & .o o. a. o. 1.8

VI*FINANCE .................. a....... o oo o, ,, 19

Introduction .....a...................0 0 0 0 19Past Performance and Financial Position . . . . . . . . . . . 19

ATA ........... o . ,. o9o&o 19Future Finances . . a* . . . . . . . . 0 . . *. a . . # a . 20Projected Financial Financial Position--AMA . . . . . . .. 23

VI. AGRMTSREACHEDAND RECOMEDAhTIONS. ** .*.*. * . . . . ..... 25

LIST OF ANNEXES

Annex

1 Existing Water Supply and Sewerage in Greater Accra

2 Description of the Project

3 Project Cost Estimates

4 Construction Schedule

5 Estimated Schedule of Disbursements

6 Demand and Production Forecast

7 Rate of Return Calculations end Sensitivity Analysis

8 Organization Chart of Ghana Water and Sewerage Corporation

9 GWSC and ATMA Income Statementsfor 1971-1973

10 GWSC and ATMA Balance Sheetsfor 1971-1973

11 Income Statements for Accra/Tema Metropolitan Area - 1971-1982

12 Cash Flow Projections for Accra/Tema Metropolitan Area - 1974$-1982

13 Balance Sheets for Accra/Tema Metropolitan Area - 1971-1982

14 Assumptions for Financial Projections

15 Analysis of Water Tariffs

16 Assessment of Potential Irrigation Component

ApS

IBRD 11032 Weija Irrigation Scheme

IBRD 3761 axisting nnd Proposed Piped Water Supplies

IBRtD 3762 General Layout of Project

I

SUMMARY AND CONCLUSIONS

Introduction

i. The Government of Ghana has askec. IDA to help finance aproject to increase the water supply to the Metropolitan Area ofAccra/Tema, the country's main administrative and commercial center,and to adjacent rural areas.

The Sector

ii. Some 40% of Ghana's total population has access to safewater supplies. Generally, in communities with more than 5,000people between 90-100% of the population receive adequate service,while in communities of less than 5,000 people only 15% receivesuch service. The basic objectives of a countrywide water supplyinvestment program presently under preparation is (a) to provide 60%of Ghana's population with safe water supplies by the end of theseventies, and (b) to improve significantly the situation in thesmaller communities. National responsibility for water supply wasentrusted in 1966 to the Ghana Water and Sewerage Corporation (GWSC).GWSC is reasonably well managed but suffers from staffing difficul-ties. Water tariffs are presently uniform for all urban and ruralareas in Ghana. To cover the financial requirements of the Projectthey will be increased by 50% by mid-1974 which, however,would still leave them at a level comparable with that in otherAfrican countries.

History of the Project

iii. The Project would be IDA's second operation in the watersupply sector in Ghana. In 1969, IDA provided a creditof us$3.5million equivalent (Credit 160-GH) to finance implementation of thefirst stage of a masterplan, prepared by consultants during 1963-1970, for water and sewerage for the Accra/Tema Metropolitan Area.The first phase works were satisfactorily completed and the pro-posed project comprises part of the second phase of the masterplan.The project was appraised first in 1971, reappraised in April 1973and finally updated in February 1974.

Description of the Project

iv. The main components of the Project concerning the urbansupplies include an earth dam at Weija on the Densu River 14 mirefrom Accra, a new intake, a raw water pumping station, a treatmentplant, a service reservoir, transmigisidn and distribution mains andmiscellaneous equipment. Tke rurl component which includes thelaying of 110 miles of small diameter mains, and associated workswill serve about 170.000 people in an area of about 1,000 squaremiles. The Project also includes engineering services and atraining component.

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Project Execution

v. As under Credit 16(-GH the Ghana Water and Sewerage Cor-poration (GNUC) would be the beneiiciary of the Credit and GWSC'sAccra/Tena Metropolitan Area (ATMA) organization would be responsiblefor inplementation of the project. ATMA's operations account for thegreater part of all GWSC operations. ATMA has appointed GWSC's formerChief &igineer, an expatriate, as Project Manager and consultantswill be responsible for construction supervision, ATMA is adequa-tely organized and managed but requires assistance in the fieldsof administration and finance. The Canadian International Deve-lopment Agency (CIDA) has indicated its willingness to providesuch assistance.

Prjct Cost

vi. The total estimated cost is US$ 44.7 million equivalentwith a foreign exchange component of US$ 22.4 million equivalent or50%, Estimates are net of duties and taxes. Project cost estimatesare based on actual contract prices, updated consultantst estimatesand experience gained in Ghana. The rural component of the Project.s estimated to accoumt for about 13% of the project costs.

Financing Plan

vii. In view of the substantial increase in the foreinexchange cost of the project since it was first appraised and thelimited availability of IDA funds., Government has reached agreementsin principle with IDA, CIDA and the African Development Bank (ADB)on a parallel financing arrangement. Both CIDA and ADB have alreadyauthorized their participation. The proposed IDA Credit of US$ 10*.million equivalent would cover about 23% of the Project costs; CIDAwould contribute US$ 7.5 million equivalent or 17% of project costs;and ADB has agreed to provide US$ 4.8 million equivalent or 11% ofProject costs. The remaining 49% would be provided by Governmentand from GWSC'a own resources. GWSC would contribute an estimated35% and to permit this would implement tariff increases for itsconsumers in Accra/Tema. Satisfactory tariff increases and conclu-sion of the convontions concerning CIDA and ADB would be conditionsof credit effectiveness.

A\TTAs Financial Position and Prospects

viii. Although, GWSC revenues are increasing, it continues tooperate at a deficit, although on an ever diminishing scale, Thefinancial performance of ATMA, however, has been much better and ATMAhas been able to earn the 4% rate of return in FY 1973 stipulated un-der Credit 160-GH. ith implementation of'the proposed tariff increases,ATMl is expected to earn rates of return in excess of 7% except for thelast two years of project construction, when they would be about 3%becalise of the increase in ATMA's asset base and the lag between newinvestmentsand new revenues. Furthermore, projected debt service anddebt/equity ratios of at least 2.2 and 58/h2 respectively are satisfac-tory. The proposed IDA Credit would be relent by the Government toGWSC at 7-1/4% p.a. for a term of 25 years including six and a halfyears grace,

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In the financial forecasts it has been assuwed that the CIDk Loanwould be relent to GWSC at 2-1/2% p.a. over 25 years including fiveyears graee. The ADB Loan will be lent directly to GWSC at 7%p.a.over 22 years including 5 years grace.Procurement

ix. The major project elements to be financed by IDk(Weija dam., supply of pipes and pumping equipment for the ruralwater supply project, supply of pipes and fittings for the secondaryand tertiary distribution systems) either have been or will be leton the basis of international competitive bidding in accordance withIDA Guidelinea. GWSC haa retained consultants for the supervisionof construction of the Weija dam on terms and conditions acceptableto IDA. Procurement had to be started in aid 1973 to avoiddelays in project execution. The Project elementsfunded by CIDk (raw water puwps, treatment plant and the remainingconstruction supervision) are to be procured ex-Canada under CIDAGuidelines, and project elements funded by ADB (civil works of thetreatment plant and the primary distribution system) will be awardedon the basis of ADB's international competitive bidding procedures.Laying of the mains financed by ADB will be carried out by GWSC,with equipment and technical assistance being financed by ADB.

DLsburs_ments

x* The Credit would be disbursed against the foreignexchange component of (i) civil works, pipe and equipment supplycontracts amounting to about US$ 8.4 million equivalent and (ii)engineering and training involving about US$ 2.0 million equivalent.It is proposed that IDA retroactively finance about US$ 2.0 millionin foreign exchange cost related to consulting services and con-struction incurred prior to Credit aignature.

Justification

xi. The main purpose of the project is to meet presentand increasing needs for potable water in Accra/Tema metropolitanarea of some 850.000 people and to extend water supply to some170.000 people living in adjaeent rural areas. Water shortagesare already being experienced in the dry season and if the projectwere not implemented a dangerous deterioration in both the qualityand quantity of supply would arise. The internal rate of returnon the incremental investment excluding duties and taxes wouldbe 6% with revenues attributable to the project taken as a proxyfor economic benefits. This however underestimates these economicbenefits since tariffs do not capture them all. In particular tariffssubstantially disregard the non-quantifiable health benefits, whoseachievement is one of the main justifications of the Project.

xii. Subject to the conditions set out in Chapter VII theproject is suitable for an IDA Credit of US$ 10.4 million equivalent.

1

G H A N A

APPRAISAL OF THE ACCRA/TEMA WATER SUPPLY PROJECT - SECOND STAGE

I INTRODUCTION

1.01 The Government of Ghana has requested IDA to help theGhana Water and Sewerage Corporation (GWSC) finance a project to in-crease the water supply to the metropolitan area of Accra, the capitalcity, and Tema,the country's main industrial center,and to adjacent ruralareas. The Canadian International Development Agency (CIDA) and theAfrican Development Bank (ADB) will participate in financing the project.

1.02 The project appraised in this report would implement partof the second stage of a master plan for water supply and sewerage forthe Accra/Tema Metropolitan Area. Consultants prepared this master planduring 1963-1970 under a study financed through a UNDP technical assistancegrant with the World Health Organization (WHO) as the executing agency.In August 1969, IDA provided a credit of US$3.5 million equivalent (Credit160-GH) to cover the foreign exchange Fcosts of a first stage project. Thisproject included the extension of the water distribution system in Accraand Tema and a new sewerage system in central Accra. These works were sa-tisfactorily completed.

1.03 The improvements in GWSC's efficiency and financial positionsought under the first IDA project have been essentially achieved, Inparticular, there has been substantial improvement in the management andfinances of (WSC's Accra/Tema Metropolitan Area Organization (ATMA)1/ whichwas responsible for the previous IDA project and will carry out the pro-posed Project.

1.0 Tahal Consulting Engineers Ltd. (tahal), of Israel,carried out the studies on which the present appraisal is based. Theproject was appraised first in November 1971, reappraised by Messrs.Alber-Glanstaetten, Middleton and Bates in April 1973 and finally up-dated by Mr. Alber-Glanstaetten in February 1974. The project'spotential irrigation component was briefly reviewed in Accra byMr. Kanchanalak (CPS) in early March 1974.

J ATMA is an organizational unit of GWSC and is not a separate legalentity.

II. THE SECTOR

General

2.01 Ghana has an area of about 92,100 square miles and apopulation of around 8.7 million, growing at some 2.5% per annum witha distinct rural to urban shift. A maJor focus of this migration isAccra/Tema comprised of Accra, the capital, and Tema, Ghana's principalport and industrial center. Accra/Tema and the surrounding rural areaswhich would benefit from the proposed project have about one millioninhabitants or some 12% of the country's total population. During thepast ten years, the population of Accra/Tema has grown at an averge of5.6% per annum.

Level of Development

2.02 Elisting public water supply systems in Ghana are shownin Map IBRD 3761. It is estimated that some 40% of Ghana's total po-pulation has access to safe and dependable water supplies In com-

iunities of above 5,000 people, which account for 30% of the totalpopulation, between 90 and 100% have such access, In the case of thereaining 70% of the population, only about 15% have access to safeand dependable water supplies. While dracontiasis (Guinea worm in-fection) and bilharsiasis have been virtually eliminated by the pro-vision of piped water, these diseases are prevalent in rural townsand villages which have no public water supplies. Such communitiesare also vulnerable to cholera, which broke out in many parts of thecountry in 1970-L971.

Sector Organization

2.03 National responsibility for the provision, distributionand conservation of water and for the establilshent, operation andcontrol of sewerage systems was entrusted in 1966 to GWSC, then a newlyformed statutory corporation. GWSC has been concerned primarily withwater supply, but comissioned its first sewerage scheme in November1973. The scheme serves Central Accra; the only other sewerage schemein ahana is operated by the Tema Development Corporation, the bodyresponsible for Toma's industrial and residential development.

2.O04 GWSC operates about 170 individual water supply systems,and, finding it increasingly difficult to adminiater these centrallyfrom Acera, in 1973, created 41 District Management Centers which haveprimary responsibility for operations and development in their respec-tive areas. The 41 diatrict centers are grouped in GWSC's nine regionalorganizations, of which the Accra/Tema Metropolitan Area (ATMA) is byfor the largest (see para. 6.05). Provided GWSC can overco itscurrent staffing difficulties (see para. 5.07), this new anagementstructure should contribute substantially to increasing the efficiencyof the Corporation.

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Sector Development Plan

2.05 owSC is drawing up for Government a countrywideineatment program for PT 1975-1979. Due to GWSC's shortage ofexperienced personnel and other problems (see pars. 6.06), thisprogram is still in a rudimentary form. Total costs are estimatedat about ¢ 200 million (US$ 174 million) of which about 80-90%would be for the extension of water supplies to comemunities of lessthan 5,000 people. The objective of the program is to provide 60%of Ghana's population with a safe water supply by 1980. Financeis to be obtained from the national budget and foreign sources, Sofar, about US$ 12 million of bilateral assistance has been grantedby Canada, GerAany, and Denmark for the construction of new watersupply systems and the extension of existing systems, mostly inrural areas. In addition to water supply the program includes asewerage project, to be constructed during 1975-1978, in Kumasi,Ghana's second largest city. As an adjunct to the program UNDPhas approved a wural water supply and sanitation pilot project.The UNDP project would provide a basis for the rural water supplycomponent of the program through training staff, reviewing designand construction practices, and constructing pilot rural schemes.

Water Supply Tariffs

2.06 In 1973, aWSC sought Government approval for a changein both the level and structure of its water supply tariff whieh isuniform for all urban and rural areas in Ghana (Annex 15). GWSCproposed that tariffs for all consumers with private connections inmajor urban areas should be raised, and that in the remaining com-munities tariffs should be unchanged and in some cases lowered. Theobjective of the propoaal was to raise GWSC's income and permit theCorporation to become financially autonomous by transferring cashsurpluses generated in urban centers to rural areas, less well ableto meet the full costs of service. IDA has supported the GWSCproposal as having a desirable inter-regional income redistributioneffect. At the same.time, IDA pointed out that for Accra/Tema boththe existing and the proposed metered domestic rate appeared to beless than the incremental economic cost of supply and suggested anarrowing of the differential between the domestic and non-domestictariff. In order to safeguard the interests of the lower-incomeconsumer and to make the benefits of a private connection availableto a larger proportion of consumers, IDA suggested the introductionof a two block domestic tariff 80 that a low charge could be retainedon the first block for a minimum quantity of water consistent withpublic health needs. Wiila Government decided to postpone anycountrywide tariff changes until all connections in urban areas havebeen metered, it has now agreed, in view of ATMA's substantial in-vestment progra- and the commitments made (see para. 3.15) for

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construction of the WeiJa dan, to a 50% tariff increase for mtereddomestic and industrial/coxercial conAumers applicable only toAccra/T.a (para. 6.15 and Annex 15). The social tariff block,however, i£ not being implemented at this time due to eapectedadministrative difficulties in meter reading and billing.

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III. THE PROJECT

3.01 The project is essentially part of the aecond stage ofimplementation of the long-range maater plan for water supply andsewerage for Greater Accra. It is designed as a continuation ofthe water supply facilities provided under Credit 160-GH in 1969-73. Details of the existing water supply and sewerage installationsin Greater Accra are given in Annex 1.

Description

3.02 The main components of the project are as follows:

I. Urban Supplies:

(a) An earth dam, with a maximum height of about55 feet, on the Densu River at Weija, about14 miles west of Accra, to replace the damdestroyed by a flood in 1968. The 25,ooo mgreservoir fcnrmed by the dam will provide areliable supply equivalent to 70 mgd.

(b) Improvement of the existing treatment plant atfeija to increase capacity to 13 mgd (Weija ra-tionalization)e

(c) An intake and raw water puLping station towithdraw raw water- from the reservoir.

(d) A new treatment plant with a capacity of 20mgd, designed for staged expansion to anultimate capacity of 60 mgd.

(e) A service reservoir of 5 mg capacity (designedfor duplication when required) about halfwaybetween the treatment works and the existingAccra distribution system.

(f) About 38,000 feet of transmission mains connect-ing the raw water intake,the treatment plant,the service reservoir and the existing distribu-tion system, together with various connectionsto existing mains.

(g) Appruiately 20 miles of now primary distribu-tion mains to strengthen the existing networkand extend it into newly-developing areas, to-

gether with associated now secondary and tertiarydistribution networks.

(h) Meters and spares necessary to provide 100%metering of all new connections.

(i) W3ste water meters and other equipment necessaryfor a full-scale program to reduce leakage.

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II, Rural Supplies:

Bitension of rural water supplies in an area ofabout 1,000 square miles im_diately to the northof the Accra/Tema Metropolitan Area, by layingabout 110 miles of small diameter mains, cons-tructing six small service reservoirs, and otherassociated works.

