91
AFRICAN DEVELOPM ENT BANK
REPU BLIC O F CON GO
PROJECT COM PLETION REPORT
REHABILITATION OF DRINKING W ATER SUPPLY
IN STA LLA TIO NS IN BM ZZA VILLE
DEPARTM ENT OF INFM STRUCTURE AND INDUSTRY
SOUTH REGION
M ARCH 1995
TABLE O F CON TENTS
*
Pages
BASIC INFORM ATION
1.
i-v
IN TR OD U CTIO N
1
1.1
1.2
G eographic Setting
Bank Group's Comm itmentin the Sector
1.3
ProjectBackground
1.4
Sources of Infonnation
1
1
1
2
SECTOM L O BJECTIV E A N D PROJECT AlM
PROJECT D ESIG N
3.1
Origin ofProject
3.2
Preparation, Evaluation,Negotiation and A pproval
PROJECT IM PLEM ENTATION
4.1
6
Entry into Force of the Loan and Start-up
ofProject
4.2
4.3
4.4
4.5
M odifications
Im plem entation Schedule
Procurem entofG oods and Services
Costs and D isbursem ents
6
7
7
8
OPERATIO NA L PERFO RM A NCE
6.
5.1
The Contract
5.1
Roleofthe Project
5.3
Other Factors
12
13
13
IN STITU TION A L PERFORM AN CE
14
6.1
6.2
6.3
6.4
6.5
6.6
6.7
14
14
15
16
16
17
18
Legaland lnstitutionalFram ework
Organization and M anagement
Personneland Training
Accounting and Auditing
Tariffs
Billing and Collection
Perfonnance ofConsultants,Entrepreneurs
and Suppliers
8.
FINANCIAL PERFORM ANCE
19
7.1
7.2
7.3
7.4
OperationalAnalysis
A nalysis ofFinancialStructure
FinancialRate ofReturn
FinancialConditions and C lauses
19
20
20
21
ECON9MIC AND SOCIAL PERFORMANCES
22
8.1
8.2
22
22
Econom ic Perform ances
SocialIncidences
9.
SUSTAINABILITY
23
10.
PERFORM ANCE OF THE BANK AND TI'1E BORROW ER
24
10.1 Generaland Specific Perform ance
10.2 W orking Relations
24
25
CO NC LU SIO N S AN D LESSON S
26
11.1 Conclusions
11.2 LessonsLearned from the Project
26
26
M APIS)
A N NEXES
Thisreporthasbeénwrittenby M essrsHOUSSEIN Y.A (HydraulicsEngineer)and Keba'BA
(Consultant.FinancialAnalyst) following their mission to CONGO in February 1995. Al1
enquiries should be addressed to M r.S.C DESAI,S1SI.2 Ext.4120
r
EOUIVALENTS.ACRONYM S AND ABBREVIATIONS
CU RRENCIES
(1stQuarter 1995)
Currrncy unit
CFA .Franc
CFA .F 780.436
'
UA 1
UA 1
UA 1
US$ 1.45985
FF 7.80436
O n evaluation
(3rd Quarter 1982)
UA 1
UA 1
UA 1
C FA .F 372.945
US$ 1.00601
' FF 7.4589
W EIGHTS A N D M EA SURES
hectare
kilom etre
litres per day per inhabitant
linear m etre
m etre prrhour
cubic m etre per hour
cubic m etre per day
cubic m etre per second
m illim etre
ha
km
I/d/inh
lm
m /h
m 3/h
m 3/d
m 3/s
m m
ABBREVIATIO NS
ACF
AD B
CB
CFD
DW S
DW SS
ED F
GTZ
IFA D
Aid and Cooperation Fund
African D evelopm ent Bank
Com petitive Bidding
Caisse Française de Développem ent
D rinking W ater Supply
Drinking W aterSgpjly and Sanitation
European Developm entFund
Germ an TechnicalCobperation Agency
InternationalFund for A gricul'
tural Developm ent
k
IRRI
JIC)
MV
NDf
j
=
InternalRate of Rettlrn
Japanese lnternationalCooperation Agency
=
M edium Voltage
N otD eterm ined
PC:
=
SNPE
UN
=
TD 1
l
N EF
ProjectCompletion Report
TenderDocument
=
Société.Nationale de Distribution d'Eatt
Uàited.NationsChildren'sFuhb
i
i
'Fiscal Year
1stJanuary - 31 Decem ber
LB T 0F ANNEXES
NO
D escription
N O of pages
M ap ofCongo /projectqrea
lm plem entation Schedule
3
Com parative table of costs
4
Loan granting conditions
5
Com parative status ofSN DE'S incom e statem ent
6
Surnm ary of SND E'S balance sheets
Assumptionsoffinancialprojections
8
C alculation table ofIFRR
9
Calculation table of IERR
1
=>
BA SIC PROJECT INFO RM A TIO N
1.
COUNTRY
Republiq of Congo
2.
PROJECT
Rehabilitation ofdrinking w ater supply installations
in Brazzaville
3.
LOAN NO
CS/CN/SP/83/010
4.
BORROW ER
GovermnentofCongo
5.
EXECUTING AGENCY
SociétéNationalede Distribution d'Fmu (SNDE)
A . LO AN
EVALUATION
1.
2.
3.
4.
5.
6.
7.
8.
CU RREN T
26.59
Amount(in UA million)
23.84
9.50%
Interestrate
Period ofreim bursement
Grace period
D ate negotiated
D ate approved
Date signed
Entry into force
20 years
3 years
18/11/82
21/12/82
07/01/83
M ay 1983
B.PROJECT INFORM ATION
EV A LU ATION
1.
2.
39.52
Totalcost(in UA million)
31.010
Financing plan (in UA m illion)
F.E
ADB
G ovt.
Total
-
CU RREN T
L .C
Total
26.59 26.59 '
12.93 12.93
26.59 12.93 39.52
F .E
L .C
Total
23.84
-
23.84
7.17
31.01
23.84
7.17
7.17
< N
ii
EVA LU ATION
3.
4
5.
6.
CU RREN T
Effective date of 1stdisb.
13/04/83
Effectkvedateoflastdisb.
31/12/94
Start 1
-
up ofproject
i
mpleljentationactivities
Completion ofproject
implemlentationactivities
.
C.
April1983
7/07/83
A pril 1985
07/90
EVA LU ATION
CU RREN T
PERFORM ANCE INDICATORS
j
Bâlànce %
10%
2.
Dè
layl
inrelationtoschedule
Delay
' in rel.to entry into force
3 m onth:
Delal
y in rel.ttjcompletiondate
Delal
yinrel.tolastdisbursement
Numbprofextensionsofdeadline
60 months
34months
atlajtdisbursement
Statuso'
fprojectexecution
two (2)
Compléted
-
3.
4.
Listof verifiable indicators
and stlgesofcompletion
(% ofenvisaged stages):
Production (m3/d)
8.
9.
Current
90,000
61,000
Subscribers
lnstitutionalperfbrmance
17,038
Inadequate
50,000
Perforr
Iizance ofConsultants
Inadequate
-
5.
6.
7.
Evaluation
Petfôx anceoffirms
IFRR (%)
IERR (
l%)
satisfactory
EVALUATION
CURRENT
20.48
nd
7.54
1848
.
D .M ISSIO NS
-
IdentI
'
ification
DA
nd TE
No
rs.
nb ofpe
>
nd G
nd
09/1982
nd
nd
2 Eng. + Fin.an.
nd
nd
-
Preparat
l ion
1 ion
Evalyat
M onitoring
supel
rvision
04/1984
Eng.
2
12/1986
04/1987'
02/1995
Eng.+ Fin.an.
Eng.+ Fin.an.
Eng.+ Fin.an.
4
4
4
4
nd
'U
)
!
'''
-1
l-
E.D ISBU RSEM ENT
(inUA million)
-
-
Totaldisbursed
Balance
Am ountreallocated
Am ountcancelled
A nnualdisbursem ent
23.836
2.754
2.693 (PARESO)
0.061
(in UA million)
1983 1984 1985 1986 1987 1988 1989 1990 1994 Total
A DB
Gvt.
4.46 8.71 6.76 3.03 0.38 0.31 0.09 0.04 0.06 23.84
2.45 2.77 0.69 0.64 0.62 7.17
Tot.
6.91 11.48 6.76 3.72 0.38 0.95 0.71 0.04 0.06 31.01
%
22.2 37
22
12
1.2
3
2.3
0.1
0.2
100
F.ENTREPRENEURS /SUPPLIERS
Civilencineerinc (lot1)and enuipment(lot2)
N am e
SociétéGénéraled'Entreprise-congo(SGE)
-
Responsibility
Contractsigning date
C ontractexpiry date
A m ountof basic contract
Am ountofcontractamendmtstz)
Totalam ount of contract
France
lot 1; lot 2 hydraulic and electro-ptimp
equipm entsubcontraeted to D EG REM O NT
8/03/83
8/09/84 (lot1);8/03/85 (lot2)
CFA .F 4,130,989,900
CFA .F 1,731,437,944
CFA .F 5,862,427,844
Supply and Iaying of supply nipes and
primary distrtibution network tbatch 3)
N am e
Responsibility
C ontractsigning date
C ontractexpiry date
A m ountof basic contract
Amountofctractamendtst4)
Totalam ountof contract
SPIE-CA PA G - France
lot3
24/03/83
24/03/85
CFA .F 3,333,517,500
C FA .F 1,632,921,175
C FA .F 4,966,438,675
Secondary distribution network + connections (batch 4)
Name
Responsibility
ContradI signing date
C ontrac1
t expiry date
I
D uratibn of contract
SAVCONGO -France
lot4-1 PV C Pipes and accessories
23/06/85
1 year
Amoun/ofbasiccontract
CFA.F 125,171,339
Amount!ofctractamendts
CFA F .177,143,600
.
Totalaiountofcontract
CFA.F 502,314,939
N am e
Responsibility
PON T A M OU SSON - France
lot4-3 connection equipm ent;lot4-2,w ater
l
C ontrac'
tsigning date
C ontract
Iexpiry date
me
tres
30/06/85
ract
A m ount1ofcont
CFA F 679,227,346
N am e
S.C .K .N
Responjibility
Iot4-4,rollingstock
Amountlofcontract
CFA.F 154,741,000
N am e
I.M .C .- France
Contractsigning date
Contract
lexpiry date
D urationl Of contract
Responjibility
.
France
30/05/85
1 year
lOt4-5,tools
Contract signing date
Contract
lexpiry date
Duration
I of contract
24/06/85
Amountlofcontract
CFA.F 57,871,115
1 yenr
ö.èöxsttvax,
r
Name
SAUR-AFRIQUE -France
Responjibility
Supervisionandinspectionofworks
Contract signing date
C ontract
lexpiry date
16/11/82
-
ouration
I ofcontract
2 years
Amoun?ofbasiccontract
Amountlofctractamendmt
CFA.F465,369,200
CFA.F 47,750,000
Totalam'buntofcontract
c#A F 513,119,200
.
I
I e
ê
k;
r
'''f
y'
i
I
N nm e
Responsibility
Contractsigning date
Contractexpiry date
Duration ofcontract
A m ountof contract
SG I - Sw itzerland
Tariffs study
08/1988
08/1989
8 m onths
CFA.F 49,200,000
N
M
ù' I
k
r
NTRODUCTI
ON
G eographic Setting
Situated astride the Equator,the Republic ofCongo covers an area of 342,000 square
kilometres. Itis bordered on the north by the CentralAfrican Republic and the Republic of
C am eroon, on the south by Zaire and the Atlantic Ocean over a distance ofsom e 200 km ,and
on the eastby the Obanguiand Congo rivers which separate itfrom Zaire,and lastly on the west
by Gabon. The population ofCongo wasestimated at 1.9 m illion inhabitants in 1987 with an
annualgrowth rate of2.7% . The townsofBrazzaville,politicaland adm inistrativecapitaland,
Pointe Noire,econom ic centre and porttown,alone have 40% ofthe totalpopulation.
Bank G roup's Com m itm entin the Sector
TheBrazzavilledrinkingwatersupply reinforcementprojectwhoseloanamountsto UA
26.59 m illion is the Bank Group's second com m itm entin the sector. The AD B had previously
financed, in 1972,to the tune of UA 1.2 m illion the extension works of the Brazzaville D W S
system from theDjouéplantbuiltin 1954.Twootherprojectsfinanced byADB (rehabilitation
of Brazzaville D W S installations am ounting to UA 16.76 m illion and Brazzaville rain w ater
sewage the loan of which amounts to UA 32.97 million were not ilpplemented and were
reallocated in 1994 as partof a plan to pay Congo's arrears. The totalam ountof the Bank's
operations in the sector in Congo is UA 27.79 m illion, representing 15% of the country's
portfolio. A partfrom A D B,the otherm ain externalsupportorgans are the Germ an Technical
Cooperation Agency (GTZ).Japanese InternationalCooperation Agency (JICA),International
FundforAgriculturalDevelopment(IFAD),European DevelopmentFund(EDF)and UNICEF.
These organs mainly take partin DW SS programmes in the ruralareas.
ProiectBackground
1.3.1 Atthe time of evaluating the present project,the Brazzaville DW S system had a
production capacity of36,000 m3/d following the extension Of the former installations ofthe
Djoué watertreatmentplantfinanced by the 'Fondsd'Action etde Coopération (FACI''and
A DB . H owever,this increase was stillinadequate in the face of the town's w ater requirem ents
estimated at63,048m3/d,i.e.ashortfallof27,048m3/d andawatercoverageof40% . M ajor
quartersofthetown(M 'fi1ou,Talangai,Mpissaand ''Citédes17'')with apopulationofnearly
81,000 inhabitants were totally cut offfrom the corporation's D W S system .
1.3.2 Following the proclam ation by the U nited Nations Of the international water and
sanitation decade in 1981,the Congolese G overnm entdrew up a developm ent program m e for
thissector. Thisprogrammewasincluded inthe firstfive-yeardevelopmentplan (1982-1986)
whose investm ents envisaged for the sector aim ed,as a m atter of priority, at im proving D W S
in the urban centres and Brazzaville in particular. In 1981 the Congolese governm ent financed
a study of the Brazzaville D W S m aster plan up to the year 2000 including detailed technical
studies of a first phase aim ed at m eeting water needs by 1990. The Plan w as finalized in
October 1981 and its results enabled the Governm entto subm ita requestto AD B for financing
thisproject.