III. Itineering Services and Training

(a) Consulting Services, mostly for construction super-vision;

(b) Technical Assistance in connecting-up the newsewerage system, staff training, design of ex-tensions, and related items;

(c) tr ig cilities and grausj to be definedwhen GWSCs overall training program is available(see para.5.08).

A full description of the Project is given in Annex 2 and locations ofthe works are shown on Map IBRD 3762.

3.03 The project is part of a longer-term development of theWeija systen. On completion of the project works in 1979, the total out-put of the old and new Weija works will have increased from 8.5 agd to28 ngd. The distribution sa,tem will be extended and reinforned con-tinuously to mest the growth of demand throughout this period.

3.o4 The facilities at the We$ija Di include minor works re-quired to comply with a 1967 request by Government to allow for irriga-tion next to the Weija site. Thia irrigation project has been reactivatedin early 1974; it presently stands relatively low in the Government spriority list. A brief field review in Merch 1974 by Bank staff indicatedthat the irrigation scheme appears feasible (for full details see Annex 16).However, its mise and inplementation have still to be defined on the basisof a full feasibility study,an investigation of potential sedimentationin the reservoir and within the Goverment's priorities of irrigatedagricultural developmont. During negotiations it was agreed that (a) re-servoir operating procedures would be established in conaultation withIDA to determine the allocation between public water supply and otheruses and in the event of water shortages to allocate priority to publicwater supply; and (b) no development upstream the Weija site will bepermitted which may adversely affect water supply in both quality andquantity.

3-05 The project does not irclude extensions to the seweragesystem, primarily because of ATK& 6s financial constraints but also be-oause A¶DQA needs to obtain experience in comissioning and operating theworks oompleted in 1973, before proceeding to major now developments. Itis expected, however, that during the period of project implementationATM& will undertake, out of its own resources, limited extensions of thesewerage system into adjacent areas, for which provision has been made

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in the financial forecasts. Technical assistAnce will be providedunder the project for the design of th ewtesions and the initialoperation of the first project sewerage works (see Pars, 3.02).Duwing negotiatioms it was agreed tUst GWSC will submit to IDA forcomut its progre for sewerage works bofore Septmber 1, 19714.

Cost Estimates

3.06 The estimated costs of the Project are detailed in Anex 3 andsoumrized belows

------ thousnds------ ------ IS$ thousands----Local Foreign Total Local Foreign Total

teija New Workas

Dma 3,227 5,631 8,858 2,806 4,896 7,702 17.2Raw water pumps 290 1,298 1,588 252 1,129 1,381 3.1Treatment works andservice reservoir 3,111 4,922 8,033 2,705 4,280 6,985 15.6Land and resettlment 1,300 1,300 1,130 1,130 2.5Transmssion mains 1,1483 1,784 3,267 1,290 1,551 2,841 6.3Distribation system 4,000 2,100 6,100 3,1478 1,826 5,304 11.9Water mters andleakage detectionequipment - 270 270 - 232 232 0.5

I"rovemnt of ExistingI*iJa Works 80 195 275 70 170 240 0.5

Sub-total (i) 13,491 16,200 29,691 11,731 14,084 25,815 57,6

Rural Water Supply 39348 549 3,897 2,911 i77 3,388 7.6

Sub-total (ii) 16,839 16,749 33,588 14,642 14,561 29,203 65.2

Engineering Services andTraining 2,187 3p090 5,277 1,902 2,687 4,589 10.3

Sub-total (iii) 19,026 19,839 38,865 16,544 17,248 33,792 75.5

Contingencies:

Physical 1,551 1,164 2,715 1,349 1,012 2,361 5.3Price 5,081 4,792 9,813 4,1418 4,167 8,585 19.2

TOTAL 25,658 25,795 51s,453 22,311 22,427 44,738 100.0- ~ ~ ~ ~ ~ _ -_ -_-

- - --- - -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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3.07 Project coat estimates are based on actual contractprioe (an pars. 3.15),detailed designs, updated (1974) consultant'sestimates for equipment and materials, and the experience gained inGhunm on other works including those funded under Credit 160-GE. Theforeign exchange component has been based on actual contract pricesand the aossuption that foreign contraetors wili win the reminingmjor civil works contrets and that supply items, with the exceptionof pipea, will be imported; pipe supply contracts will probably be wonby inufacturers now establishing themselvoe in Ghana. The foreignexchange component of the laying by GWSC of the trmnBmission andprimary distribution mains, to be financed by ADB, has been assessedby ADD on the basis of the necessary overseas technical assistance andimported equipment.

3.08 Physical contingencies of about 7% have been included,reflecting allowances on individual items of up to 20%.

3.09 Price contingencies on the local and foreign exchangecomponents to be financed by ID& and ADB (eoo Annex 3) have beenoalculated on the following bases (a) local price contingencies re-flecting trends in the local construction industry bave been addedat 15% p.a. decreasing to 10% p.a. in FY 1976 and staying at thislevel thereafter; (b) foreign price contingencies have been asumedat 15% p.e. decreaing to 10% p.a. in 1976 p.a. and 7.5% p.a. there-after. Price contingencies have been stimated by CIDA as 12-1/2%p*.* on works to be financed by then. The overmll price contingencyallovmnoe is 2h%.

3.10 In the case of the works financed under Credit160-GE, aWSC has been exempted by the Govermnent from import datiesand charges an item imported in connection with the projectl it hasbeen recoefirued during negotiations that it is the Government'sintention to preserve this exemption.

&Moed, Prallel Financing

3.11 In view of the substantial increase of the foreignexchange component of the project since it was first appraised, andthe linited availability of IDI funds, the Governmnt sought andreached agrceyent with IDA, the Canadian International DevelopmentAssociation (CIDA), and African Development Bank (ADD) on a parallelfinancing arrangement. IF will finance project elements for whichprocurement, which had to be started in 1973 to avoid delays inproject execution, was carried out under IDA international competitivebidding rules (see part. 3*l5). CIDA's and ADB3s participation hasalready been approved by their respective authorities.

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Financing of Foreign Exchange COmponent

3.12 The table below gives the foreign exchange cowponentof the Project elements to be financed through the proposed IDkCroet of US$ 10.4 million:

A. Works and Equlpmsnt US$ (000)Ti) Dam at 1-bija 4,900

(ii) Supply of Pipes, Secondaryand tertiary distribution 1,200system

(iii) Rural Supplies 500(iv) Weija Fationalization 200(v) Water Metors/Leakage Detection

Equipment 250

B. Construction Supervision(i) Dam at Weija 450(ii) Rural Supplies 350

C. Other Consulting Services(i) echnical Assistance-Sewerage 200

(ii) Other 300

D. Training Facilities & Programs 50

E. Unallocated and Contingencies 2,000

Total 10,400

3.13 The project elements to be financed by CIDL comprise(a) raw water paups, (b) supply of treatment plant and (c) con-struction supervision of all project elements not financed by IDA.Eased on the estimated foreign exchange component of these itemCIDW's contribution would be US$ 7.5 million of which US$ 5.5 millionis likely to be a loan and US$ 2.0 million, representing consultingservices, a non refundable grant.

3.14 The project elements to be financed by ADB comprise(a) civil works of the treatment plant and service reservoir, (b)supply of pipes and fittings for the tranmission and primary dis-tribution mains, and (c) equipment and technical assistance for thelaying of these mains, Based on the foreign exchaznge component ofthese items ADBEs loan would amount to about US$ .8 million.

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Construction and Supervision of Construction

3.15 The Project's present status is an follows:

(a) Tenders for the new Weija dam were invitedinternationally in mid 1973, to enableconstruction to commence in the 1973/74dry sesaon and to assure the supply towestern Accra by about May 1974. Procedureswere in accordance with IDA uidelines andthe contract was awarded to Salini of Italyin November 1973. Construction has cowenced.

(b) W&th the agreement of IDI, OWSC has contractedTahal for the construction supervision ofthe Weija dam# This work is carried out inassociation with a newly formed local con-sulting firm (Architectural and EngineeringService.).

(c) Tenders for the rural water supply works wereinvited in late 1973; thoe for the supplyof pipes and fittings and puping plantbeing invited internationally according toIA Guidelines, and that for the civil works(not to be financed from the Credit) beingbid locally. GWSC's recommendations onoentract award were agreed with IDA, butdue to delays in Govr meont approval thetender validities lapsed, and OWSC has re-invited bids from the original t nderersAward of contracts is expected shortly.

(d) Tenders for the reininlng project elementswill be invited during the period 1974-1976in accordance with the program shown inAnex 4.

3.16 ATKA, which will have overall responsibility for projectadministration, bha appointed GWSC's expatriate former chief engineeras Project MAnager. During negotiations it was agreed (i) that IDA willbe consulted before any change of project manager is implemented and(ii) that oWSC will take adequate steps to maintain the Weija dan afterits coustractien, including the possible retention of consulting en-gineers for regular inspection, and that it will continue the syste-mtic collection of hydrological data for the Densu RLver basin.

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3.17 Design and construction of the distribution systemcomponent of the project will be the responsibility of ATMA, andit has been agreed during negotiations that a programfor this work will be drawn up aid implemented in consultationwith IUA.

3.18 The project envisages the use on a stand-by basis ofthe Old Kporgfacilities to meet peak demand (see Annex 1 para. 7).Currently these facilities are on a care-and-maintenance basis.It has been agreed during negotiations that ATMA will, withthe help of consultants if necessary, undertake a full inventory ofexisting facilities and that, as apprepriate, such facilities will berepaired, upratied and restored to service.

Procurement

3.19 Goods from abroad are generally procured for allGoveriment agencies by the Ghana Supply Commission. Pbr the previousIDA Project GWSC was permitted to handle procurement directly throughits consultants. During negotiations, it has been confirmed that itis the Governmentsa intention to continue this arrangement.

3.20 As described in para. 3.11, the major project elementsto be financed by IDA (Wbija dam and related construction supervision,the supply of pipes and fittings for the secondary and tertiary dis-tribution systems, and rural water supplies) either have been orwill be let on the basis of international competitive bidding inaccordance with IDA guidelines. To maintain standardiszation withexisting equipment, some goeda (water meters and equipment for up-rating the existing Wbija works) amounting to le than 5% of the pro-posed Credit, will be bought from provious suppliers.

3.21 Certain contracts--for the installations of the secondaryand tertiary distribution system and for the civil works elements ofthe rural water supply scheme--will be awarded by ow8C after local bid-ding, and will not be financed from the proposed Credit.

3.22 The project elements funded by CIDA will be procuredex-Canada under CIDA Guidelines, the contracts funded by ADB for thesupply of pipes and fittings for the transmission mains and the primarydistribution system will be awarded on the basis of ADB's internationalcompetitive bidding procedures.

Disbursements

3.23 It is proposed that the Credit be disbursed against thec.i.f. price of all direct imports under supply contracts, the foreignexchange component of civil works contracts and of pipe supply contracts,and the foreign exchange costs of consultants' services, technicalassistance, and training. An estimated schedule of disburements isshown in Annex 5.

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3.24 It is proposed that any credit funds surplus aftercompletion of the IDA, financed protect elements should be used,with mIDA approval, for further emItem.es-ns of the distributionsystem and/or additional consulting services.

3.25 It is further proposed that IDA, retroactively flinance(i) 'US$ 300,000 for consulting bervrices contracted in September 1972and related to changes in design and procurement and (ii) foreignexchange costs incurred prior to credit signature in connection withthe dam contract (see para. 3.15 (a)) and construction supervision ofthe dam (see para. 3.15 (b)). Assuming that the proposed credit isapproved by the end of FT 1974, total retroactive financing would beabout US$ 2.0 million. As closing date, June 30, 1980 has been agreed.

Rbettlement and Iand Acquisition

3.26 The reservoir formed by the dam will inundate about12 square miles, of which 7 square miles have already been acquiredby the Goverzment in connection with the existing Wbija works. Theadditional land is subject to flooding during the rainy season andonly a small fraction of it is cultivated. There are eight villageswithin the area with a population of about 2,000. A detailed socio-economic survey of the villages carried out by the University ofScience and Technology, Kumasi, in December 1969 showed that thevillages had no infrastructure or social services and that the villa-gers were willing to sove to new sites where adequate land is availa-ble for resettlement and faming. lssettlement should signifioantlyimprove the standard of living of the villagers affected by providingthem with better housing, roads, water supply, sanitation, healthfacilities and faming opportunitieso There in no indication thatresettlement would have any adverse social or economic, impact. De-tailed planning and supervision of resettlement will be undertakenby the University of Kmasi. flsettleuent costs are included in theproject costs.

BEological Aspects

3.27 The consultants' study of the project included a surveyto investigate possible health hasards that might result from the con-struction of the new dat. The survey showed that malaria and bilhar-siasis are endemic in the area; the hasard from these diseases should,therefore, decrease when the present inhabitants are resettled awayfrom the iwediate vicinity of the lake and bordering swamps, and pro-vided with piped water and sanitary facilities.

3.28 G1tC is presently discussing the establishent of acoinittee of experts to supervise and coordinate investigations intothe envirormental impact of the new Weija reservoir, considering notonly disease vectors but also water quality.

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IV. JUSTIFICATIDN

De]ind and Production

4.o1 The main purpose of the project is to met present andfuture demand for potable water in Accra/Tema and to extend water supplyto adjacent rural areas. A supply of piped water is currently availableto all income groups in Accra/Tema but water shortages are experiencedin the dry season. Without the project, this situation would deterioratefurther in the face of population growth and increasing demands fromindustry and commerce. The rural areas adjacent to Accra/Tema have onlylimited supplies of piped water and rely mainly on generally pollutedponds, streams and wells.

4.02 ATMA's production has been growing at an estimated averageof 12.5% per annum over the last decade although the growth rateslowed to about 9% per annum during the past three years. Statistics onconsumption are unreliable due to the lack of systematic record-keepinguntil 1969 and the significant proportion of unmetered consumption whichexigsted until recently lJ.

4.03 The forecasts of future consumption and required production,detailed in Annex 6, were prepared with the assistance of IDAL They lncorpo-rate demand studies prepared by consultants, The forecasts are consideredreasonable and are as follows:

(i) Fbr Accra/Tema., the estimates of consumption arebased on estimates of the main components of demand(namely industrial, institutions and public authori-ties, public standpipes, domestic and comercial).Cocbining these forecasts of individual componentsshows a total demand growing at about 8% p.a. inthe five-year period FY 1973-78 and at 6.5% p.a. inthe five-year period FY 1979-83. Total demand hasbeen converted to required production by assuminga steady decrease in unaccounted-for-water from thepresent 39% to 25% by FY 1982 as a consequence of aplanned leakage detecti n and reduction program(see para. 5.06).

(ii) For rural areas production estimates are basedon consultiats studies and estimates which employappropriate projections of population growth andper capita deand.

j/ Over 80% of domestic cornections were unmetered until the end of 1971.

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Selection of the Project

4¢.04 The site of the Weija dam on the Densu River wasidentified for future development as a result of studies carriedout in 1963-70 to determine the least cost source of supply forAccra. The only alternative source, the Volta River at Kpong,was shown to be more costly to develop, mainly because it wouldrequire a 48-mile trnsmission main from Kpong to Accra via Tema,together with associated pumping facilities, compared to theapproximately 7 illes of tranamission main required for Weija.Additionally, the dam at Weija will permit continuous use ofexisting pumping, treatment and transmision capacity which atpresent is under-utilized in the dry season dae to inadequateriver flows.

4.05)g The design of the lbija dam, deteruined by siteconditions, local seismic activity and high design floods, issuch as to make it more economical to oonstruct the dam immedia-tely to its maximum height.

Benefits and Costs Attributable to the Project

4.06 Since implementation of the irrigation componentdiscnsed In pamr 3.04 in still uncertain, the project has beentreated solely as a public water supply project for the purposeof economic analysis. Thus in the analysis the cost streamincludes (i) the full cost of the Weija dan (no deduction beingmads for a contributin from the Ministry of Agriculture in respectof irrigation supplies) and of all associated works needed totreat, convey and distribute water from WbiJa for public supply,and (ii) the cost of the extensions to rural water supplies in-cluded in the project. Public water supply revenues attributableto the project were used as a proxy for benefits and the costawere adjusted for taxes, duties, depreciation, financing chargesand consumer-financed works. Revenues and costs were expressedin 19714 prices. (further details are given in Annex 7).

4.07 To take into account the stabilising effect of theWeija dam in the dry season, operating costs attributable to theproject were calculated by preparing both wet and dry season pro-duction schedules for Weija and Kpong. Since Weija has loweroperating cost than Kpong, Weija outtput was used to the greatestextent posoible. Corresponding water #sles attributable to theproject were converted to revenues by applying thepropoed 50%tariff increase.