2
1.3.3 Theprojectwasevaluated in 1982 and implemented between 1983 and 1986 underthe
respondibility ofitsexecuting agency,the ''SociétéNationaledeDistributiond'Eau (SNDEIi'.
1.4
Sources of Inform ation
This Pr
(ojectCompletion Report(PCR) was based on information obtained from the
projectevuluaI
tion report,archivesofADB q.
npyttheexecuting agency aswellastheoutcomeof
dilcusslonsheld during projectsite visitswith variouisofficialsofSNDE departments.
.
.
f;
3
SECTOM L OBJECTIVX AND PROJECT AIM
2.1
W ithin the context of the international w ater and sanitation decade, the Congolese
Governmentsetitselfthe following sectoralobjectives;
i)
Drirlkinc W aterSupply
In urban areas,raise the drinking water supply rate of40% in 1982 to 90% in
1986 to reach 100% in 1990;
ln ruralareas, raise the drinking water supply rate of 6% in 1982 to 50% in
1990.
ii)
Sanitation
The objectives aimed ata substantialimprovement in the levelof sanitation
services in urban centres and providing them in rural areas.
2.2
ln response to the above-mentioned sectoral objectives, the Brazzaville DW S
reinforcementprojectaimedatenhancingthewatersupp.lycapacityofthetownbybuildingnew
?roduction,transportation, storage and distribution facilities from the Djirl river. The
lmplementation ofthe projectwaspartly to help satisfy waterneedsup to the year 1990 and
cover at least 99% of the estimated needs as soon as it became operational in 1985.
Furthermore,theprojectaimed aterlhancingSNDE'Scapacity inoperating and maintainingthe
DW S installations w ith the procurem ent of operating vèhicles and training of persorm elto run
thetreatmentplant.taastly,theconductofatariffsstudywithinthecontextoftheprojectwöuld
help to detenninetarifflevelsthatwould ensurethe viability oftheprojectand thatofSNDE.
2.3 In theearly 1980's,thedevelopmentoftheDWSS sectorformed jartofthe firstfiveyeardevelopmentplan (1982-1986)whoseoperationsweredesigned underamasterplgn ofthe
BrazzavilleDW S overatwenty (20)yearperiod (1980-2000). Atthebeginningoftheplanning
period,the situation of the sector was as follows:
DW S
Urban
40%
Rural
6%
Sanitation
2.4 U nderthe five-year plan,the aim w as to attain in 1990 a drinking water supply coverage
of 100% in urban areas and 50% in rural areas, and provide adequate sanitation for the
populations.
4
2.5 Basedqntheestimatesofanaveragegrowthconsumptionperinhabitantfrom 83l/d/inh.
in 1980 to 106
l l/d/inh.by the year2000,the waterproduction and distribution plan adopted
consisted in thl
econstruction ofanew intakestructureon the Djiririverwith a rate offlow of
about40 m3/slatalltimes. Theplan wasbased on theconstruction in two stagesofthe Djiri
w ater treatm e tplant.
2.6 W x
ith rggard to sanitation and drainage ofrain watersin particular,a master plan and
feasibility study was conducted in 1986 and hetpçd to define aprogramme ofworksin three
p
hasesoveraj
ls-yearperiod.Thefirstphasewhichtakesintoaccountthemosturgentworks
(sâtlitationinmos
' tdenselypopulatedquarters,protection ofmajorheavyinfrastructures,halting
I
ofthemostse iouserosionphenomenaintheurbanizedsectors)wasthesubjectofanADB loan
in 1989. Thiscould notbe started asa resultofthe slow attitude ofthe authoritiesto make the
loaflenterinto force,to launch the varioustenderdocum entsand also ofthe factthatthe countly
w as under sanc
ltion follow ing paym entarrears. In 1994,this loan was reallocated as part ofa
plan to pay Cmngo,s arrears.
27
.
l
The myin components ofthe Brazzaville DW S strengthening project,as defined and
evàluated by A D B,are the follow ing:
A.
Construction of a water intake. structure of 4,500 m 3/h ;
B.
Building ofa treatm entplantw ith a capacity of2,250 m 3/h during the firstphase;
Construction of a 10,000 m 3 treated water storage tank and reequipm entof two
previous ones;
..
D.
Building of 14 houses for the personnel;
E.
lm plem entation of road works com prising a bitum ized section Qf 2.3 km and a
track of6.36 km ;
F.
Laying of supply and prim ary distribution pipes of a totallength of41.8 km ;
G.
Building of a secondary distribution network of200 km and 25,000 individual
connections;
H.
Supply and installation of hydraulic equipm entand electro-pum ps;
1.
Supply and installation ofelectricalequipm ent;
J.
Supply of operating vehicles
K.
Training ofpersonnel;
L.
Engineering-consultancy servicesforworks supervision and inspection'
,
M.
Conductofa tariffs study.
r1
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5
PR OJECT D ESIG N
3.1
Oricin ofProiect
TheBrazzavilleDW S reinforcementprojectwasidentifiedwithinthecontextofamaster
plan sm dy on the Brazzaville DW S system conducted in 1982. The Plan included a feasibility
smdy which helped to selectthe mostappropriate site forharnessing the waterand construction
of a water treatmentplant. The detailed feasibility study on the firstphase of the Plan helped
in the preparation of tender docum ents Of structures to be built. O n the basis of the results of
the Plan's study,the Congolese G overnm ent subm itted an application for financing w orks for
the firstphase of the Plan.
Preparation.Evaluation,N egotiation and A pproval
3.2.1 Theprojectpreparation consisted in theimplementation ofthemasterplanand detailed
prelim inary studies aswellasthe drafting oftenderdocumentsby a consultancy finn recruited
by thegovernment. The projectwasevaluated in September1982 and approved by the Board
of D irectors in Decem ber 1982. The A DB loan agreem entfor an am ountof UA 26.59 m illion
was signed in January 1983.
3.2.2 In view ofthe criticalsituation of Brazzaville's DW S system ,the various phases of the
sm dy,i.e.the Plan,feasibility study and detailed prelim inary plan ofthe firstphase and drafting
oftherelevanttenderdocumentswereundertakenwithinaveryshortperiod(lessthan7months)
to enable works to be started quickly. This situation did notmake itpossible to carry out,
among others,a detailed study ofthe main physico-chemicalaspectsofthe Djiririver in an
adequate hydrologic cycle (atleastoneyear). TheBank did notparticipatein thepreparation
process. A Ilthese factors explain the m odifications and contract am endm ents which occurred
during theprojectworks(para.4.2). However,during evaluation,theBank recommended a
tariffs study to ensure SN DE a sound m anagem entand thus supplem entthe study ofthe m aster
Plan which dwelt m ainly on the technical aspects.
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ofSNDE'Sdebtrecovery plan. The conditiohsofentry into force are provided as anlex 4. No
Ifore attributed to the fulfilmentofcondi
delay waj there
ttioùs ofentry into force.
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i.e.less than 5 months after ithad been signed. The shbrtperiod
between tke signing ofthe
.
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.
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Entry into force of the loan and start-up of pro
-''.
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4.2.1 During prol.ect implementation, the most significant modifications concerned the
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electricity corporation(SNE)wasnotinvolvedin theinspectionoftheseworksarethecauseof
current difficulties observed in the plant's power supply. H ence, the poor connection of
lightning arrestersdisrupts,incase ofstorm,electricity supply to theplant(rathermany blowoutsoftransformersatarateof4 to 5 ayearalwaysduring stormy weather).
4.3
lm plem entation Schedule
4.3.1 W ork actually started on 7 July 1983 and there was provisional acceptance of civil
enqineeringworks,hydraulicequipmentandelectro-pumpson6/09/85andthatofworksonthe
Iaylng of pipes of the prim ary netw ork on 11/05/85. The acceptance of a section of the pipe
laying w orks of the secondary netw ork took place in August 1988. To date,connection w orks
have notbeen com pleted asa resultof the cancellation ofthe relevantcontractfor non paym ent
by the governm entofbills issued by the corporation. Besides,partofthe connection equipm ent
had disappeared forlack of adequate storage. Lastly,the finalreporton the tariffs study ending
theprojectactivitieswasonly sublnitted inJuly 1990.
4.3.2 Com pared w ith estim ates of the appraisalreport,therefore,there was a delay of nearly
60 m onths due particularly to the com pletion ofthe tariffs study. The delay is 44 m onths if one
considers the com pletion of w orks on the laying of pipes of the secondary network.
4.3.3 According to SNDE officials, quarterly reports were prepared during the project
im plem entation period. H owever,neither the m ission could be provided with a copy nor could
one be found in the Bank's archives. The same goes for the final report on completion of
w orks. M oreover, this problem w as notpointed out in the reports of the Bank's supervision
m issions. On the other hand, reports of site m eetings were m ade available to the m ission and
served as sources of inform ation in the preparation of the present PCR .
4.4
Procurem entofG oods and Services
-
4.4.1 Theprojectwasimplementedonseveralcontracts.Thevariouscomponentsasdescribed
in theappraisalrepol't,withtheexceptionofthetraining (K),inspectiolz/supervision works(L)
and tariffstudy (M )com ponents,were regrouped in lots as follows:
lu7t 1: C ivilengineering works include components A ,B, C ,D , E,1.
Lot2: Supply and laying ofhydraulic and electro-pum p equipm ent,com ponentH .
Lot3: Supply and laying ofm ain supply pipesand prim ary distribution network,com ponentH .
Lot4: Supply of equipm ent for secondary distribution network, com ponents G ,J. This lot,
subdivided into 5 sub-lots,was the subjectofthe following separate and individual
contracts:i)sub-lot4-1,pvcmains;ii)sub-lot4-2,connectionmaterials;iii)sub-lot4-3,
m etres'
,iv)sub-lot4-4,operating vehicles'
,v) sub-lot4-5,tools. Pipe laying works of
thesecondary network,thesubjectofcomponentG,weretobecarriedoutbySNDE on
force account according to estim ates of the appraisal report. H owever, in view of
1
8
technical and financial diffiçulties, SN D E w ao ungble to im plem ent them and they
becamq'thesubjectofamutuallyagreed contractwith aFrench finn with theapproval
of the Bank.
44.2 Theprocl
1urementofgoodsandservicesforcivilengineeringworksand majorequipmetlt
.
.
was done throIuch
international compe
itive biddinc
(-ICB)
his stace.
n view of the
- t
- . At t
-'-' ' i
.
emergency situation mentionedby theCongoleseauthorities(para3.2.2),theBank,àeval
bation
.
l
he basis ofresultsoffirm's tenders The evaluatibn m ission tim ited itself to
was done on t
checking thecl
onformity oftenderlaunching operationsand award ofcontractsin accordance
.
l
with Bank guidelines.
4.4.3 Lots 1, 2 and 3 w ere awarded on the basis ofadvance procurem entprocedures. Lot 1
and 2 were allocated to a French firm which sub-contracted 1ot2 to anotherFrench firm while
lot3 w entto a1third French firm .
44.4 Enginee1lrin/*- consultancy serviceson workssupervision and insp.ection (componentL)
.
-'
'
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'
financedby thel
'Governmentformedthesubjectofacontractawardedunderamutualagreement
.
to a French finu.
1 The Iatte!had previously conducted the m asterplan,feasibility and detailed
preliminary sty
ldiesand prepared thetenderdocumeats. Thecontracton petsonneltraining
(componentK)wasallocated to a firm which sub-contracted lot2. Lastly,a Swissfirm was
awarded theclntractontariffsstudy.
45 l
Costs and Disbursements
.
A. lroiectcosts
45.1 TheacqI
ualprojectcostswerequotedinUA workedOutfrom amountsquotedinCFA for
.
purposesofco'
mparison. Thefinaltotalprojectcpstwascalculatedon.
thebasisoftheexchange
ratesinforcei
(
nSeptember1986.Atthattime,thedollarwasequivalenttoCFA.F380.62327
andtherateofUA in [email protected]% CplpparçllwiththeêF,theUA was
equivalentto 7.60465 i.e.412.824 in relation to the .
CFA. '
fhe tabie below shows the
comparison ofcostestimates,contractand actualcostsortheprojectattheend ofworks.
-
1.ua-rll..
zzn 4::.
'#
K.q
e.
9
h
Table 3.1
Com parative Table of Costs
(in UA million)
Eval.
Contract
10.23
10.46
3.71
Primary supply pipes(F)
9.07
8.06
3.94
Secondary distrib.network (G)
8.39
2.57
0.42
Operating vehicles (J)
0.34
0.37
0.37
Training ofpersonnel(K)
0.16
0.12
0.12
W orkssuperv.and inspection (L) 0.32
1.12
0.19
0.12
Civileng.Hyd equip/elect.
C ontract
Am endm ent
A ctual
14.17
(componentsA,B,C,D,E,I,H)
Tariffsstudy (M)
Contingencies
10.82
Total
39.52
22.80
0.12
2.99
1.24
0.12
8.19
31.01
N B .C ontractcosts as wellas actualcosts include risks and contingencies.
4.5.2 A studyofthetableshowsthattheactualprojectcostsareOn thewholelowerthanthose
estim ated on evaluation. This difference is m ainly due to an Overestim ation of costs of works
and suppliesasa resultofpoorpreparation oftheproject. Furthermore,itisnoted thatthe
actual costs are m uch higher than the costs of contracts. This is due to the Iarge num ber of
contract am endm ents negotiated for additionalw orks and supplies.
B.
D isbursem ents
4.5.3 ADB andGovernmentcontributionstothefinancingoftheprojectareshown intable3.2
below :
*
10
Tabls 3.2
Financing Plan
(in U'
A million).
Sources
On Evaluation
ADB
Gokt.
lbtal
Atthe end ofW orks
F.E.
L.C . Total
F .E.
L.C .
Total
26.59
26.59
12.93 12.93
23.84
7.17
.23.84
7.17
26.59
12.93 39.52
23.84
7.17
31.01
t 1 4 An ana'lysisof the above table shows that,coppared to the finalcostofthe project,
AbB'sparticipation washigherin relative valueto tkèestimatesmadeon evuluation. Indeed,
although lowelinabsolutevaluethan theloanamounf,ADB'Scontributionreptesçnted 76.'