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4.08 The preceding analysis gave a rate of return of6%. On the one hand, this rate reflects the fact mentioned inpara. 2.06 that even with the 50% tariff increase agreed uponthe domestic tariff is probably still below the incremental costof supply; however the size of the above increase appears to beat the limit of what the Government can reasonably be expectedto implement at this stage, and, since the social tariff blockcould not yet be introduced (para. 2.06), further increases inthe domestic tariff would conflict with a desirable socialobjective, by making it even more difficult to extend the be-nefits of a private connection to a larger sector of the lowerincome population. On the other hand, the rate of return under-estimates the justification of the project because revenuesattributable to the project do'not capture all the benefits. Inparticular revenues due not reflect:

(i) the unquantifiable health benefitsattributable to the project, whichis essential to prevent a progres-sive and unacceptable decline inhealth conditions in Accra/Tena andwhich would improve these conditionsin the rural areas it coveras

(ii) the potential irrigation benefits(par. 3.04 and Annex 16); and

(iii) the unquantifiable benefits ofresettlement, the cost of whichare included in the project costs.

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V. THE BORFWER AND THE BENEFICIARY

The Borrower

5.01 The Republic of Ghana would be the Borrower, andwould rolend the proceeds of the credit to (hana Water and SewerageCorporatlon (Go1C) en the tervs and conditions described in para.6.09).

The Beneficiary

5.02 GCw, the Beneficiary, is a statutory corporationestablished in September 1966 under the Ghana Water and SewerageAct of 1965. aWSC has a oard of seven members includinga represetative of the tinistry ,f Works and Housing., to whichaWSC is responsible. Board msmbe:.s are appointed by the Read ofstate.

Organization, Managemnt and Operations

5.03 GWSC is now a relatively decentralized organizationwith nine soei-autonomous area organizations headed by area aanagerto whom 41 district manageament units report (see Annex 8). ATNA,whose operations are as great as the rest of GWSC's activitiescombined and which impliaented the project financed under Credit160-GH, would be responsible for carrying out the project describedin this report. During negotiations it was agreed-as under Credit160-GH-that any oaterial modification in the structure of GWSC'sorganization and operations would be made in consultation with IDA.

5.04 The present managing director of GWSC waa appointedin late 1973 after serving GWSC in senior positions for mny years.The ATMA area anager was promoted to his post in early 1973. CIDAis expected to provide the management assistance in administrationand finance for 2-3 years. To help ensure continued good manageusnt,it was agreed during negotiation as under Credit 160-GHl, that IDAshould be conulted in connection with future appointmnts to theposts of anLging director of GWC and mnager of ATMn

5.05 MC Staff total about 4,300 people of whom 330 are insenior positions. Except at the most senior levels, however, mostof OWSC's technioal staff are recent gradutes with little practicalesperience. For this reason the pace of WSC plamnning, design andinplem.ntation is slow except where consultants are engaged. Also,with some exceptions and notably the Accra/Tema system, operationsand maintenance tend to be poor due to lack of trained operatingstaff (see paras. 5.07 and 5.08).

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5.o6 One particular deficiency of MWSC is its lack ofwater leakage control. This applies equally to ATff. In orderto improve the situation, the project would provide ATL withthe necessary equipment for a program, which has recommencedrecently, of sytematic water leakage detection and reduction.Daring the negotiations, GWSC agreed to submit to IDA, by September30, 19714, full details of this leakage control program togetherwith specific water saving targets. ATMlA' system control wilalso be improved by the end of 1974 when full otering will havebeen attained.

5.07 GWSC is making efforts to improve its efficiencybut this is being counteracted by both a shortage and a rapidturnover of qualified staff in key positions. The ChiefComercial Manager, for example, was promoted to his positionin early 1973, but resigned in Novmber of the sawe year. ewas the fourth Chief Finance Officer to leave GWSC in the lastfive years. The main reason appears to be insufficientlyattractive salaries and terms of service. GWSC is classed asa Grade II Statutory Corporation, and thereby its salary strac-ture is inferior to that of, among others, Ghana's two electricpower utilities, which are Grade I. GWSC has asked the Governmentto reclassify it as a Grade I corporation. Durin&_negotiations ___

the Government has advised IDA of its own concern about GWSCIsstaffing difficulties and indicated tha% based on an ongoing review,it expects that GWSC*a employment terms will become coapetitive.

Training

5.08 In addition to in-service trining, GWSC providesand finances for its staff short courses at its own two vocationalschools, courses at local technical and management institutions,and post grmduate courses at local and foreign universities. InFY 1973 sowe 400 individuals benefited from GWSC training programs.A deputy managing director is responsible for the Corporation'sPersonnel and Training Department and a training committee, composedof some of GWSC$s most senior staff, is charged with advising ontraining in general and preparing training programs, budgets andsyllabi. With the aid of a part time training specialint GWSC ispreparing a five year manpower forecast . During negotiations GWSCagreed to submit to IDA by September 30, 1974 its comprehensive trainingprogram as the basis for employing that part of the proposed IDACredit allocated to training.

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tanagst Systems

5.09 Procedures are in regular use for collecting andreporting technical, co_orcial and financial inforuation relatingto the regional organisations, ,anl for its compilation and analysisat SC headquarters. GUWC uses , public utility accounting systemwhich allows the accounts of each region, headquarters, and thestores division to be kept separately, and financial statements forthese to be prered separately. Management is thus able to revievthe financial pesition of each division and the position of theCorporation as a whole.

5.10 GWSC has about four years of computer proeossingeoerience, and uses the computer for billings in Accra, prepara-tion of monthly payrlls and for periodic stores inventories.

Audit

5.ln SC's accounts are subject to audit by the Auditor-Genersl or by an auditor appointed by hia. 0iSC's present auditor.are the local branch of the private international firm, lamood

armer Co. This arrangement in satisfactory. In view of past de-lays, it as agreed during negotiations that (a) ATAK's accountsbe audited eparately and that the audit report will be side availa-ble to Im within 4 months of the close of the financial year, and wl(b) the audit of GMC's consolidated accounts will be ade availableto IDA within 6 months of the close of the financial year.

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VI. FINANCE

Introduction

6.01 GWSC's financial management has improved substantially inrecent years not least because of requirements established by IDA in

onnection with Credit 160-GH. Consolidated deficits after deprecia-tion have been reduced by 65% from the level of 1969, when Credit 160-GHwas approved; and in the three major urban centers, Accra/Tema, Kumasiand Sekondi/Takoradi revenues now more than cover operating costs.ATMA itself achieved a rate of return on net fixed water supply assetsof It% in FY 1973,as required by the terms of Credit 160-GH.

Past Performance and Financial Position

(a) GWSC's Consolidated Finances

6.02 Annexes 10 and 11 present GWSCts historical income statementsand balance sheets for the period FY 1971-73. Between FY 1971 and 1973,GWSC's water revenues increased by about 21% from % 7.8 million to % 9.4million, with ATMA, and the two other major systems, Kumasi and Sekondi/Takoradi, accounting for about 2/3 of total water revenues. In GWSC'seight other regional systems, Government subsidies were required tocover cash operating costs. These subsidies have averaged ¢ 1.5 million an-nually over the past three years. As of end of June 1973, GWSC wasadequately capitalized with resources sufficient to meet its short andlong-term obligations.

6.03 Bofors the esaUbliehuest of MISC, all capital works werefinanced by Government grants. The improved financial conditions ofGWSC's major urban areas will permit thee to use increased debt finan-cing in future. Thus it is proposed that the planned expansions inSokondi/Takoradi (water supply) and Kumasi (sewerage) should be largelydebt-financed. Fbr all other systems, including rwual water supplies,it will probably be necessary for Governrment to continue to provide GWSCwith development and annual operational fundsed Duing negotiations GWSCagreed - as under Credit 160-GH - not to incur any debt unless its net re-venues for a particular financial year exceeded 1.5 times the maximumdebt service requirement during any succeeding year.

6.04 Government has directed that G'iSC should eventually take overall water supply systems that are still operated by local councils. Inconnection with this, Government agreed, under Credit 160-GH, to meetthe capital costs and operating losses incurred through such take-oversOf non-viable systems. These agreements were extended to the proposed Credit.

(b) ATKA

6.o5 As shown in Annexes 10 and 11, ATMA accounts for about halfof GWSC's consolidated revenues and assets. Between Fr 1969 and F! 1973,

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ATMA's water revenuea more than doubled from % 2.1 million to 0million due to tariff increases (1969), increased water consumptionand better management. The operating ratio of about .50-.60 duringthe last three years was satisfactory. ATMA is the only GWSC systemin which revenues exceed operating costs and depreciation. However,ATMA's liquidity position at the end of FY 1973 was tight and thisis likely to continue due to the delay in obtaining Governmentagreement to tariff increases. ATMA's highly leveraged long-termcapitalization includes a 0 20.0 million subordinated Government debtassumed under a covenant of Credit 160-GH to reflect part of the valueof assets taken over from the Government at its establishment. Assetsin operation before 1966 were valued in 1971 and this valuation wassubsequently approved by IDA.

Buture Finances

(a) GWSC's Consolidated Finances

6.o6 In view of considerable uncertainties,both about GWSCrequirements and sources of funds, meaningful financial projectionsfor GWSC as a whole cannot be prepared at this time. This is particu-larly so as the costs of GWSC's FY 1975-79 invlestment program, (seepara, 2.06) probably are significantly underestimated and so farsources have yet to be identified for a substantial part of plannedactivities.

(b) ATMA

6.07 ATMAts projected operations during FY 1974-1983 arepresented in Annexes 12, 13 and 14. Related assumptions are discussedin Annex 15.

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6.08 ATKts financing plan over the years of project implementation,PI 1974-1979, i suiarized belows

us $ %

I. SOURCES OF FUNDS

Internal Cash Generation 30,760 26,748le8s Operational Requirements- Increase in working capital 3,183 2,768- Debt service 9,789 8,512

Net Internal Cash Generation 17,788 15,468 29

IDA Credit 160-GH 690 600 1Proposed IDA Credit 11, 960 10,1400 20CIDA Loan 8jf625 7,500 14ADB Loan 5,520 4,800 9Local Banks/Government 8,a45 6,996 13

34,840 30,2Y6 57

Overnet Contributions 8,700 7,565 14

Total 61,328 53,329 100

II. APPLICATION OF FUNDS

Capital Investmentmainder of First Stage Project 900 783 2

Proposed Second Stage Project 50,878 44.,242 83Other Water Supply Works 4I,4oo 3,826 7Sewerage Works 5,150 42478 8

61,328 53,329 100- - . -

6.o9 The Goverment has agreed to relend the proceeds of theproposed IDA Credit of US$ 104 million to GWSC at interest of7-1/4% p.a. for a term of 25 years including six and one halfyears grace. In view of the long life of the assets the assumed25 years term is reasonable.

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6.10 The CIDA contribution will to be composed ofa non-refundable grant of US$ 2.0 million, equivalent for con-sulting services, and of a US$ 5.5 million loan to the Government,at no interest, and repayable over 50 years including 10 yearsof grace. It is expected that Government will relend the wholeUS$ 7.5 million at 2-1/2% over 25 years including six and halfyears grace.

6.11 ADB has agreed to make a Loan of 4.0 million unitsof account (US$ 4.8 million equivalent) to GWSC directly, bearinginterest of 6% pluw a 1% statutory coaindion over 22 years in-cluding 5 years grace.

6.12 It is expeuted that local comercial banks willjointly ako available about US$ 7 million to GWSC to cover 13%of ATMAs investment program. The term assumed is 25 years in-cluding five years of grace and interest at 8%. The remainderof project costs is expected to be met by Government through an equitycontribution currently estimated at % 8.7 million (US$7.6 million) andinternal cash generation of US$ 15.5 million equivalent.

6.13 During negotiations, it wan agreed that theGovernment will:

(a) relend the IDA Credit on terms acceptableto IA

(b) provide OWSC with whatever additionalfunds are reqjuired to complete the Project.

6.14& During negotiations it was further agreed that theIDA Credit would not become effective before both the CIDk and ADBgrants and Loans and their terms and conditions vis-a-via GWSC wouldhave been formalized or alternative financing, satisfactory to IDA,arranged.

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Projected FInancial Position

6.15 ATMAla water revenues are projected to increase fromtheir present level of about 0 5.1 million to $ 12.0 million by theend of the project construction period (FY 1979). The increase of135% would result from projected increases in consumption, but moreimportantly from a 50% increase, in the average tariff. Duringnegotiations it has been agreed that such tariff increase shall bea condition of Credit effectiveness. I1k wan however assured that theGovernment had already app.oved the appropriate increases effectiveby not later than August 1, 1974 and that only the imsusing of thetariff regulation remains outstanding. A further average tariffincrease of 40% in FY 1980 would be needed to allow sufficientcash flow for the next phase of ATMAT e3pansion. Such an increasetogether with sewer,age user charges now proposed by GWSC areassumed in the projections of FY 1974-1982. ATMAIs financial po-sition (see Annexes 11, 12 and 13) is sunmarized below:

1973 1975 1977 1979 1981Actual ---------Projected-----------

_______ ______ Mi1 llionTotal Ihvenuea 44 67 10.1 11.7 T1Operating Costs 2.2 3.4 4.3 5.6 7.0Operating Fitio 1 .50 .38 .41 .47 .37Fate of Return (5) 4.3 8.4 7.0 3.0 7.8Debt/Equity Fatio 58/42 58/42 57/43 57/43 53/47Debt Service Coverage 6.3 3.1 2.4 2.1

6.16 Projected rates of return on average net fixed assets inservice are satisfactory. The teiuporary decrease of the retimn in Fr1978 and 1979 reflects completion of the project and thus a significantincrease in the rate base, As water supply revenues will have to par-tially cover sewerzage operating and capital costs for soms time, agree-ment has been reached during negotiations that the rate base agreed underCredit 160-GH be expanded to include sewerage assets and that rates wil.be maintained to yield at least a 7% return except for the final two yearsOf proJect construction when the return should not be less than 3%. Ithas further been agreed that sewerage charges would coverewerage operating costs and depreciation during FT 1980.

6.17 The projected debt/equity ratio of at least 58/42 anddebt service coverage of at least 2.2 are satisfactory. In order tolimit ATMA's debt servicing obligations Government has agreed duringnegotiations that it would defer ATMA'. debt service obligation of0 1.8 million p.a. on its subordinated debt of A 20.0 million (eepara. 6.05) until the end of the project construction period in FT1979.

1J Operating expenses before depreciation over operating revenues.

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Othr Financial Management Aspects

6.18 AM has made coniderable efforts to improveits billing sstem and revenue collection. The ratio of ATMIscollections to annual billings increased from 65% in FY 1969 to90 in PT 1973. Further progress will depend on more regularpa7ments by Governmnt Departments. During negotiations ithas been agzeed that the Government would cause its departmntsto pay within three mnth their bills for future water andsewerag services; bills already outstanding would be sttledbefore Jme 30, 1975.

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VII. AGREEMENTS REACHED AND REC0MMENDTIONS

Agreement has been reached as follows:

7.01 The proposed Credit will not become effective beforet

(i) CIDA, ADB, the Government and GWSC shallhave entered into the CIDA and ADB Agree-ments or suitable alternative financingshall have been arranged (para. 6.14).

(ii) ATMA's water supply tariffs shall becomeeffective by not later than August 1,1974 (para. 6.15).

7.02 Covenants : based on uimilar provisions contained inCredit 160-CII provide thatz

(a) the Government will:

(i) Meet the capital costs and operating lossesof take-overs of non viable water supplysystems undertaken by G0WSC at the Govern-ment's request (para. 6.o4).

(ii) Relend the proceeds of the Credit andprovide the additional funds requiredto complete the project, on term andconditions acceptable to IDA (pra.6.13).

(b) the Government and GWSC wills

(1) Neither cause incurrance nor incuradditional debt unless GWSCls netrevenues are at least 1.5 times themazimum future debt service (para.6.03).

(ii) Consult with IDA on any material modifi-cation in the structure of 0IWSCta organi-zation and operations (para. 5.03).

(iii) Consult with IDA about any proposed futureappointments of the managing director ofGWSC and the manager of ATMA (para.5.04).

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7.03 Other principal coveants provide thats

(a) the Government will:

(i) ODnaent to deter ATMA's debt serviceobligation of its transferred A 20.0million diebt until the end of theconstruction of the Project (para. 6.17).

(ii) Cause its Ministries and Departments topay all amounts due to GwsC as of thedate of the Credit Agreaent by not laterthan June 30, 1975 and all fture amountswithin three months of billings (para.6.18).

(iii) Not permit the carrying out of any de-volopent upstream the Weija site whichmay materially and adversely affect thewater supply of the resorvoir (para.3.01).

(b) the Govenment and GQEC will:

(i) Establish and maintain water and sewerage ratessufficient to yield a rate of return of notelos than 7% on the value of ATMA's notfixed assets in opoation, exocpt forthe last two years of construction whenretuns my not be less than 3% (para.6.16).

(iii) Istablish in consultation with ID, _by not later than Jume 3-s 1975,operating procedures to deterKine theallocation of water of the Weija reservoirbetween public water supply and other usesand in the event of shortages allocatepriority to public water consumption (para.3.o1;).