87%
-
of the projeclcostas against67.28% envisaged on evaluation. Atthe same time,the
Goverrl
ment's!contributiondeclinedbynearly9.6%cömparedwiththeestimatesmadet
m
ev
d
aluation. Jh
esedifferencesinthecaseofADB areduetothepoorqualityofthetender
ocum ents w hi
'ch brought abouta Iarge num ber of am endm entto contracts,for a totalam ouht
1
ofUA 8.7 million representing nearly 28% ofthe overallcostofthe contracts.
Table 3.3
Estim ated Schedule of Expenditures per Source of Financing
(in UA m illion)
Source
1983
1984
1985
Total
AD B
Govt.
Total
14.96
3.63
18.59
10.51
7.67
18.18
1.12
1.63
2.75
26.59
12.93
39.52
Tabl
e 3.4
L
ActualSchedule ofExnendtttlrtspefSource of Financing
'
.
'
(in UA m illion)
1983 1984 1985 1986 1987 1988 1989 1990 1994 Total
ADB 4.46
G vt. 2.45
8.71 6.76 3.03 0.38 0.31 0.09 0.04 0.06 23.84
2.77
0.69
0.64 0.62
7.17
Tot. 6.91 11.48 6.76 3.72 0.38 0.95 0.71 0.04 0.06 31.01
%
22.2 37
22
12
1.2
3
2.3
.0.1
0.2
100
4.5.5 Tables 3.3 and 3.4 above show the estimated and actualschedule ofexpenditures per
source of financing.
4.5.6 The analysis of these tables show s thatthe Bank's disbursem ents initially planned over
athree-yearperiod didspread over9 years(excluding the 3yearswhenthecountry wasunder
sanction). However,overthe firstfouryearsduring whichphysicalworkshadpractically been
completed, disbursements already represented 93% of the project costs. The indicated
expendimres from 1987 to 1990 represent especially payment for additional works already
carried out betw een 1983 and 1986 and for which am endm ents to contract had been signed.
1994 expendim res representoutstanding payments asa resultof sanctions againstthe country
betw een 1990 and 1994.
4.5.7 Disbursements made by the Bank represented 89.6% of estimates made atthe tim e of
evaluation (UA 23.84 million againstUA 26.59 m illion)while those ofthe Governmentwere
only 55% of the estimates. In the case ofthe Bank,thisgap isexplained by the factthatthe
costson evaluation were overestimated given the poorprojectpreparation with theresultthat,
in spite of the num erous contract am endm ents, the loan yielded a balance. The low levelof
governm ent disbursem ents is especially due to fiancialdifficulties which did not enable it to
honour itscomm itments(a shortfallof 10,000 connections).
12
5.
OPERATIONAL PERFORM ANCE
5.1
The Contract
5
.1.1nemljorobjectiveoftheBrazzavilleDwsstrengtheningyrojectwastoimprovethe
watersupplyckpacitythroughtheestablishmentofnew waterproductlon,trailsportation,storage
anddistributionlfacilitiesfrom theDjiririver. Theprojçct thereforemadeitpossible,among
hings,to!build awaterintake structureof4,500 m 3/hour,a tteatm entplantof 2,250
othert
m 3/hour and a storage tank of 10,000 m 3.
5.1.2 Onevaluation,itwasenvisagedthattheplantwouldattalnitsfullcapaçityassoonasit
becameoyeratil
bnal,i.e.54,000m3/day.W ith thealreadyexistingplant,thed'
ailyproduction
of water In Brazzaville was around 90,000 m 3, i.e. 32,400,000 m 3/year. H oweyer, annual
production wasIlowerthan thatenvisaged on evaluation as shown in the table below:
Table 4.1
Com parative Status of Actualand Estim ated Am m al
W ater Productioh in B'
razzaville
(in '000m3)
Estim ated
Produced
D iff.
1286
32,400
17,530
-46%
1987
1988
1989
1990
1991
1992
1993
32,400
32,400
32,400
32,400
32.400
32,400
32,400
21,370
21,000
25,550
22,020
22,000
24,811
25,362
-34%
-35%
-35%
-21%
-32%
-23%
-21%
5.1.3 Thispoorjerfonnancecanbeexplainedbytwofactors.Firstofall,theassumptionsthat
the Djoue and Dliriplants would attain theirfMllcapacity were rather optimistic under the
technicalcondq
etions of operation. Then,the structures builtunderthis projecthave major
defectswhich '
are both due to the design,implementation and operation ofthe installations.
Indeed,theDjjliplapthadmajoroperatlngdifficultiescausedby:i)sanddepositatthewater
intakepoint;ii)deficienciesoftheelectricjowersupplysystem;iii)lackofsewerageforrain
Watersaroundlhe10,000m3reservoirandlv)inadequatestockofsparepartsformaintenance
onft
i
hefacilities)
.AIlthesedefectsmentionedbythemonitoringandauditmissi
onscarriedout
1992 stem l
from the shortperiod within which the project was evaluated and financed.
M oreover, thevehiclesprocuredundertheprojectdeteriorated very fastforIack ofm aintenanee.
13
5.2
Role ofthe Proiect
5.2.1 The Brazzaville DW S reinforcementprojectis the firstcomponentof the emergency
phase,the outcom e of the study of the M aster Plan ''horizon 2000''financed by the Congolese
governm ent. lts im plementation w as to help reduce the water production shortfallestim ated at
83,160m3/day in 1990. Thedaily productionofthenew plant(54,000m3/day)wastherefore
to bring the shortfalldow n to 29,160 m 3/day.
5.2.2 Alongsidetheincreaseinwaterproduction,theprojectenabledthecomlectionofalarge
partof the population to the netw ork. The num ber of subscribers in Brazzaville therefore rose
from 26,700 in 1986 to 50,000 in 1994, i.e.an increase of 87% (there have been 15,000
connectionsunderthepresentproject).
5.2.3 Lastly,thisprojectisthefirstphaseofaDW S developmentstrategy inBrazzaville.The
im plem entation ofthe secönd phase and rehabilitation ofthe former network willenable the
people to have easy access to drinking water.
5.3
Other Factors
5.3.1 The project's contribution in tenns oftraining ofSNDE personnelwas appreciable.
Indeed,two engineers and three senior technicians have had a two-m onth training w ith the firm
thatsupplied hydraulic equipm ent. Besides,13 pump operators have had a nine-m onth training
locally. The m ission observed,however,thatnone ofthe executives senton training currently
worksatthe Djiriplant. W hatismore,thestaffdo notseem to be quite satisfied with their
training course,apparently due to the factthatitwas rather simple and not quite adapted to the
operatingconditionsattheDjiriplant.Inanycase,thissituationposestheproblem ofjudicious
choice,on theonehand ofthetrainingcoursesprovided theStaffoftheprojectimplementation
organs and,on the other the workers w ho benefitfrom them .
5.3.2 Themanagementofsuchaprojectby SNDE'Stechnicalunitshasbeen quiteavaluable
experience forfuture operations ofthe donors in thissector. ltis,however,regrettable thatw ith
the num erous changes in which the firm 's staffhave been involved,none of the officials w ho
participated inthe projectiscurrently atpostintheTechnicalDivision.
14
6.
INSTITUTIONAL PERFORM ANCE
Legaland InstitutionalFram ework
6.1.1 SNDE'Slegalframeworkhasundergonegrofounàchangessincetheproject'sevaluation
in 1982. lndeed,by decree 83/668 of 30/08/1983,SN DE was made a PilotState Entreprise
1
o
managed underterm s and conditionsdefined by legislation N 54/83 of6 July 1983.