(a) GSC will:

(i) Submit zo IDA for comnt by not laterthan September 1, 1974 its program forconnection and extension of its seweragesstem (Para. 3.05).

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(ii) Prepare a proposed program for the extensionof its water distribution system in Accra/Tma Metropolitan Area for each of itsfinancial years and submit such programto IDA for approval (para. 3.17).

(iii) Consult with IDA about any props edfuture appointments to the positionof proJect anager (para. 3.16).

(iv) Take adequate steps for proper inspec-tion and maintenance of the Wdija damafter construction and for coatinuedsystematic collection of hydrologicaldata for the Donau river basin (para.3.16).

(v) Carry out a survey of the existing watersupply facilities at Kpong to deteninethe optimu usage of such facilities,Such survey will be submitted to IA bynot later than June 30, 1975 (para.3,18).

(vi) Prepare and submit to IDA for coment,a program with pcific water savingtargets by not later than September 1,1974 (Pam. 5.06).

(vii) Prepare and submit to IDA for approvalits proposed training program by not laterthan September 30, 19714 (para. 5.08).

(viii) Allow ATMA'o accounts to be audited se-Marately and make then available within

months after the closing of the financialyear. Consolidated accounts will be madeavailable within 6 months after the closingof the financal year (pare. 5.11).

7.0h During negotiations, the representatives of theCGovernment confirmed that (i) GWSC would be exempted from payAmntof import duties and charges (para. 3.10); (ii) GWMC would beallowed to handle procurement directly for all items to be financedfrom the proposed Credit (para. 3.19).

ANNEX 1

Page 1

GHANA

ACCRA/TEMA WATER SUPPLY PROJECT-SECOND STAGE

Existing Water Supply and Sewerage in Greater Accra

1. The Greater Accra area is supplied with water from two sources -the DssU RLver at WeiJa 14 miles to the W"t of JcLra, and theVolta River at Kpong some 50 miles to the northeast of Accra. The watertreatment plants are located at Weija and Kpong.

Weija Water Works

2. The installed capacity is now 8.5 mgd, comprising 4.5 mgd fromthe "New Works" constructed in 1954 and 4.0 mgd from the "West German Works"constructed in 1965. A report by Tahal Consulting Engineers in September1967 proposed various minor improvements and extensions - the "Weija Ration-alization" - which would increase the works output to 13.0 'mgd at low cost.This proposal is to be implemented as part of the Project (slee Annex 2).

3. The treatment process consists of chemical coagulation followed byclarification, rapid gravity filtration, pH control and chlbrination. Alaboratory at the works carries out rcutine chemical, bacteriological andbiological tests on the water. A training sohool for waterworks operatorsis also operated at Weija.

4. The water to supply the works is drawn from the Densu river. A lowdam was constructed across the river in 1952, and the storage increased byinstalling spillway gates in 1959. In 1965 Tahal reported that the damfoundations appeared unsafe and that the spillway capacity was inadequate,but no remedial measures were taken and the dam was washed away by a floodin 1968.

5. In the absence of impounding storage at Weija, the nominal outputof 8.5 mgd cannot be maintained during the dry season. In 1969 the riverdried up completely for 37 days, and in 1973 the works output averaged lessthan 1 mgd throughout February and less than 3 mgd during March. This ledto severe water shortages in parts of western Accra, which cannot be suppliedby water from the Kpong system,

6. The water is delivered to Accra by four gravity mains - 12-inch (1913),14-inch (1929), 16-inch (1952) and 21-inch (1959) - with a combined capacityof about 10 mgd. A booster pumping station was constructed on the 21-inch mainat Odorkor in 1966 to increase the system capacity to 13.0 mgd, but is now outof commission; as part of the project works distribution system modificationswill be undertaken to restore the conveyance capacity to 13 mrgd (Annex 2).

ANNEX 1

Page 2

Old Kpong Works

7. In 1954 a 1.5 mgd capacity works was built at Kpong village onthe west bank of the Volta river, some 15 miles downstream of the Volta danat Akosombo. It was extended to 7.5 mgd by mid-1966, but was retired when theNew Kpong works were commissioned. The facilities are generally serviceable,and it is proposed that they should be brought back into at least intermittentuse as part of the project, as explained in Annex 2.

8. A 21-inch transmission main 35 miles long was constructed in1958-59 to convey treated water from the works to a terminal reservoir inTema. The design capacity of the main was 2.9Imgd, and its present capacityis thought to be about 2.0 mgd.

New KponR Works

9. Opposite the old works, a new works (the "New Kpong" or "STEPRI"'works)was constructed in 1966-67. The treatment process consists of chemicalcoagulation, rapid sand filtration, chlorination and pH correction, and amodern plant control laboratory is provided.

10. The filtered water is pumped by series high-lift pumps through a42-inch diameter 34-mile long steel main to a 10 mg terminal reservoir atTema.

Tema-Accra Link

11. From Tema,part of the New Kpong output can be pumped to a 10 mgterminal reservoir at Accra through a 32-inch diameter steel main 14 mileslong running parallel to the Accra-Tema motorway. The normal capacity ofthis main has recently been measured as 19.5 mgd.

Distribution System

12. A detailed master plan for the distribution system serving themetropolitan area was prepared under the UNDP/WHO study, and is beingimplemented in stages as required. The system is divided into high, mediumand low pressure zones, with appropriate service reservoirs and booster pumps.Total service reservoir capacity is 33 m;,. about equal to peak daily demand.ATMA will shortly complete and commission a further 4 mg service reservoirin a poorly-served area of western Accra.

13. Under the First Project, which has recently been completed (Credit160-GH), the distribution system has been extended and reinforced. About28 miles of mains from 10-inch to 20-inch diameter have been added to theprimary distribution grid in Accra, and 6.6 miles in Tema. A total of about76 miles of new mains have been added to the secondary and tertiary distri-bution grids.

14. The supply is made through about 37,000 connections, of which about90% are domestic and about 1% are public standpipes. All connectionsexcept some of the public standpipes and some of the domestic consumers aremetered. In December 1971 ATMA introduced a program to meter all domesticconsumers, and by December 1973 had reduced the proportion of unmetered

ANNEX 1

Page 3

connections from 80 o/o to 45 o/o. Outside the metropolitan area, someof the smaller rural communities are served by pipeline extensions fromthe Accra/Tema system. In the past three years over 20 o/o of the mainslaid by ATMA have been for these rural communities.

Sewerage and Sewage Disposal

15. Tema has a sewerage system constructed and operated by the TemaDevelopment Council which is being expanded as new housing and industrialareas are completed.

16. At present, Accra is dependent on septic tanks and a night soilcollection system. Under the First Project about 17 miles of 9-inch to39-inch diameter sewers have been laid, serving the residential andcommercial districts of central Accra. Sewage is being discharged at seathrough three 12-inch and three 10-inch submarine outfalls 4,000 feet long,constructed from steel pipelines formerly used for the conveyance of oiland donated to ATMA. The project also included improved arrangements forthe disposal of night soil and septic tank wastes, which will be collectedat a new works and discharged to sea through the submarine outfalls, andimproved sanitary arrangement; in some low-income areas.

ANNEX 2

G_H A N A

ACCRA/TEMA WATER SUPPLY PROJECT - SECOND STAGE

Project Description

General

The project includes the construction of a new dam at Weija,improvement of the existing treatment works at Weija, construction ofadditional raw water pumping and water treatment facilities of 20 mgdcapacity at Weija, construction of a 5 Ing service reservoir, new trans-Mission and distribution mains in Accra and Tome, water meters andequipment for leakage detection.

Piped water supply will be extended to 132 coounities inadjacent rural areas. As part of the project, technical assistance willbe provided to ATNA in the commissioning and operation ot the seweragesystem now installed in central Accra, and in preparing plans for futureextensions.

The project has been designed by Tahal Consulting Engineers(Tahal) of Tel Aviv (Israel). It forms part of a master plan for watersupply and sewerage for the metropolitan area prepared by Tahal in asso-ciation with Engineering Science International Ltd. of Arcadia (Cali-fornia, USA), under a study financed by the UNDP (Special Fund) withthe World Health Organization (WHO) as executing agency.

Wija Dqa

The new dam will be constructed on the Donsu River at Weija,about 14 Miles west of Accra, to replace an earlier dam on an adjacentaite which was washed away in 1968. The maximum height of the now damwill be about 55 feet above river bed level, or 75 feet above projectedfourndation level. The reservoir formed ly the dam will have a grossstorage of 25,000 mg at normal water level.

The method of constructing the dam will be so arranged that aaupply of at least 13 mgd will be available for Accra from the 1974 wetseason (i.e. end-FT 1974) onwarda.

ANNEX 2Page 2

The dam is situated in an area of tectonic activity. Inview of its site, it is designed as a zoned earthfill dan with animpervious core of compacted laterite and with rockfill armoring toupstream and dowetream slopes. Site investigations have indicatedthat suitable construction material is available locally. Thespillway will be a mas concrete structure constructed in the rockof the right abutment, provided with 5 radial gates each 19 feethigh and 30 feet wide.

The reservoir is designed to yield 70 zgd. The yieldfigures will be revised when a longer time-series of river gaugingrecords is available. Studies have shown that it is uneconomicaland technically difficult to construct the dam in stages, and it willtherefore be built to its full height iimediately. Outlet works havebeen provided, at nominal cost, for the proposed irrigation scheme.

The original design of the dam was proposed by Tahal intheir Design Report of March 1970. The assumptions underlying thedesign, in particular the adequacy of the field investigations, theallowance made for the effect of earthquakes, and the design spill-way floods, were questioned by Harza Engineering Company of Chicago(USA), who formed part of a consortium carrying out a water resourcessector study in Ghana in 1969-70 financed by USAID. Tahalls proposalswere therefore reviewed in 1971 by two international experts, ProfessorFay K. Linsley and Dr. James L. Sherard. Professor Linsley's hydrolo-gical review confirmed that Tahal's estimates of maximum flood-flowsvere acceptable for design. Dr. Sherard's review of the design of thedar indicated the desirability of some iinor modifications !I. Thesehave been incorporated in the present design with only marginal increasein cost.

A further report to Tahal by Dr. Sherard In May 1973 describeathe minimum instrumentation considdered necessary (settlement, movement,water table and seepage measurements) to monitor dam performance, andadvises on the necessity for the analysis of these measurements by acompetent engineer, particularly during the early years of reservoiroperation.

Intake Works

An intake tower with multi-level drawoffs will be constructedin the reservoir and connected by a concrete conduit to the raw waterpumping station. The intake works have a capacity of 70 mgd, and aredesigned to supply both the new pumping station and also the existingraw water pumping station, since the present intake to the latter willbe removed during conatruction of the dam.

ij Accra/Tema Water Supply Project - Second Stage - Feport on Design Modifi-cationss Tahal Consulting Engineers and Engineering Science. ReportER/71/059. October 1971.

ANNEX 2Page 3

Raw Water Pumping Station

The new raw water pumping station will be constructed on theleft bank of the river immediately downstream of the dam. It is designedto house four electrically-driven vertical spindle pumps, each with acapacity of 10,6 mgd against a design head of 371 feet. Three pumps willbe installed under the present project, one acting as a standby unit, togive a nominal station capacity of 20 mgd. Later addition of a furtherpumpeet will increase nominal station to 30 mgd.

Iaw Water Main

A raw water main approximately 5,000 feet long will deliverraw water from the pumping station to the treatment works. The presentcontract drawings and designs show this main as steel, but tendererswill be invited to offer alternative designs in prestressed concrete.A German company is currently establishing a factory in Accra to producecylinder-type prestressed concrete pipes, and budgetary quotations in-dicate locally-manufactured pipes of this type will prove more economicalthan imported pipes of any type. The main in sized at 32-inch, with acapacity of 20 agd, to be duplicated in the next stage of development.

Treatment Works

A new treatment works of 20 mgd capacity will be built adjacentto the existing treatment work on the high ridge forming the reservoirleft bank. Water pumped by the raw water pumping station to the treatmentworks inlet will flow from there by gravity through the various stages oftreatment, and down the treated water conveyance system to Accra withoutthe need for further pumping. The treatment processes will consist ofaeration, coagulation with aluminum sulphate, clarification, rapid gravityfiltration, pH adjustment and chlorination. Complete plant designs andspecifications prepared for the design report referred to above form thebasis for the tender documents, but tenderers are invited to submit alter-native proposals.

The plant is planned for staged expansion to 60 _xgd (the estimat-ed yield of the reservoir less the capacity of the existing treatment plan).It is envisaged that first stage of expansion will be by 10 mgd, to a totaloutput of 30 mgd, by the construction of one more clarifier and two morefilters, and appropriate provisions have been made in the design.

ANNEX 2Page 4

"Rationalization" of Exdsting Weija Works

The existing raw water puxming system and treatment worksat Weija will be uprated from 8.5 mgd to about 13.0 mgd capacity,following the recommendations in a report dated September 1967 byTahal.

Treated Water Transmission System

A 36-inch diameter main about 17,000 feet long will connectthe clear water tank at the treatment works to the service reservoir onMcCarthy hill. A short length of 34-inch main will cross-connect theservice reservoir with the existing transmission mains. A 13,300 feetlong main (10,000 feet 40-inch diaeter, the remainder 28-inch) willconnect the service reservoir to the existing Accra distribution system.

The treated water conveyance system has been designed to convey19 mg4, (l jqofrom the new works and 4 mgd resulting from uprating ofthe existing worke, permitting one of the elder Weija mains to be retiredexcept in emergencies and the other to be used for rural water supplies).It will require duplication once the new works output exceeds 15 mgd, andthe duplicated system will be adequate to serve the headworks expansionto 30 ugd.

Service beservoirs

A new concrete service reservoir of 5 mg capacity will be builton McCarthy hill, on the alignment of the treatment water transmissionmains between Weija and Accra. The site is planned for future expansion to10 mgd. A steel elevated tank of 10,000 g capacity will be constructedon the motorway alignoent between Accra and Tema to serve the developingarea of Teshi-Nungua.

I.stribution System

As part of the project, primary distribution mains will be laidas follaws: In Accra, one 21-inch main 10,000 feet long to serve thenewly developing area of Dansoman, and two 8-inch mains totalling 14,000feet to strengthen the existing netirork; in Teshi-Nungua, a 19,000 feetlength of 15-inch and 10-inch main to new development zones; and in Tema37,000 feet of mains between 10 and 15-inch diameter to supply new comu-nities now being developed. These mains are designed as asbestos cement,but alternative proposals for uPVC (unplasticised polyvinyl chloride)mains are invited in the tenders, for the supply of the pipes. Themains will be laid by ATMA, using equipmsnt financed by ADB and withtechnical assistance also provided by ADB.

ANNEX 2PZge 5

A further major link in the primary network is a main 22,400feet long over the Kuasiman ridge, which will enable water from theAccra terminal reservoir to be brought to Weatern Accra.

The associated secondary and tertiary distribution systemmains will be laid departmentally by ATMA using uPYCor asbestos-cement pipes procured after international coapetitive bid-ding and financed out of the proposed Credit. Locally-mnufacturedUPIC pipes are more expensive than the imported equivalents, but itis expected that a factory for asbestos-cement pipes, which is justbeing established in Accra, will be able to compete successfully withimports in all sies.

Water Meters

The current Crash Metering Program will result in completemetering in the Accra/Teoa area by the end of 1974. Meters will con-tinue to be installed on all new connections, and provision has beenmade in the project estimates for the import of the necessary metersand spare parts.

LeaLage Detection Equipment

ATKA are currently re-establishing their leakage detectionand prevention service, and the formulation of a campaign to reduceleakage will be one of the conditions of the proposed credit. Theproject estimates include the purchase of waste water meters, pipedetectors, electronic sounding equipment, and other necessary items.

Sewerage and Sewage Disposal

Financial constraints preclude major sewerage investments byATMA in the near future. Moreover, ATMA have at present no experiencein commissioning and operating a sewerage systes, and in the immediatefuture will be fully occupieid in making connections to the system in-stalled under Credit 160-GH and in bringing it into service. It istherefore also operationally premature to include further sewerage worksin the present project.

It is however essential that ATMA continue to receive technicalassistance in sewerage planning and operations, and the project estimatesinclude for the provision of the services of the engineer formerly employedby the consultants for the Credit 160-GH sewerage works, together with asmall allowance for other expert assistance. His duties will include:commissioning of new works; establishing maintenance procedures; training

ANNEX 2Page 6

of Ghanaian staff; drawing up and supervising implementation of aconnections program; collecting data for tariff studies; design andexecution of experimental community wash-houses and toilets in urbansub-tribal areas; design and supervision of construction of sewerageexteneions to be executed by ATMA; drawing up consultants' terms ofreference for future studies and supervising such studies.

Water Supply to Rural Areas

The project area is about 1,000 square miles in extent andlies between Akosombo and the Volta river to the north, the Atlanticcoast to the south, Sangaw Lagoon to the east and the Weija water workson the Doenu river to the west. It contains the area served by GWSC'sAc¢ra/Tema Metropolitan Area organisation, and also numerous villagesand small townships. One of the objectives of the project ia to pro-vide an adequate supply of potable water to all the rural populationin this area, which at present partly depends on streams or shaluwwells which are heavily polluted.

The area contains 132 mmall communitieo varying in sise fromunder 100 to about 7, 500 people, their total population being about170,000. About 50 of the communities are served with piped water dranfrom ATMA's existing system, or will be served by schemes now underconstruction* Water will be supplied to the remaining cowunities underthe project.

Water from the Wbija works wil1 be used to suply a few commu-nities in its area, but the main source of rural supply will be theexisting works at Ipong. At present rural supplies from Kpong are givenby transferring water treated at the New Kpong works to Old Kpong, andpumping it into supply. This pattern of operation will be maintained asfar as possible, with the Old Kpong treatment works being brought backinto service from time to tims to meet peak demanda; no now treatentfacilities will be required for the rursl supplies.

The proJect includes the laying of 110 miles of 4-inch to 8-inch mains (probably locally-manufactured asbestos coment or uPVC pipes),the construction of six small service reservoirs with capacities between0.02 and 0.2 Mg, the construction of seven maintenance yards and the pro-vision of additional pumpsets at the Old Rpong works and at an intermediatebooster station. Distribution will be mainly by public standpipes. Mastermeters will be installed on the main pipelines to measure the quantities ofwater supplied to the various communities.

ANNEX 2Page 7

Engineering

ATMA's present consultants, Tahal, have been retained undera new agreemnmt for supervision of construction of the dam. Tahalis carrying out this work in joint venture with a newly formed localconsulting firm, Architectural and Engineering Services. This is inline with the Government'a policy to develop local consulting expertise.The engineering services for all other project works will be carried outby a Canadian consultant to be chosen by CIDA.

ATMA will retain Ghanaian consultants for supervision ofresettlement of villagers displaced by the new Weija reservoir.

G R A NA

ACCRA/TEMA WATER SUPPLY PROJECT - SECOND STAGE

PROJECT COST ESTIMATES /1

( t'000 )

-------------------------- Local Component------------ SubF- --------------------- Foreign Component------------

Year Ending June 30 1973 1974 1975 1976 1977 1978 1979 Total 1973 1974 1975 1976 1977 1978 1979 Total Total

}. New Weiia Works

Dam - 223 i,241 1,602 161 - - 3,227 - 1,825 1,725 1,800 281 - - 5,631 8,858

Raw Water Pumps - - 290 - - 290 - - - 519 779 - - 1,298 1,588

Water Treatment Plant-Supply - - - - 109 547 125 781 - - - - 473 2,355 541 3,369 4,150Water Treatment Plant and Service

Reservoir - Civil - - - 461 1,086 747 36 2,330 - - - 367 870 296 20 1,553 3,883

Land and Resettlement - - 400 870 30 - - 1,300 - - - - - - - - 1,300

Transmission Systom-Sopply - - 210 420 550 268 15 1,463 - _ 222 375 418 157 10 1,182 2,645Trsusmission Systas-Laying Equipment - - - 15 5 - - 20 - - - 392 210 - - 602 622

Distribution Systom - 300 740 740 740 740 740 4,000 - 100 400 400 400 400 400 2,100 6,100Water Meters/Leakage-Detention Equipment_ - - - - - - - - - 128 142 - - - 270 270

Subtotal (i) - 523 2,591 4,108 2,971 2,302 916 13,411 - 1,925 2,475 3,995 3,431 3,208 971 16,005 29,416

Tl: Improvement of Existing Weija Works - 10 40 30 - - - 80 - - 165 30 - - - 195 275

III. Rural Water Supply A - - 491 800 1,200 857 - 3,348 - - 134 125 165 125 - 549 3,897

IV. Consulting Services

Dam - 54 251 267 22 - - 594 - 154 176 169 21 - - 520 1,114

Rural Wets, Supply /2 - 137 168 246 195 - 746 - - 64 74 105 74 - 317 1,063

Other Works - - 51 59 64 74 63 311 - - 205 230 260 291 329 1,315 1,626Resettloment - 13 106 174 72 18 19 402 - - - - - 402Otber343435

V. Technical Assistance

Sewerage - 11 15 17 19 21 23 106 - 25 33 36 39 42 45 220 326

Other - - 8 12 8 - 28 - - - 43 53 47 - 143 171

Subtotal (iv) - 78 560 693 435 316 105 2,187 345 179 478 552 478 454 374 2,860 5,047

Total Basic Cost 611 3,682 5,631 4,606 3,475 1,021 19,026 345 2,104 3,252 4,702 4,074 3,787 1,345 19,609 38, 625

VI. Physical Continagocies - 33 334 545 391 242 6 1,551 - 274 284 356 188 59 3 1,164 2,7145

Total Basic Cost Including PhysicalContingencies - 644 4,016 6,176 4 997 3,717 1,027 20,577 345 2,378 3,536 5,058 4,262 3846 1,348 20 41,350

VET. Price Contingencies - 411 1,325 1,670 1,537 138 5,081 - - 5D9 742 1,337 1,747 457 4,192 9,373

Total Cost Including Physical and Price

Contingencies - 644 4,427 7,501 6,667 5,254 1,165 25,658 345 2,378 4,045 5,800 5,599 5,593 1,805 25,565 51,223=2= _ B2- _ _ _ __ _,0 2556 ,,,_2_3

L The training allowance of US$ 50,000 has beaiexcluded from this table in vifw of the unknowntime frane of expenditure.

A Derin&g neotimtioee MA, was inforo d tbat, " a resultof dlays In aruding tbs rual uater supply cowtznt

(see pro. 3.15 (c)) tbe baic foreign cost of the workshad inorasid to % 725,000. The foreign cost of theassocated sonsulting service. had mIsc incre d by

A 50,000. These increases are assumed to be covered byssntisgnoy allowances end are not shown in the above table,

NYA, 17T4

GHANAACCRA-TEMA WATER SUPPLY PROJECT - SECOND STAGE

CONSTRUCTION SCHEDULE

Fiscal Year FY 1974 FY 1975 FY 1976 FY 1977 FY 1978 FY 1979

FNTiaTY ITEM Year 1973 1974 1975 1976 19;7 19783 4 1 _V~~~~~~~~~~~ 341 Quarter 1 2 3 4 1 2 3 4 1 2 3 4

_ -- PARPATIAL IMPOUNDIN G_URBAN SUPPLIESPAiAIM06DN

IDA WRiJAN DAMPLIES -i { _ -~BEHIND COFFERDAMI IIIIIIIIIIIIII M I TONr MANU FACTU RE TEST ING tlO

CIDA RAW WATER PUMPS & ANUFAC L TESTINGASSOCIATED EQUIPMENT REVIEW SIZING i

& DUTIES MANUFACTURE & DELIVERYADB SUPPLIES OF TRANSMISSION - -| __

MAINS t VADB LAYING OF TRANSMISSION -. IIIIIIIIIIII

MAINS BY G.W.S.C. - -j i - -

CIDA WATER TREATMENT PLANT - MANUFACTURE ERECTION & COMMISSIONING_EQUIPMENTI I IICiDA EQUIPiv1ENT l 6 j | 6 - T ~~~~~~~ FINA LIZE STRUCTURAL | j r

ADB CONSTRUCTION OF TREATMENT F STRUCTURALWORK & McCARTHY DRW G iSERVICE RESERVIOR S & ERECTION OP i i

IDA DISTIBUTIONNETWORKDESIGN, TENDERING & CONSTRUCTION THROUGHOUT PROJECT PERIODIDA DISTRIBUTION NETWORK _ _ U i I 1 - -

ECONSTRUCTION OF CIVIL WORKSIDA RATIONALIZATION OF EXISTING C -- L WORKS

WEIJA WORKS

RURAL SUPPLIES

IDA CIVIL ENGINEERING WORKS - -_

} i i l ~~~MANUFACTURE DELiVER| j L I I I I I I I IIDA PIPE SUPPLY i r' INSTIALLA TION

MANUFACTURE I & TESTINGIDA PUMP SUPPLY a - -I -

LEGEND

Review of documents prior to inviting tender i Mobilisation and execution of works up to substantial

Tendering, evaluation of tender, award of contract. completion (12 month maintenance period follow).

0 Delivery of materials to site commences. - Dependencv. World Bank-8643

ANNEX2 5

GHANA

ACCRk/TIM& WATER SUPPLY PROJECT - SWCOND STA0E

Estimated Schedule of Disbureownts

IRD Fiscal Year & Quarter Cmulative Dlabuueuents atEnd of Qurter, US$ 000's

1974/75

December 31, 1974 3,100March 31, 1975 4,200June 30, 1975 5,200

1975/76

September 30, 1975 5,800December 31, 1975 6,400March 31, 1976 7,000June 30, 1976 7,800

1976/77

Septoembr 30, 1976 8t000December 31, 1976 8,200March 31, 1977 8,400June 30, 1977 8,700

1977/78

September 30, 1977 9,100December 31, 1977 9,500March 31, 1978 9,900June 30, 1978 10,400

May 1974

ANNEX 6

Page 1

GHANA

ACCRA/TEMA WATER SUPPLY PROJECT - SECOND STAGE

Demand and Production Forecasts /1

1. Estimates of water demand for Accra/Tema up to 1983 are builtupon estimates of the following components: industrial; institutions andpublic authorities; public standpipes; domestic; and commercial. Corres-ponding production requirements are obtained by adding to these demandforecasts allowances for leakage. Estimates for the rural areas are basedupon projections of population and required production per capita. Theresults, summarized in Attachment I, are based upon discussionsheld with GWSC during the appraisal updating mission in April 1973, ATHAstatistics, and previous demand studies. While the forecasts are believedto provide a reasonable basis for project planning, the analysis at severalpoints is conjectural. Apart from the usual uncertainties of demand fore-casting, ATMA has compiled consumption data on a systematic basis onlyduring the past 3 1/2 years. Furthermore, a significant component of pastconsumption has had to be estimated, since until recently only 20 o/o ofdomestic connections were metered. Consequently, the forecasts will haveto be regularly updated in the light of the improved consumption data whichshould become available as the percentage of metered domestic accountsincreases.

2. Over the last decade, the population of Accra/Tema grew at anannual average rate of 6 o/o, reaching about 700,000 by the 1970 Census.Over the same period, the rural communities in the project area grew at2.3 o/o p.a. on the average, and population had reached a total of160,000 by the 1970 Census. For the purposes of the demand forecasts,it is assumed that the population of Accra/Tema will continue to grow at6 o/o p.a. In the rural communities of the project area, however, there isevidence that the population growth rate is moving closer to the nationalaverage of 2.5 o/o and this is the rate adopted for the future.

Industrial

3. From the limited information available, industrial consumptionseems to have grown on average at 25 o/o to 30 o/o p.a. over the five-year period FY 1967-1971, due larg..ly to the rapid industrialization ofTema, which accounts for over 90 o/o of total industrial consumption.Demand fell during FY 1972 due to a general fall in economic activity,but is estimated to have risen again during FY 1973. As a result, industrialdemand grew at an average rate of only 12 o/o p.a. over the past three years.This rate is believed to be more representative for the near future asindustrialization in Tema slows down. Growth of 12 o/o p.a. in industrialwater demand is therefore projected for the next three years, falling to10 o/o in FY 1977, 8 o/o in FY 1978, 6 o/o in FY 1979 and 5 o/o p.a. in theremaining years to FY 1973.

/1 These forecasts were made at the tine of the reappraisal missionof April 1973. Since subsequent events give no reason to changethem, they have been kept in their original form.

ANNEX 6

Page 2

Institutions and Public Authorities

4. Sales to this category of consumers have grown continuallyover the past three years at an average rate of 25 o/o p.a. However,the available quarterly data show three quite distinct phases, the firstquarter (ending September 30, 1969) being unusually low and the lastfour quarters (ending December 31, 1972) being unusually high. Growthin the middle period (essentially calendar years 1970 and 1971) was at6 o/o p.a. which is close to the population growth rate and demand istherefore assumed to grow at this rate up to 1973.

Public Standpimes

5. Over the past three years the number of public standpipes hasremained virtually constant. Quarterly consumption per standpipe isestimated by GWSC to be 420,000 gallons (equivalent to about 7.5 hours'continuous use per day, which is believed to be typical). In the fore-casts it is assumed that the number of standpipes and the populationserved by them will remain at their present levels, and that the totalconsumption from standpipes will continue at about 600 mg p.a.

Domestic

6. In preparing the forecasts of domestic consumption throughprivate connections, the mission attempted to take into account twoopposing factors: rising standards of living will tend to be reflectedin higher per capita consumptions, but on the other hand GWSC's policyof increasing the proportion of households with private connections willtend to reduce the overall per capita consumption as lower-income groupsare connected. The approach adopted was to divide the population intothree categories and to assume that the share of each category in thetotal population would remain constant over the forecast period. Thecategories are:

(a) Existing metered domestic connections, which accounted fornearly 60 o/o of total private connections at the end ofDecember 1972. These were used to represent a higher-incomesegment of the community. Future consumption was estimatedby increasing the FY 1973 consumption by 6 o/o p.a. (toreflect population growth) and a further 1 o/o p.a. to reflectincreasing per capita usage.

(b) Fisting unmetered domestic connections, representing amiddle-income segment of the community. Because, untilthe end of 1971, unmetered connections were estimatedarbitrarily and inconsistently, consumption records forthis category are of little value in forecasting. How-ever, the increasing number of metered connections haspermitted and analysis of the incremental effect of meter-ing. Over the 6 -month period July-December 1972 the con-sumption of newly-metered consumers averaged 4,600 gallons/connection/month. This appears low but seems to be con-firmed by a further analysis of the billings for meteredaccounts in Accra for May 1973. Of the 8,300 accountsexamined, the lowest third consumed on average 4,600gallons/month. Unmetered consuwption for FY 1973 was

ANNEX 6

Page 3

therefore estimated by assuming a oonsumption of14,500 gallons per month per uvntered connectionand tultiplying by the average number of connee-tions In 1973 (13,300) Forecasts wern obtainedby inereasing this estimate by 6% p.a. forpopulation growth and a further 2% p.a, forgrowth in per capita consumption.

(c) Users of public standpipes, representing a lower-incomesegment of the community. It is estimated that 330,000persons, or 40 0/0 of the population of Accra/Texaa, atpresent depend on standpipes and consume 5gped. In theconsumption forecasts, it is projected that this numberwill continue to rely on standpipes, but private connectionswill be provided for the increasing balance. Their consumptioncharacteristics up to FY 1978 are expected to be similar toexisting unmetered domestic consumers with private connections,i.e., an estimated 7.5 gpcd. After FY 1978, consumption isassumed to increase steadily to a level of 10 gped by 1983.

7. The results of the above analysis showed that overall per capitadomestic consumption would remain constant up to Fl 1978 at about 13.5 gpcdand increase only marginally thereafter. This level of per capita consuimption

- compared with other countries - seems low for private connections, although

comparisons are complicated by differing circumstances and inadequate data.

Commercial

8. The number of commercial connections, which had been more or lessconstant in Fl 1970, fell sharply in FT 1971 and in the first two quartersof FY 1972. The fall is attributed to the Government's policy of Ghanaian-ization of small businesses, as embodied in the Compliance Act of 1969 and

the Ghana Business (Promotion) Act of 1970 which reduced the number of small

businesses. The elimination of the smaller business has led to an increasein the average consumption per connection. These trends appear to have

stopped,since during calendar year 1972 the number of connections and

consumption per connection have stabilized. The forecast assumes that thenumber of connections will return to the FY 1970 level by FY 1976 (with a

corresponding decline in average consumption per connection) and that

commercial consumption will grow at 6 o/o p.a. thereafter in line with

population growth.

Total Sales for Accra/Tema

9a The assumptions described above led to the water demand forecastsfor each consumer class shown in Attachment I. Total sales are obtained by

aggregation and imply growth rates of about 8 o/o p.a. in the five-yearperiod to FY 1973-78 and 6.5 o/o p.a. in the five-year period FY 1979-83.

ANNEX 6

Page 4

Required Production for Accra/Tema

10. Production requirements are obtained by adding to the demandforecasts an assessment of leakage. Such an assessment is complicatedby the absence of reliable past sales statistics, notably due to thehigh proportion of unmetered accounts and the short time-series available.Values reported by GWSC for FYs 1970, 1971 and 1972 were 32 o/o, 29 o/o and44o/o respectively of total production. Estimates of water production forFY 1973, combined with estimates of sales in this year, indicate a currentpercentage of 36 o/o (equivalent to over 12 mgd).

11. ATMA has recommenced with leakage detection work. It has beenassumed that this effort will reduce the percentage of unAccounted forwater to 30% by PY 1976 (when in absolute terms it will still amount to11 mgd), and to 25% (13 mgd) by FY 1982.