6t.2 Underl
thislegislation,aqerformancecontractwasconcludedbetweentheStateandthe
l
.
pilotEntrèprisg,among otherthlngs,on the injtiul'
materialinfrastrucmre to be placed atthe
disposalofSN E,definition ofan investmehtprogramm e necessary fortheentreprise,itsprice
policy and al1other specific clauses on the activity of the entreprise. This legislation clearly
outlinesthe prerogativesofthe supervising M inistry which should exercise a permanentpower
ofpolicy and 'nspection overthe entreprise. M oreover,thislegislation providesforthe setting
up of a Board ofD irectors as wellas itscomposition and powers.
6.1.3 Also,by
1 decree84/401of23/04/84voted bytheCouncilofM inisters,SNDE'SArticles
of Incorporation
l were ar
finine
ts orza
zation and functioning. Although the
*mr
* oved.
' di
''''
-' i
%-''' ni
'
'
.
objectiveofthqcompanyhasremained unchanged,thenew ArticlesofIncorporationhenceforth
provide SNDE with an authorized capitalfully held by the State and define the financialand
accounting provi
I sions applicable to the entreprise
62 l
.
Organization and M anagement
.
6.2.1 In lieu and place of the Steering Committee which existed at the time of project
evaluation,SN E ishenceforth administered by a lz-mem berBoard ofD irectorsappointed for
a three-year tenh of office by decision of the supérvising M inii
stry. Presided over by the
M anaging D irect
I or of SN D E , thisBoard is inkèsted wir
th the mostextensive powers to acton
b
Meor
haeove
lfof
n
j
foer
h
ea
cconeunwto
h
epol
firm
wlit
htneth
e,f
ame
o
rk
f
he
eof
gis
la
ti
odde
ninrmfo
rcet.
r?a
indvi
wt
of
the
sf
oct
i
oiticâ
cont
xt
br
'
f
thew
t
hr
eeo
ort
ga
nsl
'
t
he
inah
tèllogy which existed in 1982,only the jromoiion'atld social lectlrity committee ls xtill
bjèràtilmél.
6
.2.2 TheS PEHeadOfficeisrunbyaManagingDirectorappointedbydecreevotedisbted
ythine
Council of M ihisters on the proposal of the supervising M inistry. This D irector is ass:
hisdutiesbycqnt
I ralDirectorsappointedbydecreevotedbytheCabinetCouncilontheproposal
ofthe supervising M inistry afterconsultation with the M anaging Director. DepartmentalHead'
s
l
'
are appointed by
! decision ofthe supervising M ini#tl'y o.
n the M anaging D irector's proposal. The
M inistry therefore hps greatintluence in the establishmentofmanagementorgans.
.
62.3 SNDE'Sl
jorganization hasimproved substantially sincetheproject'sevaluation. Ap
'art
.
from thegenerl
almanagementoffice,the organization chartcomprisessix (6)centraldivisions
(instead of foyr (4) in 1982) and four regionaldirectorates (instead of two at the time of
evaluation). Two new units (Data Processing and Supplies) have been setup and directly
z..,= .ex
..
%,.:x -. g.z.-
:.œ....= x.-.
'D
15
attached to the generalm anagem entoffice. SNDE'Scurrentorganization chartis provided as
annex 6.
6.2.4 lnitially,the restructuring of the organization chartwas to help reduce structuraland
personnelexpenses while atthe same time providing the M anaging Directorwith the necessary
support structures to carry out his tasks. It should, however, be noted that the present
organization is ineffective in thatthe prerogatives and duties of the various unitsare notalw ays
clearly defined. Forexample,the CornmercialDepartmentis,in reality,only responsible for
commercialstudies. Itisneitherinvolved in billing nordebtcollection operationsentrusted to
regionaloffices. This situation poses a problem ofcompetence betw een thisdepartm entand that
of research and planning. M oreover,severaldepartm ents do nothave the hum an and m aterial
resources to enable them fully play their role in the entreprise.
6.3
Persolmeland Traininc
6.3.1 As of31 January 1995,SND E'Sstaffnumbered 669 em ployees asagainst678 atthe tim e
ofprojectevaluation,i.e.adecline ofonly 1% . However,itshould be stated thatthe staff
strength evolved in a saw -toothed m anner. In fact, up to 1993 the num ber of pennanent
em ployees declined steadily from 678 perm anent em ployees to 571 as of 31/12/93, i.e. a
decrease of26% . During this same period,SN DE resorted to temporary staffparadoxically
assigned to pennanentduties. In 1994,therefore,the regionallabour inspectorate insisted that
the 127 w orkers then engaged tem porarily be rçcruited.
6.3.2 The table below gives a com parative status of staffdistribution per category atthe tim e
of evaluation and drafting of the com pletion report.
Evaluation
Executives
Forem en
W orkers
59
192
427
87
249
333
Total
678
669
The current staff structure of the firm shows overstaffing of the executives and foremen
category. Indeed, SND E has 1 executive to 2.8 forem en, 1 executive to 3.8 workers and 1
forem an to 1.3 workers. Thistrend isespecially related to a recruitm entpolicy notin line w ith
anyobjectivecriterion,reclassiticationofcertainemployeesafternonvocationaltrainingcourses
(ideologicalandtradeunionaffiliated)andanautomaticpromotionsystem whichdoesnotinany
w ay encourage the spiritof com petition.
6.3.3 Afterthe projectevaluation,SNDE establishedatraining centrebuiltthrough financing
from theGerm an cooperation. Uptill1992,thiscentre had trained nearly450 SNDE em ployeej
in the production units and secondary centres. The trainng courses w ere provided by a Gennan
i
16
com pany. H ow ever,with the suspension of externalassistance,this centre no longer receives
financing and has therefore suspended its activities. To date, the entreprisé has no training
policy reflecte1
d by the drawing up ofa training scheme in response to its needs. Oj.
1e of the
reasons for thls shortcom ing is that it has no executive staff capable of draw ing up a training
program m e.
6.4
Accounting and A uditing
6.4.1 There is a tealbottleneck in the managementof SNDE'S accounts. In organizational
terms,thestrul
ctureoftheaccountsdepartmentseemstobeojerationalwiththeaccountsunits
I offices and a centralization at the head Ofhce. However, this function is
of the regional
l
characterized by:
I i)inadequate controland monitori.
ng.of
,operationswithin theaccountsunits
ofthe regional
1offices;ii)inadequa
- te internalcontrolOfprocedures;iii)a manualaccounting
system that requires several m anipulations and rev
.eals a poor application of Iaid down
1 dures.
accouhtingproje
M oreover,thedataprocessing system currentlybeing designed hasno
lirlk between the headquarters and regionaloffices.
'
1
e
xistatSNDEIItstartedwiththefinancingoftheADB11project,butwasinterruptedwiththe
departure of th'e technical assistantrecruited for thatpurpose because of the sanctions againgt
6.4.2 The an'
alyticalaccounting system m entioned in the appraisal report does notcurrently
Congo.
6.4.3 The accounts are stillcertified by the State audit service in accordance with the firm 's
'
ltofanom aliesdetected a'
bylaws. Howeyer,asaresu
tseveralaccounting posts,theatlditorhas
never been able to certify the regularity and sincerity of SND E'S financialstatements. The
financialdocu Ients of the fil'm have not even been subm itted to the Board of D irectors for
approvalsince 1991.