Rural Areas

12. Existing information to serve as a basis for demand projectionsin the rural communities served by the project is even less reliable thaninformation used for Accra/Tema. Studies by consultants show that the132 rural communities involved vary considerably in size and likely percapita consumption. The latter is due partly to differences in theproportion of domestic demand, industrial demand, supply through stand-pipes and supply through private connections. Production for the ruralareas is at present believed to be growing at around 7 o/o p.a. and thisgrowth is projected up to FY 1977, the first full year of supply underthe project. Consultants estimate production requirements of 11 gpcd by1985 (growing at 0.3 gpcd annually). Additional provision of 0.8 mg perannum by FY 1980 is made for industries on which some definite informationexists. Combining these data with population forecasts for the rural areasgives the production requirements shown in Attachment I.

ANNEX 6Attar.iaint

PRODUCTION AND DALES FORECASTS FOR ACCRA/TEMA AND RURAL AREAS

(million gallOnS)

-------- Actul -------------- ----------- --- - - - -atited - ------- -- ---------------- -------- --------- --

Year endiny Juno 30 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

A.-.e/Tem-

Induetrial 1,085 1,532 1,366 1,604 1,796 2,012 2,254 2,479 2,677 2,838 2,980 3,129 3,282 3,1b6

Institutions and PFblic Authoritien 1,212 1,444 1,701 2,397 2,540 2,693 2,855 3,026 3,208 3,400 3,604 3,820 4,045 4,232

Public staudpipe9 716 1,089 556 581 600 600 600 600 600 600 600 600 600 60

Douestic 2,610 2,844 2,665 2,474 2,712 2,964 3,233 3,522 3,832 4,188 4,573 4,998 5,450 S,959

Cun-rriul 770 912 779 641 660 700 750 795 840 890 944 1.000 1,060 1.12&

Sales tu Accrn/Tem- 6,393 7,821 7,067 7,697 8,308 8,969 9,692 10,422 11,157 11,916 12,701 13,547 14,437 15,361

% Watrer ld to str produced 68 71 56 64 66 68 70 72 73 73 74 74 75 75

Prodoction fur Accrn/Teta 9,390 11,o60 12,630 12,097 12,588 13,190 13,846 14,475 15,284 16,323 17,164 18,307 19,249 20,481

Rural Areas

Pruduction 410 440 470 503 538 576 616 669 779 891 1,003 1,050 1,099 1,153

Total Productitu fur Accra/Tuna cud Rural Aru.. 9,800 11,500 13,100 12,60o 13,126 13,766 14,462 15,144 16,063 17,214 18,167 19,357 20,348 21,634

Avoruge deily production fur year (mgd) 26.8 31.5 35.9 34.5 36.0 37.7 39.6 41.5 44.0 47.2 49.8 53.0 55.7 59.3

Avorage daily production for peuk tuu nooths (ngd) 28.3 34.3 38.1 38.0 39.6 41.5 43.6 45.7 48.4 51.9 54.8 58.3 61.3 65.2

ANNEX 7

Page 1

GHANA

ACCRA/TEMA WATER SUPPLY PROJECT - SECOND STAGE

Rate of Return Calculations and Sensitivity Analysis

Introduction

1. In view of the (as yet) undefined nature of the recentlyreactivated irrigation component, the economic analysis defines theproject as the long-term public water supply development program forthe Weija system, i.e. the proposed Weija dam and all additional worksrequired to enable full use of the Weija facility, and the extensionsto rural water supplies /1. The project area is supplied from twoexisting sources at Kpong and Weija. In the absence of impoundingstorage at Weija, the nominal output of 8.5 mgd is available for aboutten months of the year. During the dry season (about two months dura-tion) output from Weija falls to low levels and frequently dries upcompletely (see Annex 1 para 5).

2. In calculating the economic return, benefits and costsattributable to the project are taken over an assumed project life of50 years and defined as the difference in benefits and costs with andwithout the project. As explained in para 6 below, the economic bene-fits of the project cannot be fully quantified and expected revenues at1974 price levels were used as a proxy. As far as costs are concerned,under "without project" conditions operating costs alone are relevant.Replacement costs and terminal values were taken into account but havelittle effect on the results since they are either common to both alter-natives or else reduced significantly by the discounting process. Allcosts are expressed at 1974 prices and exclude taxes, duties, depreciationand financing charges.

"With Projects" Conditions

3. (a) Production. Forecasts of production were derived asdescribed in Annex 6, and partitioned between the dry season (two monthsduration with production assumed to be 10 o/o above the annual average)and the remainder of the year. Since Weija has lower operating cost thanKpong, Weija output was assumed to be used at all times to the fullestpossible extent.

(b) Revenue. System sales were converted to revenues by applyingGWSC's expected average tariff which is assumed to be valid for 5 years(see Annex ll) and stating the results in 1974 prices. Beyond FY 1979,tariffs are assumed to increase with inflation, i.e. to remain constant in

/1 The project will increase Weija capacity on a year-round basis to13 mgd from FY 1975, 29 mgd from FY 1979 and L3 mgd from 1984.Reservoir utilization beyond 43 mgd is not credited to the project,although the design yield of the Weija dam is 7OImgd, as there isnow the possibility that it will be used for irrigation.

ANNEX 7

Page 2

real terms. Consumption in the rutial areas (which is expected to takeplace mainly through public standpipes) and public standpipe consumptionin Accra/Tema were credited with a nominal revenue of 0100,000 and0200,000 annually in money terms, these figures being based upon a roughestimate of the number of households involved and the present housecharge for standpipe consumption.

"jiithout Project" Conditions

4. (a) Production. Weija output is assumed to be 3 mgd in the dryseason. Full output (8.5 mgd) is available in the wet season. As in the"with project" situation, production schedules for Weija ard Kpong werederived for the wet and dry seasons with Weija output being fully utilizedat all times. System capacity has already been reached in the dry season(Accra experienced water shortages in FY 1973) and would also be reachedduring the wet season in FY 1978. Production thereafter is assumed to beconstant at the capacity of the existing system.

(b) Revenue. System sales were obtained from production andconverted to revenues at 1974 prices as in "with project" conditlons.Public standpipe consumntion was valued at 0200,000 p.a., as before, butrevenue from the rural areas was reduced to 50 o/o of the "with project"figure.

Benefits and Costs Attributable to the Project

5. The benefits end costs attributable to the project resultingfrom the above studies are shown in Attachment I and give a rate ofreturn of about 6 o/o. Analyses were carried out to test the sensitivityof this return to variations in capital costs, operating costs, andrevenues. The results, summarized in Attachment II, indicate a variationin the rate of return of about 2 o/o above and below the base case. Sincethere is a possibility that the official rate of exchange may overvalue theCedi by as much as 50 o/o, an additional test was carried out using ashadow price for foreign exchange 50 o/o above the official rate. The rateof return fell to 5 o/o.

6. The above estimates of the rate of return are minimum valuesprimarily because any possible irrigation and health benefits of the projecthave not been quantified. The nature of the health benefits is differentin Accra/Tems and in the rural areas. Virtually all the population ofAccra/Tema has access to piped water, either through standpipes or houseconnections. The health benefits of the project are therefore not mainly interms of an improvement in existing health conditions but rather the avoid-ance of a deterioration in health conditions which would occur in the absenceof the project. In the rural areas adjacent to Accra/Tema, the populationis inadequately supplied with piped water and the majority must rely uponstreams, ponds and shallow wells which are generally polluted /1. The projectis therefore expected to improve health conditions in the rural areas. Whileexisting information is not adequate to quantify either of these two types of

/1 Over 1,500 cases of cholera were reported in the rural areas affectedbv the nroiect during the last cholera epidemic of 1970-71.

ANNEX 7

Page 3

health benefit (and in the case of Accra/Tema would additionally involveconsiderable speculation on what would happen under "without project"conditions) they are likely to be substantial. In addition to omittingthe above benefits, the rate of return calculation makes no allowancesfor consumer surplus /J. This element is also unquantifiable in theabsence of any knowledge of the shape of the demand curve for water.Finally, benefits will arise from the resettlement of villagers livingin the project area, the costs of which have been attributed to theproject.

L The additional amount of money which people would be willing to payfor what they actually consume.

ANNEX 7Attachment I

Project Cost and Benefit Stream(thousands of cedis and 19714 prices)

Year Capital Coat Operating Cost Benefits

1971j 3.022

1975 7.552 19 181

1976 11.2314 30 234

1977 9.259 165 279

1978 7.563 256 444

1979 2.375 387 853

1980 - 454 1194

1981 4.600 535 1772

1982 14.200 603 2161

1983 - 690 2673

19814 - 776 3253

1985 - 870 3860

1986 - 969 4495

1987 - 1.074 5158

1988-2026 - 1.170 5774

Note: Operating costs and benefits attributable to the projectare the difference in system operating costs and thedifference in system revenues with and without the pro-ject as explained in the text.

ANNEt 7AttachkMnt II

SensiivityTeatVs

1kt. ofIncroeas % Decrease R Return t) in Caset(Cam A) (Cae B) A B

1. Bas Ce -- 6.0

2. Capital Cost 25 5.0

3. Operating Cost 25 - 5.8

4. Operating Umn"us 25 25 7.8 4.0

GHANA

ACCRA-TEMA WATER SUPPLY PROJECT - SECOND STAGE

ORGANIZATION CHART OF GHANA WATER AND SEWERAGE CORPORATION

11ANNI- -G CAR-R INIT END INTERNAl FA-AT UDIT

'De_loRment~~~~~~~~~~~~~~~~~~~~~~ ~ RN*11I. 'IDVID *uu AJNo,I,, * ADVI,.I*INI t..I.D

NT C . . . E-Al EI~~~~~~~~~~~~~~~~~~~~,AI.T..I *EIFl *EPR.N~.RFFIA-Eq ~I * ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I *IaIF~ CIFMe

ENGNAVINE -- ES -.- TS -VI L= ANIZATIGNS STORES PERSONNEL T RAINING__.~~~~~~~~~~~~~~~~~~~~~~~~~~A.NSRTO

Glwlseonal { nqwns D onal e:@|n v Fln~~~~~~~~~~~~~~~~~~~~A-ca ... sole K bn.

EnOle~~~~~~~~~~.G--tNA*mLm lORGf>TsnotAN-7n1j aarsx nusrd

-E. ~ ~ ~ Dlomn .. Qem Aet*e F A.-ANTI

NOT~~~~~~~~~~~~~~~~ 11- A.- T.-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| eINL NZAIN

ANNEX 8

Page 2

Notes on the Organization of GWSC

GWSC was originally organized on the basis of recommendationsmade by Public Administration Service (PAS), a US firm of managementconsultants provided under the UNDP project. A major reorganization ofthe headquarters staff was instituted at the end of 1970 in order to reduceoverhead costs and to give a more commercial orientation to operations.The present organization chart is shown on Page 1 of this Annex.

The engineering department undertakes design and implementationof all development programs financed by the Government or from the internalresources of the Corporation. It also provides supporting technicalservices to the regions. A self-supporting field section consisting of atransport unit, two workshops, a meter and instrument repair shop and adrilling unit, is attached to the engineering department. The centralworkshop serve maintenance requirements of the regions. Each workshopfunctions as a self-contained field unit under the supervision of thechief engineer.

The commercial department handles all financial, accounting andbudgetary matters of GWSC and stores management. The financial managerresigned in November 1973 and recruitment for the position is under way.At the present time, the finance and stores division function as independentdivisions. GWSC maintains four regional stores in addition to the centralstore at Tema. All stores are under the supervision of a general storesmanager. Most of the procurement is done through the central stores whichin turn makes allocations to the regional stores.

Personnel and training aspects have been transfered in 1973 fromthe commercial department to a new separate department. With the promotionof the former principal training officer to chief of personnel, trainingaspects are to receive heightened attention.

The position of general manager who acts as the chief executivein the absence of the managing director is presently vacant. This functionincludes supervision of the operations of all nine regions and coordinationof the activities of the regions with the engineering and commercialdepartments. The regional Managers are directly responsible to the generalmanager for operations in their respective regions.

A separate unit has been established to carry out internal auditsof the headquarters and the regional accounts. A planning and researchunit provides GWSC with economic and statistical support services, collectsdata for long range planning and coordinates bilateral aid programs. Themanaging director oversees both the internal audit and the planning andresearch units.

The reorganization of 1970, while relieving the managing directorfrom day to day operational problems did not take into account the rapidlyincreasing number of water systems under GWSC's control, which is now

ANNEX 8

Page 3

straining the effectiveness of supervision of the Managing Director,General Manager, other senior headquarters staff and regional managers.Therefore, GWSC,in an effort to delegate more authority to the lowerechelons of its organization,decided in 1973 to create district managementcenters headed by district managers with the first line responsibility torepair, operate and maintain all water systems and assist in the supervisionof all water development works. 17 urban and 24 rural such centers werecreated.

All regional organizations are presently structured alike. InATMA which is directly responsible for the project, the area manager is thechief executive officer. The area manager is supported by an engineeringdepartment responsible for water production, distribution and systemmaintenance; a finance department responsible for financial management,accounting and budgeting; a general services department charged withadministration and personnel matters; and a commercial department respon-sible for revenue collection and public relation activities. The areaorganization has its own budget and retains its revenues. ATMA is presentlyconsidering the combintng of its finance and revenue collection functionas the separation so far has lead to little coordination and weak internalcontrol. Furthermore, the structure of the engineering department is beingrethought in view of the commenced operation of the sewerage scheme.

For the purpose of billing and revenue collection, ATKA has dividedAccra into five districts, each one of which is further divided into fourcycles. One cycle represents an area that can be covered by a crew of 6-8meter readers in one day. The Corporation rents an IBM 360/20 computer whichis primarily used for billing for the Accra/Tema area. The computer is alsoused to prepare statistics on accounts receivable and ageing of accounts, forrevenue collection purposes. All bills are required to be paid within 28 daysof date of billing. The commercial department is presently responsible forrevenue collection. Although service can be disconnected for failure to paythe bill within the specified period of time, this power is not widely invoked.The regularity and quality of mter reading and billing is not satisfactory,and arrears of accounts continue to be high. ATKA is aware of these problemsand is taking a number of measures such as the use of additional meterreaderinspectors, closer control of the cycle of processing and delivery of billsand of collection performance.

ATMA has its own transport unit, which is used for stores transport-ation, distribution system maintenance, new connections, meter installationsand revenue collection. A separate transport workshop is maintained toservice and repair the vehicles and for fabrication of small parts. ATMA hasits own meter shop for repairing and testing of water meters.

G H A N A

GHANA WATER AND SEWERACG CORPORATION

Income Statements

(, 10008s)

1971 1972 1973

Year Ending June 30 Consolidated Accra/Team Consolidated AccraiTeta Consolidated Accra/Tema-----------------------Audited -------------------- Preliminary-----

RlSVlOES

Unmetered 1,201 784 684Metered 3,649 3,631 4,447Public Authorities 1,539 1,719 1,989Other 1,378 1,715 2,259

Total Revenues 7,767 3,929 7,849 3,925 9,379 4,388

EXPENSES

Personnel 3,210 3,570 3,851Contractual Services 2,445 2,317 2,711Comodities 2,341 2,505 2,226

Total Expenses 7,996 2,115 8,392 2,232 8,788

INCOME (DEFICIT) BEFORE DEPRECIATION (229) 1,814 (543) 1,693 (591) 2,214

DEPRECIATION 1,781 974 1,862 1,000 2,000 1,000

INCOME (DEFICIT) AFTER DEPRECIATION (2,010) 840 (2,406) 693 (1,409) 1,214

OTHER INCOME 1,987 - 197 35 -

NET INCOME (23) 840 (2,209) 693 (1,374) (1,21X)

GOVERNMENT SUBSIDY 1,500 - 1,500 - 1,500

OPERATING RATIO 1.03 .54 1.07 .57 .94 .50

RATE OF RETURN neg. 2.9 neg. 2.4 neg, 4.3Mairch, 1974

G H A N A ANNEX 10

GHANA WLTER AND SEWEGE CORPORATION

3alance Sheets

( % 1000l')

1971 1972 197_

As of June 30 Consolidated. Accra/Toe Conaolidated Accra/Tong Consolidated Ascra/Tea------------ _---_----_ Audited -______________________ --------- Preliminary______

ASSETSFtxeAssets

Building & Equipment 55,201 32,455 56,214 33,080 57,479 33,691LESS: Accumulated Depreciation 6,71h 3,638 8,577 4,638 10,586 5,541Assets in Operation 48,1487 21 7,637 28,442 46,893 2,10Construction in Progresa 13,693 1,356 28,011 6,035 37,627 12,279

TOTAL F7XED ASSETS 62.180 30.173 75.648 34.1477 8L4.52 40.429

Current AssetsCash 8,689 2,998 5,367 2,156 6,4146 2,437Accounta Feceivables 3,248 1,677 3,635 2,006 3,739 2,057Stores 5,240 597 4,566 563 4,945 991Other 4,0o6 423 8,892 691 10,270 539

TOTAL CURRENT ASSETS 21,263 5,695 22,460 5,416 25,1400 6,024

TOTAL ASSETS 83,443 35,868 98,108 39,893 109,920 46L453

f3QUITY AND LIABILITIES

EquityContributeR Capital 56,982 14,1149 68,077 14,149 73,164 15,399Surplus (Deficit) 3,046 131 2,995 823 3,142 2,146

TOTAL EQUITY 60,028 14,280 71,072 14,972 76,306 17,545

Long Tern LoansGhana Government 20,000 20,000 20,000 20,000 20,000 20,000IDA Credit 160-GH 442 442 2,083 2,083 3,273 3,273

TOTAL LOANS 20,14 20,144M2 22,083 ____3 23,273 23,273Other Loans - _ 6

Current Liabilities 6o_--_Aecounts Payable and Accruals 2,502 58 4,186 1,802 1,479 3,523Inter Branch Aecount - 456 - 815 - 471Customer Advaaooe 471 632 767 221 1,219 998

TOTAL CUNR LIABILITI3S 2,973 1,146 4,953 2,838 9,698 4,m

TOTAL EQUITY AND LLABnILIT 83,443 35,868 98,108 39,893 109,920 46,453

Debt/Equity Ration 25/75 59/41 24 60 214 58

Current 1Ltio 7.2 5.0 4.5 1.9 2.6 1.2

March, 1974

ANNEX 11

G H A N A

ACCRA/TEMA METROPOLITAN AREA

INCOME STATIMENTS 1971-1981

-- ___ _____-Construction Period----------

------ Actual-------- ------------------------ Forecast ------------------------------------

Year Ending June 30 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

Water Prod-ced (TMC) 11,500 13,100 12,600 12,120 13,800 14,500 15,L00 16,000 17,200 18,200 19,400 20,300Water Sales (IMG) 7,821 7,067 7,686 8,000 9,380 10,150 10,870 11,680 12,560 13,470 14,360 15,230Unaccounied for Water (7,) 35 44 39 34 32 30 28 27 27 26 26 257. Population Ser-ed (2) 100 100 100 100 100 100 100 100 100 100 J00 100

Average Water Rate11,000 Gallons (t) 0.54 0.55 0.64 0.64 0.96 0.96 0.96 0.96 0.96 1.34 1.34 1.34

Operating Revenues

Water SupplyBillings 4,050 4,026 4,826 5,120 9,005 9,744 10,435 11,213 12,058 18,050 19,242 20,408

Less: Provision for Bad Debts 300 187 238 371 653 706 756 813 874 1,309 1,395 1,479Net 3,750 3,839 4,588 4,749 8,352 9,038 9,679 10,400 11,184 16,741 17,847 18,929

Other Incomne 179 86 (200) 100 100 100 100 100 100 100 100 100Subtotal 3,929 3,925 4,388 4,849 8,452 9,138 9,779 10,500 11,284 16,841 17,947 19,029

S-eerage

User Charges - - - - 102 203 208 252 257 262 267 271Connection Fees 146 164 93 132 171 171 171 171Stbtotal - - - - 248 367 301 384 428 433 438 442Total 3,929 3,925 4,388 4,849 8,700 9,505 10,080 10,884 11,712 17,274 18,385 19,471

Operating Expenses

Water SupplyPersonnel 741 757 795 986 1,137 1,314 1,517 1,753 2,026 2,344 2,703 3,115Electricity 325 397 415 550 541 572 597 645 602 658 725 775Chemicals 372 427 335 358 468 539 599 672 970 1,075 1,203 1,325Fuel, Lubricants & Maintenance 323 271 272 405 465 511 549 640 788 847 911 979Administration 223 244 246 253 286 325 369 417 473 539 592 651Other 131 136 111 297 305 324 354 404 416 438 440 454

Subtotal 2,115 2,232 2,174 2,849 3,202 3,585 3,985 4,531 5,275 5,901 6,574 7,299

Sewerage - - - 200 220 242 266 293 322 354 389 428Total Operating Costs 2,115 2,232 2,174 3,049 3,422 3,827 4,251 4,824 5,597 6,255 6,963 7,727

Operating Income Before Depreciation 1,814 1,693 2,214 1,800 5,278 5,678 5,829 6,060 6,115 11,019 11,422 11,744Depreciation 974 1,000 1,000 1,230 1,559 1,784 1,977 2,645 3,328 3,459 3.679 4,050Operating Income Before Interest 840 693 1,214 570 3,719 3,894 3,8'2 3,415 2,787 7,560 7,743 7,694Interest - - - 246 249 239 228 217 205 3,621 3,521 3,415

Net Income 840 693 1,214 324 3,470 3,655 3,624 3,198 2,582 3,939 4,222 4,279

Average Rate Base - 28,629 28,298 34,833 44,427 50,239 54,787 74,740 94,521 95,517 99,278 107,794Rate of Return 7 2.4 4.3 1.6 8.4 7.8 7.0 4.6 3.0 7.9 7.3 7.1Operating Ratio .54 .51 .50 .59 .38 .39 .41 .43 .47 .35 .37 .38

March, 1974

ANNEX 12

G H A N A

ACCRA/TEMA METROPOLITAN AREA

CASH FLCW PROJECTIONS

( 4 °000 )

---------- Construction Period----------------

Year Ending June 30 1974 1975 1976 1977 1978 1979 1980 1981 1982

Internal Sources of Funds

Operating Income Before Depreciation 1,800 5,278 5,678 5,829 6,060 6,115 11,019 11,422 11,744

Operational Requirements

Increase (Decrease) in Working Capital (723) 4,049 200 186 210 229 1,108 289 282Interest Charged to Operations 246 249 239 228 217 205 3,621 3,521 3,415Principal Payments 780 151 161 172 183 195 1,649 1,749 1,855

Total 303 4,449 600 586 610 629 6,378 5,559 5,552

Balance of Internal Funds Available for

Investment 1,497 829 5,078 5,243 5,450 5,486 4,641 5,863 6,192

Capital Investment

First Stage Project 900 - - - - - - -Second Stage Project 3,022 8,472 13,301 12,266 10,847 2,970 - - -

Sewerage Works 150 1,000 1,000 1,000 1,000 1,000 2,000 2,000 2,000Other Water Supply Works 600 1,700 800 100 1,000 200 500 10,00t) 10,000Interest During Con ;truction - 442 863 1,476 1,873 2,109 - 160 600

Total Capital Inves.:ment 4672 11.614 15.964 14.84 14,72 6,279 2,500 1 12,600balance to be Financed 3,175 10,785 10,886 9,599 9,270 793 - 6,297 6,408

Financed By:Borrowing

IDA I 690 - - - - - - - -IDA II 6,000 3,000 1,000 1,960 - - _CIDA - 200 900 2,000 4,000 1,525 - - -

ADB - 300 1,500 2,500 1,145 75 - - -

Local Banks - 2,500 3,000 2,000 545 - - 4,000 7,000

Total Borrowing 690 9,000 8,400 7,500 7,650 1,600 - 4,000 7,000

Government Advances 1,100 (1,100) - - - -

Government Contributions

Rural Water Supply - 700 1,300 2,100 1,600 - - -

Irrigation Component - 1,550 1,200 250 - -

Total Contributions - 2,250 2 500 2,350 1,600 -

Total Funding 1,790 10,150 10,900 9,850 9,250 1,600 - 4,000 7,000

Cash Increase (Decrease) for Year (1,385) (635) 14 251 (20) 807 2,141 (2,297) 592Cash at the Beginning of Year 2,437 1,052 417 431 682 662 1,469 3,610 1,313Cash at the End of Year 1,052 417 431 682 662 1,469 3,610 1,313 1,905

Debt Service Coverage 1.8 6.3 4.5 3.1 2.7 2.4 2.1 2.1 2.0

March, 1974

ANNEX 13

C H A N A

ACCRA/TEMA METROPOLITAN AREA

BALANCE SHEETS

( c000 )

- - Actual-------- ----------------------------- Forecast --------------------------------

As of June 30 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

ASSETS ------------ Construction Period--------------

Fixed AssetsBSildsng and Equipment 32,435 33,080 33,691 48,287 55,669 63,254 68,525 107,782 114,061 116,561 128,721 141,321Less: Accumulated Depreciation 3,638 4,638 5,541 6,771 8,330 10,114 12,091 14,736 18,064 21,523 25,202 29,252

Net Fixed Assets in Operation 28,817 28,442 28,150 41,516 47,33 53,140 56,434 93,046 95,997 95,038 103,519 112,069

Construction in Progress 1,356 6,035 12,279 2,355 6,587 14,966 24,537 - - - -

Total Fixed Assets 30,173 34,477 40,429 43,871 53,926 68,106 80,971 93,046 95,997 95,038 103,519 112,069

Current AssetsCash 2,998 2,156 2,437 1,052 417 431 682 662 1,469 3,610 1,313 1,905Accounts Receivable (net) 1,677 2,006 2,057 1,382 2,431 2,631 2,817 3,027 3,256 4,364 4,653 4,935St-,res 597 563 991 950 950 950 950 950 950 950 950 950Other 423 691 539 540 540 540 540 540 540 540 540 540

Total Current Assets 5,695 5,416 6,024 3,924 4,338 4,552 4,989 5,179 6,215 9,464 7,456 8,330Total Assets 35,868 3. 46,453 47,795 58,264 72658 85,960 98,225 1,212 104,502 110.975 120,399

EQUITY AND LIABILITIES

Equitv

Government Contributions 14,149 14,149 15,399 16,499 17,649 20,149 22,499 24,099 24,099 24,099 24,099 24,099AecumsEared Surplus 131 823 2,146 2,470 5,940 9,595 13,219 16,417 18,999 22,938 27,160 31,439

Total Equity 14,280 14,972 17,545 18,969 23,589 29,744 35,718 40,516 43,098 47,037 51,259 55,538

Long Term Debt

Ghana Goverment-Transferred Debt 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 19,485 18,937 18,353

IDA I 442 2,083 3,273 3,826 3,675 3,514 3,342 3,159 2,964 2,757 2,536 2,301IDA 11 - - - - 6,000 9,000 10,000 11,960 11,960 11,714 11,450 11,167CIDA - - - - 200 1,100 3,100 7,100 8,625 8,288 7,942 7,587ADB - - - - 300 1,800 4,300 5,445 5,520 5,394 5,259 5,113Local Banks - - - - 2,500 5,500 7,500 8,045 8,04S 7,827 11,592 18,338Other Borrowing - - 643 - - - - -

Total Long Term Debt 20,442 22,083 23,916 23,826 32,675 40,914 48,242 55,709 57,114 55,465 57.716 62,861

Current Liabilities

Accounts Payable 58 1,802 3,523 3,500 500 500 500 500 500 500 500 500Customer Advances 632 221 998 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000Inter Branch Account 456 815 471 500 500 500 500 500 500 500 500 500

Total Current Liabilities 1,146 2,838 4,992 5,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

TOTAL EQUITY AND LIABILITIES 35,868 39,893 46,453 47,795 58,264 72,658 85,960 98,225 102,212 104,502 110,975 120,399

Debt/Equity Ratio 59/41 60/40 58/42 56/44 58/42 58/42 57/43 58/42 57/43 54/46 53/47 53/47

Current Ratio 5.0 1.9 1.2 .78 2.2 2.3 2.5 2.6 3.1 4.7 3.7 4.2

March, 1974

ANNEX 14Page 1

GHANA

ACCRA/TEMA WATER SUPPLY PROJECT - SECOND STAGE

ASSUMPTIONS FOR FINANCIAL PROJECTIONS

1. All the financial projections in the report cover theoperations of ATMA only.

2. Figures for income statements and balance sheets forFY 1971 and F! 1972 are based on audited statements Auditedstatements for FY 1973 are expected to be available by May 197T.

Projected Statewent of Income

Operating Fevenues

3. Water sales for the current financial year of 1974 wereprojected on the basis of this yearts revenue trend. Sales duringFT 1975-1979 are based on the projected quantities of water consumed(see demand projections - Annex 6) and ATMAs proposed tariff increasesequivalent to a 50% increase of its average tariff to )M.96A, 000gallons. After FT 1979, the average tariff rate is assumed to increasefurther by 40% to allow sufficient cash flow for ATMA&s next expansion.

4. The provision for bad debts has been calculated at a somewhatmore conservative rate than in the past at about 7% of annual billings.

5. The forecast of other water supply income of a constant0 100,000 p.a. includes, reconnection fees, and investment income ofATMA's liquid assets.

6. Sewerage-user charges are based on projected domestic and non-domestic connections and a tentative charging proposal provided by GWSC'ssewerage consultants, as shown belows

(a) Fbrecast of Number of Connections

F! 1975-1976 215 p.a. (30% domestic)1976- 200 p.a. (100% dcmestic)

(b) Charging Proposals

Domestic connections at D 24 p.a. Nondomestic connections at 80% of waterbill (estimated at f! 1,200 per connection).

ANNEX 14Page 2

7. Sewerage connection fees have been estimated by ATMA's formersewerage engineer at ¢ 850/connection. Connection feea are assumed tobe payable in a lump sum by non-domestic users and over 3 years by do-mestic users.

Operating Expenses

8. Basic operating expenses are based on Fr 1973 actulas. In-flation allowances have been added to reflect the likely local infla-tion of 10% p.a. and foreign inflation trends,the latter affectingchemicals and fuel/lubricants, at 15% in F! 1974 and F! 1975 decreasingto 10% in FY 1976 and 7.5% thereafter.

9. The assumptions underlying the different operating cost ca-tegories are as follows:

Personnel

10. Present basic personnel coats are shown as increasing at 5%p.a. on the basis of merit. An additional 12% of basic peraonnel costsfor rent and vacation has been added in each year. With the codisaion-ing of the new I'ija ncheoe in F! 1978, further maintenance staff estimat-ed to cost ¢ 100,000 p.a. has been add d.

Electricity and ahemicals

11. Historical unit costs have been calculated for ATMAts two sourceworka as follows

weija Kpog

A9 000 g

Electricity .0132 .0359Chemicals .0400 .0187

Total .0532 .o546

12. Unit power costs have been increased 25% effective in FY 1974to reflect the Electricity Corporation's of Ghana recent tariff increases.Power tariffs were assumed to increase by a further 25% in F! 1978.

Fuel. Lubricants, and Maintenance

13. The F! 1973 actuals were increased by 50% in F! 1974 to reflectnew recent contract prices for fuels and lubricants. The presumed addi-tional maintenance due to the project is, beginning in F! 1979, ¢ 100,000p.a. which is estimated on the basis of the nature of the new equipmentinstalled.

ANNEX 14Page 3

Administration (Head Office, Office Suppiies)

14. An increase of 3% p.a. has been assumed.

Other (Inaurance and Miscellaneous pcpenses)

15. This item Was also assumed to increase by 3% p.a..

Projected Balance Sheets

Fixed Assets

16. Fixed assets are valued at book cost. Assets predating 1966were valued by a Government committee in 1971 and subsequently agreedby IDA. Depreciation is calculated at 3% on average gross fixed assetswhich is considered representative.

Construction in Progreas

17. Fbr projection purposes, it has been assumed that the dam, andraw water pump will be brought into service by the end of F! 1977 whilethe treatment works and transmission are projected to be in service byFY 1978. All other Project, other water supply and sewerage works havebeen assumed to be in service at the end of each year during which theexpenditure was made.

Current Assets

18, Accounts receivable are calculated net of provision for baddebt. During FY 1975-1979, it has been assumed that about 3-1/2 monthsrevenue will remain uncollected at the end of the year. Thereafterabout 3 months were assumed.

19. Stores and other current arsets have been assumed to remainconstant at about the level of F! 1973 actuals.

20. Fbr the Interbranch Accounts Customer Advances and accountspayable constant amounts have been assumed reflecting ATMK's currentbest estimates.

Cash Flow Projections

21. The capital investment includes

(a) The remaining expenditures on the worksfinanced under Credit 160-(H;

(b) The proposed Project;

(c) Nominal allowances for sewerage extensionsinto areas adjacent to the exiating seweragearea, and for subsequent extensions intoareas presently undefined;

ANNEX 14Page L

(d) Other water supply works includes main renewals,crash program for metering, and other miacellaneousdevelopment works.

22. The terms of ATMA's existing debt is as follows:

Amounts Interest Grace Term Period ofmill. Rate Period Loan

(W) (Year) (Year) (Year)

Ghana Government 20.0 6-1/2 - 20 1973-1992

On-lent IDA Credit 160-5H 4.025 6-1/2 3-1/2 20 1969-1989

23. The eoisting subordinated debt of ¢ 20.0 million to theGhana Government atems from a covenant of Credit 160-GH. The ration-ale of this covenant was to build up the financial responsibility ofGWSC through at least the partial repayment of assets for which theGovernment is servicing previously incurred suppliers' credits. Theprincipal amount ias determined on ATMA'. projected isproved debtservicing capability, In view of the substantial requirements of fundsfor the Project, the Government is now considering to defer ATMA'. debtservicing obligation until the end of the construction period.