6.5
65.1
Tariffs
l
The water tariffstructure has remained similarto the one thatprevailed atthe tim e of
evaluation char
lacterized by the existence of three tranches that correspon(j to prices which
,
i
There was,
.
increasewithtpelevelofconsumption.
however,animprovementin1984withthe
s
crappingoftq'
e20% rebateuntilthenappliedtoawatervolumeover300m3.SNDE'Stariff
system is therefore very sim ple and facilitatesbilling.
65.2
l
There have been four increases in water tariffs since 1982 of which, the last, 20%
ble in the second quarter of 1994 after the devaluation of the CFA Franc. The
becam e applical
' m3 ofwaterwentup from CFA .F 81 in 1982 to CFA .F 131 in 1995,i.e.an
average tariffqf
.
increase of63%'
. Until1987,the tariffincrease wasonly 34.3% whereas,according to the loan
l
conditions.itshould have been 50% m inimum . ln termsOfUS dollars,the average rate ofm3
l
of water rose from 23 cents in 1982 to 26 cents in 1995, i.e.an increase of 13% over the
. .
pefiod.
g.y, 6.5.3ThetariffsstudyfinancedbytheBankunderthepresentprojectwasnotcompleteduntil
1990,i.e.a delay of4 years in terms Of the initialschedule. The conclusions ofthis study
instituted a uniform tariff of CFA .F 350/m 3 and a m arginalcost of around CFA .F 530/m 3.
H owever, they w ere never applied in view of the rather unfavourable socio-politicalclim ate.
ltistherefore obviousthatunderthe currentoperating conditions,the tariffs in force atSNDE
cannot guarantee its econom ic and financialviability.
6.6
Billing and Collection
6.6.1 SNDE'S commercial department is totally inefficient. ln 1987, the com mercial
departm ent was established after the break-up Of the form er operations departm ent. H owever,
this new departm ent is only responsible for draw ing up and supervising the corporation's
com m ercialpolicy while the regionaloffices are in charge of aIIreading,billing,paym entand
collection operations. ln reality, this departm entis a com m ercialstudies departm ent.
6.6.2 Today,SNDE hasabout90,000 subscriberscompared with 45,240 in 1986. There was
an inventory ofsubscribersunderADB thelllprojectbutcovered onlythe townofBrazzaville
which,however,accounts fornearly 50% ofSNDE'Sbilling.
6.6.3 Billsareprepared monthlyformajorconsumersandfortnightlyforindividuals.Readings
are m ade by team s from the regional offices by direct reading of metres. These team s are,
however, unable to carry Out their tasks correctly. FOr instance, the Brazzaville regional
departm enthas 14 m etre readers for 50,000 subscribers. These m etre readers have no m eans
of transportand receive a daily transportallowance of CFA .F 300.
6.6.4 Bills are prepared atthe data processing department,distrihuted by the same team of
readers and payable as soon aj they are received. Notices are also dissem inated in the m edia.
There is a lump sum billing for a greater proportion of the customers (77%). The average
billing rate isaround 81% .
6.6.5 C ollection rates are not know n at SN D E w hich is an indication of a total lack of
com m ercialm anagem entprocedures. M oreover,w ith the currentsocio-politicalsituation,SN DE
has lostcontrolover a large section of its clientele located in the high risk zones.
6.6.6 The rate of arrears is very high. They concern mainly State corporations as wellas
individuals. A s of 31 Decem ber 1993, arrears am ounted to nearly C FA .F 10 billion for a
turnover of C FA .F 3.7 billion. In spite of this situation,no specific m easures are envisged.
A tthe tim e ofpreparing this com pleticm report,the legaldepartm entofthe Brazzaville regional
office is stillin its em bryonic stage and w ithouthum an and m aterialresources. N o recovery
docum ent has been sent to a bailiff or a lawyer.
18
6.7
Perform ance of Consultants.Entrepreneurs and Suppliers
Consultant
6.7.1 In allrespects,the services ofthe engineering consultancy firm were very poor. The
firm , a branchIofa water supply company,isnotrecognized in the study and design ofDW S
projectactiviti
es. Therefore,thelack ofreliàbledataontheDjiririverdidnotenablethe
1
consultantto design an adequate raw water catchm entstructure. The sand depositatthe intake
I
structure asrellasa1lotherstructures(decanters,filters)noted rightfrom thefirstoperation
oftheplant,cou
' ld be solved,among othersolutions,by stabilizing the steep banksofthe river
1
and constructing aprimary decantation channelwith an evacuation system ofthedeposited sand.
The consultant
Icould notfind any solutions to the specitk technicaldifficultiesthatcropped up
during worksimplementation (electricaland secondary network). Itisthesame withproblems
regarding the procurem ent of goods and services where the consultant's contribution w as nil.
Entrepreneurs and Suppliers
I
6.7.2 The fiIrm awarded the contracts for civil engineering works, supply of hydraulic
equipm entand electro-m echanicalpumpswasnotedforaverage quality work in view ofthepoor
l usltancy services. Rain water evacuation problem s at the factory, the poor
engineering cons
quality of the access track to the 10,000 m 3 reservoir, and Ieakages noted atthe reservoir built
undertheprojectwhich neverwentinto operation werenotsolved by thisfirm .
19
FIN AN CIA L PERFO RM A NCE
7.1 O perational A nalvsis
7.1.1 This analysis was m ade I'rom the table provided as annex 5 which gives a com parative
status of estim ated operating accounts prepared atthe time ofqyaluation and those on SND E'S
financial status for the period 1986-1993. H owever, w e hakç.reservations on the financial
docum ents as of 31/12/92 and 31/12/93 w hich are only provisional.
.
7.1.2 SN D E'S operational earnings were quite below the estim ates m ade at the tim e of
evaluationandbasedontheoptimum productionoftheplantbuiltundertheproject(32.4million
m3 peryear)and annualsalesof27.54 million m3. Overthe period underreview,SNDE'S
mrnovergrew by 32% from CFA .F 2,958 m illion in 1986 to CFA.F 3,907 m illion in 1993 for
an estim ated annualam ountofCFA .F 4,817 m illion. The rise in the turnover is m ainly due to
the tariffincreases between 1986 and 1993 (34%). Indeed,in terms ofquantities ofwater,
SN D E'S annualsales were practically sim ilar over the entire period whereas its production rose
from 17.5 million m3 in 1986 to 25.3 m illion n43 in 1993,i.e.an increase of44% . Thus,
neitherthe production levelsnorthose ofsales envisaged on evaluation were achieved as a result
of technicaland institutionalshortcom ings. Technically,problem s connected w ith the design,
implementationandoperationoftheproject'sstructurescaused severalbreakdownsattheplant
which had several interrtlptions in its functioning w ith tlle resultthatthe optim um capacity was
never attained. Besides, in view of the state of the network,technical losses keep On rising.
Institutionally, the absence o17any com m ercialstrategy has Ied,on the one hand to an alm ost
system atic lum p sum billing which does notreflectactualconsum ption and,on the other,a rise
in fraudulentconnections. Consequently,theincrease in thenumberofsubscribers (80,000 in
1993 asagainst45,240 in 1986)wasnotreflected byan increase in watersales.