Government Advances and Contributions

21. The advance of $ 1.1 million reflects an actual Goveznmentoomdtment to provide ATMA with interim financing towards the foreign

exchange coot of the Weija dam. The Government would be reimbursed byIDA, once the proposed Credit is effective.

25. _- In view of ATMA s own tight financial position and the pendingexpiration of the rural water supply projects tender validity periods,the Government has indicated that it will take full financial responsi-bility to allow the contracts to be emecuted.

26. The aoverruent contribution for the Wbija Dam's irrigationcomponent is based on the Ministry of Agriculture's desire to proceedwith the irrigation scheme and its willingness to contribute 20% towardsthe capital soat of the dam. The 20% formula had originally been agreedin 1967 when GWSC agreed to irrigation development in the area.

ANNEX 15

Page 1

GHANA

ACC R TEMA WATER SUPPLY PROJECT - SECOND STAGE

Water Supply Tariffs

EXISTING TARIFFS AND GWSC'S PROPOSALS

1. The existing water supply tariff is uniform for all urban andrural areas in Ghana. Full details on existing tariffs is given in theAttachment. In early 1973, GWSC submitted to the Government a new setof tariff proposals for implementation over the period FY 1974-1978.The important features of the new proposals included:

(i) departure from the present principle of a uniform nationaltariff by distinguishing between three types of community,according to financial viability, as follows:

(a) the six communities deemed to have the greatestfinancial potential;

(b) twenty intermediate urban centers; and(e) rural communities;

(ii) predetermined tariff increases during the five yearimplementation period;

(iii) largest tariff increases in the six financially viablecommunities and either no tariff increases or evendecreases in the other communities.

2. After a critical review, the IDA recppraisal mission of April 1973expressed general sympathy with GWSC's new tariff proposals on grounds ofinter-regional income redistribution and made certain specific suggestionsfor the Accra/Tema area. The Government, however, despite its support forthe principles of GWSC's proposals, decided in mid-1973 to shelve theproposal until full metering had been achieved in the six main communities.This in effect meant a delay of at least 1-1/2 years for Accra/Tema andmore for the other communities. Towards the early part of 1974 however itbecame evident that Accra/Tema's financial position was deteriorating andthat it could not carry out the proposed pro.ject without additionalrevenues. Therefore, although Accra/Tema's system is not yet fully metered,the Government has agreed to increase metered domestic and couercial/indus-trial tariffs by 50% effective in mid 1974.

ANNEX 15

Page 2

In addition, GWSC is ezpected to abolish meter rental charge andto introduce the levey of refundable deposits for new water con-mrs. Upon the suggestion of IDA GWC has been considering atwo-block tariff for metered domestic consumers including a pre-ferential charge for consumption within a restricted first block,But decided not to implewnt it at this tim because:

(i) inefficiencies in AT!MAIs billingsystem; and

(ii) difficulties in allocating waterconsumption in the many multi-family dwellings in Accra.

On the basis of available evidence, there is a strong presuptioncommercial/industrial consumers will continue to subsidise domesticconsumrs in the sense that the average incremental cost of supply.,estimated at % 0.804,000 gallons, appears to be higher than theanticipated mtered domestic tariff of $ 0.60/,000 gallons. 1bileit is questionable whether donestic comnumers am a class should besubsidised by non domestic consumers, there is a case for subsidizinglower-income domestic consumers, and the practice of providing waterfrom public standpipes free of charge to the consumer goes some waytowards meting basic needs.

ANNEX 15Attachawnt

G H A 11 A

ACCRP/lTEN& WATER SUPPLY PROJECT - SECOND STAGE

Enxsting Tariffs

Conuimer Category

A. Dow4stic with Metered Connection

(i) Metered rate (per thousand gallons) p0.40

(ii) Hl.ninmm charge (per month) ,2.00

B. Domestic Unmotered

Fixed chargp (per month) ¢2.00

C. PuLblic Stanldpips

Monthly fixed charge (per house) 4.00

D. Industrial/Comercial

(i) Metered rate (per thousand gallons) %0.90

(ii) IL.niuim charge (per month) 5.00

ANNEX 16

Page 1

GHANA

ACCRA/TEM WATER SUPPLY PROJECT (SECOND STACE)

Assessment of Potential Irrigation Component

Background

1. Some ten years ago, a group of consulting engineersidentified the possibility of developing irrigation by using waterfrom the proposed Weija reservoir. In 1967, after modifying thescheme, the Government requested GWSC to include it as an elementin the Weija scheme. To do so required raising the dam heightproposed by GWSC at the time by 6 feet to gain 8,000 mg V more capacityfor irrigation, and installing an outlet conduit for the irrigation waterrelease. MWA agreed to bear the additional expense which GWSC claimedwould amount to 20% of the dam cost.

Project Area

2. Rainfall in the area is erratic and totals about 29inches p.a., some 65% of which falls during the main cropping season(April-August). It is not enough to grow two crops, e.g. two cropsof rice grown here would require up to 68 inches of water,

3. At present, most lands are not cultivated and only asmall number of farmers grow some vegetables and maize, uaing tra-ditional rainfed methods. Crop yields are very poor due to unimpro-ved soils and inadequate water supply.

4. Landis tribally owned, its alloeation and use beingbased on tribal custom. Should the Governmen", introduce irrigation,the allocation of the comand area would becomie the Government's func-tion, with priority of settlement accorded to farmers on or adjacentto the area.

The Project

5. Gsneral Features. The project is still at an early stageof study. Two separate areas are proposed to be served: about 4,800acres in Block I and 800 acres in Block II (Map attached). Block Iwould be served by means of pumping the Weija reservoir water (about100 ft lift) into the distribution system. Block II, on the other hand,would receive its gravity flow through the proposed outlet in the Weijadam itself. The project would include a drainage system and on-farmdevelopment to assist farmers in arriving at the anticipated yields andbenefits.

I/ Imperial million gallon (1 mg - ,500 m3 - 3.65 ac-ft).

ANNEX 16

Page 2

6. Cropping Pattern. The project is designed to irrigate, on ayear-round basis, rice, maize and vegetables, which are in great demandin the area. The projected cropping intensity is expected to reach 150 o/oultimately as follows:

Wet Season (April - August) (o/o)

Paddy 60Maize 20Vegetables 10

Dry Season (October - February)

Paddy 30Vegetables 30

150

7. Water Requirements. On the basis of a conservative 50 o/o overallirrigation efficiency, project water requirements would be about 8,000 mgyearly (16,000 m.3/ha), with the following monthly distribution:

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Annual-- ___---_--_-___---__-____-- Img -__------- -__---------------------

960 270 - 600 900 900 1,470 600 - 360 870 1,050 7,980

8. Pumping Plant and Electrical Charges. The scheme would requirefive 350 HP pumps with 20 cfs capacity each to lift the reservoir water tomeet the peak demands of Block I (77 cfs). The cost of power would be about060,000 yearly (US$52,000).

9. Cost Estimates. Based on the existing pilot farm data and localprices, both updated to 1973 levels, project costs are estimated to be about#9.0 million (US$7.8 million or US$3,400/ha), excluding the allocation forthe dam, which is treated as a "sunk cost". Yearly operation and maintenancecosts are estimated at 0555,000 or 0100/acre (US$215/ha), including theagricultural support services required during the first 10 years to ensure fullagricultural development, as projected. These figures were derived as follows:

Construction Costs 0 '000

Head work 905Distribution System & On-farm Development 4,480Engineering 15 o/o 775Zontingencies 20 o/o 1,230

Subtotal 7,390

Power Connection, Resettlement & O&M 1,800

Total (rounded) 9,200

ANNEX 16

Page 3

Annual Costs

Depreciation 60Energy Charges 00.0114/kwh 60Attendants, Labors and Spares 35Distribution System 0 & M 250Agricultural Support Services for the First 10 years 100Contingencies 10 o/o 50

Total (rounded) 555

Rounded per acre 555000 =100/acre5,600

10. Schedule of Construction and Expenses. The following timing ofexpenditures is based upon a four year construction period for civil work,with irrigation starting in Year 3 and reaching full development in Year 5.

Construction Period

Total Year 1 Year 2 Year 3 Year 4 Year 5

-_____________________.___ .t --------------------------

Civil Work 8,500 700 3,060 2,700 2,040 -

0 & M 700 - 100 200 400 555

9,200 700 3,160 2,900 2,440 555

,.1./..

ANNEX 16

Page 4

11. Anticipated benefits to the project are shown in the table below.

Gross Revenue Production Cost Net Revenue

Area Yield Production Price Tota 4 ere Tot#2 e x 103ac lb/ac lbsX103 lbsxlu3 Olb gxlo 0Axi Econ. Farmers

Wet Season (Paddy) (Rice)

Rice 3,360 3,000 10,080 6,050 0.20L2 1,210 150 504 7060.13/2 780 276

Maize 1,120 1 ,200 1,344 0O.06 80 50 56 24 24Vegetables 560 7,000 3,920 0.20 784 220 123 661 661

Sub-total 5,,04O 1,391 961

Drr Season (Paddy) (Rice)

Rice 1.680 3,000 5,040 3,024 0.201 60 150 252 3530.13 2 393 141

Vegetables 1,680 7,000 11,760 0.20 2,352 220 370 1,982 1,982

Sub-total 3,360 2,335 2,123Total 8,4WZO 3,726 3,0814Per acre commanded 670 550

12. Aaricultural Benefits. These benefits are based upon the following:

Ci) The pilot farm yields and production costs adjusted toreflect actual field conditions at present.

(ii) The Government controlled price of the import rice(from Mainland China) for economic benefit assessment.

(iii) The average farm gate price of local rice and othercrops for the farmer benefits assessment.

(iv) The projected cropping pattern (150 o/o croppingintensity).

13. Farmer's Benefits. At full development and taking an average of5 acre per farm family the project would accommodate at least 1,100 farmfamilies. Their net revenue from each 5-acre holding would be at the levelof 02,750 (p 550/acre), with a net income (after allowing for annual 0 & Mcoats) of about 02,250 per 5-acre holding.

/l Import rice priceLocal rice priceCropped Area (Command area 5,600 ac).

ANNIM 16

Page 5

ih. Economic Rate of Return. On the assumptions set forth in thisstudy the scheme's economic rate of return has been calculated at the levelof 30 o/o for the 50 years of economic life. Apart from excluding anyallocated dam costs, the calculation also excludes the investments neededfor a rice mill and the benefits from such investments, as the rice millwould be a separate entity. The project appears viable even if the cost isincreased to include 03.0 million allocated for the dam, since with thisincreased cost, the return would be 23 o/o.

15. Organization and Management. The Nlnistry of Agricultur, In roapoomi-blo for national agrioulturaldevelopment, At present, it could not build and runthe project in a way which would achieve the anticipated potential benefits.Improvement in its organization would therefore be necessary and key staffwould have to be drawn from expatriates. Provision for such a supportservice has been included in the estimated annual costs.

16. Pro.ect Operation, Study and Assurances Required. Initially,irrigation water available from the proposed Weija storage would be 8,000 Imgout of the reservoirts total capacity of 25,000 mg. However, it is not yetknown how far the supply of water will be limited by sedimentation and thisquestion is being studied by the project consultants. If reservoir sediment-ation is significant, the reservoir capacity is expected to be reducedprogressively after completion of the Weija dam and the storage available forirrigation would be reduced accordingly. The operation criteria proposed byGWSC could impose a further constraint to irrigation, since once the storagecapacity falls below a level reserved for urban water supply in case of drought,GWSC would allow no more irrigation releases.

IBRD 11032

0° 25' 0 20' -- MAY 1974

GHANA - OManhia 0ACCRA/TEMA WATER SUPPLY PROJECT- SECOND STAGE

IRRIGATION COMPONENT k , OAfuom '(WEIJA IRRIGATION SCHEME) 0 Donchiro

Project Information in Red WJ RESERVOIR\ \- t-M e2-==-j7 ,&~~WEIJA RESERVOIR

[=~ Proposed Irrigated Areas 7300 Acres N

International Boundaries -'

0 2 4 6 )< -{ y / 44. = OKwosimanI I ~~~~~~~~~~~~~~~~~~~~~~~0

KILOMETERS -- 5°35'-

0 1 ~ ~ ~~2 3 4-73I I ~~~~~~~~~~~~~~~~~~~~~~~~~~~:~~0 Gbowe ~ca

MILES 7\XOGae MIL~~ <-CES-D :~ PROPOSED WEIJA DAM >

< k ¢ > O~~~~~~~~0Weija

YOT2 0R0

(, 0, A,2 . ,,, , +,1-- _ . P ' 6<lAOUTLET BLOCK 0 OblogoJrx \ X < ;i t ^_~ (Gravity I BO _rf

t, Zr @ i \ \ ~~~~~~~~~~~~~FOR IRRIGATION EDR '.-. ~~~~~. OT.. -

0 t r° O ._

0~~ >

(4800 Acnes) G H A N A

Botionow 0 - Sakamo

D-ekwo POJ ECT 5' 30' logoon 50301_

PROJECT -K LOCATION - T / 6 Ut f OF GHANAwlInceb G IFA - F H A/

os :D t;:;: L ? \ i- . t i| / '7t~ ~~~ ~ ~~~ ~~~~~~~~~M A WNR SUto S Td0- ' 0 2 / rJ 2 T STAG#g 4 4~' LSTA-:TlENE PRO-IO 5ED:PIPQ DAXAMAWA~TER.SJPV RJCK a -tE a sj< - SEC: N WA>STAGtES :

N - R TTER SI_P*E*

1 °:0it:s F-\Wenc /, F'D a Er' (57 0

4-,~~~~~~~I

0 ) eS SutS X aW > , -.

'I-.~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~V

5~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OPEE 00000 OPT§S RLIRLRLDdRERAED _00A

IORI DU ~ ~ ~ ~ ~ ACA ITRC 0000

T E: R ~ ~ CAECAS _____OA DU

1,r,,,/ ./ t.t l ,, .... , .,., ....T X , : S , , l WTlRw -41 _l LT T0- ' '"'9".'~~~9 .. N EK:D 0 00 0 0ROR

I I~~~~~~~~~~~~~~~~~~~IIIA

IBRD3762R10 2000 4000 2000 a000 D u APRIL 1974

PIPELINES:

EXISTING OR UNDER CONSTRUCTIONPROPOSES

PUMPING STATIONS:

/ FRINK |A EXISTING OR UNDER CONSTRUCTION| U Tp < \s\ } ,,/' < * PRDPOSED

|\KOSOMBO g

/< X \ t s \ | ) I&1 * \ ~~~~~~~~~~~~~~~~~~~~~~~~RESERVOIRS:PROPOSED WEIJA DA K(

RESERVIRS

-1~ ',<R Il OO-A .JOMPONG EXTINS OR UNDER CONSTRUCTION- - ATIMPOIRO~~~~~~~~~~~ ~~~ PROPOSED

('\/ r$ ~ s | ATIMPOKO ) o TREATMENT WORKS:

>\~~~~~~~lM CART.Y iS EXISTING

/ j ( \ * MRESCEARRVTO5IYR , MAIN SERVICE PROPOSEDRESERVOIR --------- RESERVOIR I

K4NG WATER WORKS POPULATION DENSITY:

O 0 - 1,000 INHABITANTS

s \t / 0z/= * - ; O 1,000 - 2,000 INHAGITANTS\ -.ai - -- U9ss - gR F<,, ~ ~ . 2,000 5,000 INHABITANTS

'so-0 A ~~~~~5,000 -10,000 INHARITANTS

\OFORIDUA AKUSE _ - A 10,000 - 15,00D INHABITANTS

\ ,'T'<T OVER 100,000 INHABITANTS

................ METROPOLITAN AREA LIMITS

ASUTSUAREI* , RAD00j

MAPERE 11~~~~~~~N .-..---.. RAI LWAYS

NOTE: Water dibtr:b1i-o NOsteR deto:Id in

ACCRA-TEMA not NhOW.

AEROPONG

DAWA*

( gURI~~~~~~~~~~~~ , -. r - C_

f ____WAM /& / ~~~~~~~~~~~~~~~~~~~~~~AFIEN L C *_,Y

BEREKUOD RMRAHIA DAWHE 0 ) NISO _0~~~~~~~~~~~~~AMAA , , > i .t//K/POFJEHN

;~~~~~~~~~~~~~~~~~~~~~~~~~M .! E M Ae

WEIJA WATER= WORGHAN

ACCRA -TEMA WATER SUPPLY PROJECT- SECONo STAGE

GENERAL LAYOUT OF PROJECT

<~~~~~~~~~~~~ IQ =0 IW0QO I 00 FEE