7.1.3 Atthe same time,operating expenses increased by 78% from CFA.F 4,302 m illion in
1986 to CFA.F 7,648 m illion in 1993 and are quite above the estimates made on evaluation
(+98% in 1993). This rise ismainly attributed to personnelexpenses the levelofwhich.quite
above forecasts,account fbr nearly 60% of the turnover. M oreover,depreciation and stocks
rose by 98% between 1986 and l993 given that account was taken of fixed assets of the
secondary centres in 1989 and trend of bad debts.
7.1.4 In any case,contrary to estilnates m ade on evaluation,SN DE'S results show a structural
deficit and cumulative Iosses reached CI7A.F 17,976 million in 1993, i.e. 143% of the
authorized capital. The operating ratio is higher than 1 over the entire period. Apart from
technicalproblems,SNDE operation hassuffered from :i)a low Ieveltariffunable to ensure the
comoration's viability'
, ii) an incoherent recnlitment policy especially guided by political
considerations;and iii)totallack c)fcontrolOverfinancialand com mercialaspçcts.
20
7.2
72.1
Analvsis ofFinancialStructure
l
The appraisalreportcontainsno estimated analysis ofSNDE'Sfinancialstructure. The
.
nâlysisbelojwasmadefromthetableinannex6presentingasummaryofbalancesheetsfor
a
.
theperiod198l
6-1993.
7.2.2 The fi ,s net situation sharply deteriplvted as a result of the cumulated lossçs. It
.
declined from CFA.F 8,236 m illion in 1986 to CFA.F -5,392 m illion in 1993 with the result
that SNDE is currently totally insolvent. Therefore,the debt ratio eventually reached 25 in
1991,the lastyear the firm had a netpositive situation.
7.2.3 Howeyr,the sharp rise inmedium and long term debts(MLTD)helped to ensure a
balanced structure overthe entire period exceptthe year 1991. Field investigations did nothelp
tb explain the rise in M LTD between 1992 and 1993.
7.2.4 ln any case,SNDE iscurrently in acriticalfinancialsituation whichjeopardizeswater
supply in Congo. Rehabilitating the firm callsxatthr same time forthe injection offinancial
re:burèejand redefinitionofanew institutipnai
l,and statutol'
y iramework. Thisiswhy theState
à-ijItllilâtéd âprivatization processofSNDE which wi
llhelp toensttr: theviability ofthenew
éhtlty tbbesjtupthrough:i)theredefinitionofan.
pppropriateframework;ii)therestofation
ofthè fhéjorl
financialbalances'
,and iii)the application.,
ofrealmarketprices. To thigend,a
consultantw illbe recruited in D ecem ber 1995 to pave tt
he w ay fQr the finn,s privatization and
j
ensure thetrans
itionalmanagementofthe sector.untilthe resumption ofactivitiesby the private
6 ultant, to be financed by theW orld Ban:
sector. Thecons
y
k,wit
llwork in closecollaboration with
t
he privatizajion committee setup to implementthe programme ofstate withdrawaland
restructuring bf the public entreprises sector.
t.3
FinancialRateofReturn
7.3.1 Theas
lsumptionsforcalculatingIFRR onconlpletionoftheprojecyareprovided asannex
7. Aseribing to the projectthe entire additionalproduction ofwater in Brazzavitle without
takingaccoultofthecurrentoperatingconditionsofSNDE givestheprojectan IRR of7.54% .
C onsidering t
lhe actual operating conditions of this seotor, characterized by a level of overall
' st50% ,theproject'sIRR is 0.47% . Thetabl
lossesofatlea
e forcalculating IFRR isprovided
as arm ex 8.
7.3.2 These rates are quite below the estim ates m ade on evaluation, where according to the
assumptions,!theIFRRwoul
dbe9.21%,13.80%or20.48%.Therateof0.47% perfectly
reflect!theYalityandisexplainedbytheproject'spoortechnicaland
.financialperformances.
In view ofthe average weighted costofcapitalofabput7.2%,the projectis notfinancially
viable.
;.
,
.
j:..a..k
,
,x.
21
7.4
FinancialConditionsand Clauses
7.4.1 On evaluation,the financialconditions of the loan provided on the one hand, for tariff
increases ofatleast50% overa five-yearperiod as wellas the application of the conclusions
of the tariffs study in default of a State subsidy and,on the other,the subm ission of a plan to
recover SND E'S debts from its subscribers including the State and its departm ents.
7.4.2 These conditions were perfectly appropriate and theirstrictapplication would have saved
SN D E from finding itselfin a cessation ofpaym entsituation. They w ere,however,notapplied
by the Borrow er. The firstreason stem s from the factthatin their form ulation,the conditions
did not have any binding nature. In fact,since the conditions of entry into force of the loan
w ere lim ited to the subm ission Ofcom m itm entplans and letters, itw ould have been necessary
to provide in the other conditions for deadlines before the end of w orks to putpressure on the
G overnm ent. M oreover, the delay in the start-up of the tariffs study rendered its conclusions
for the socio-politicalreasons inapplicable.
7.4.3 Furthermore, by insisting on the drawing up of a plan to recover SN DE 'S debts, the
evaluation mission tried to find asolution to one ofthecompany'smajorproblems. ltwould
have therefore been necessary to setup a debtrecovery unitcapable of im plem enting this plan.
>
'D
'
'''
*!
22
!.
ECONOM IC AND SOCIAL PERFORM ANCES
8.1
I
Econom ic Perform ances
8.1.1 The teoInicalconditionsofdrawing up,implementation and operation ofthe project's
structures as well as SN D E ,s socio-econom ic environmpnt have strongly lim ited thq results
expected from theproject. Indeed,although accessto waterhasbeen facilitated fora larger
proportion of the population of Brazzaville, the DW S situation is still preoccupying and
characterized by quite long untimely interruptions in water supply. Severalquarters receive
wateron1y1J!
r2hoursperday,generallylateatnigàt.
8.1.2 M oreover,the industries targeted atthe time ofevaluation (breweries,softdriA s...l
resortto wellsfortheirdrinkingwatersupply and thereforefullyescape SNDE. Theproject's
im pacton the developm entof econom ic activity is therefore very little.
8.1.3 Given j
thatmostofthe project's indirectbenefitswere notquantifiable,the evalùation
missiondidnqt
'calculatetheproject'seconom icrateofreturn (ERR).However,underSNDE'S
currentoperating conditions,and considering the 1143 ofwater as an econom ic tariff,the m ission
1oject'sERR at 18.48% . The tableforcalculating IERR isprovided asannex9.
assessed thepr
8.2
Social lncidences
8.2.1 In heal
th term s,SN DE'S totally insolventsituation renders very difficultthe supply of
1
chem icalproducts for treating w ater. The w ater consum ed by the population of Brazzaville is
th
i
ereforenotj
fullyguaranteed,sinceitisnotadequatelytreated.Consequentl
y,theproject's
m pacton reducing water-borne diseases is very low .
l
'i
8:2.2 Howev
Ier,the projects m plem entation has helped to provide training tbrabouttwenty
.
SNDE employees and contributed to improve the living conditionsofSNDE staffthrough the
construction lftwelvehousesatthe site oftheplant.
23
$
SUSTAINABILITY
9.1 Theprojecthashelped,amongotherthings,tobuildatreatmentplantandastoragetank
whosemajorobjective wasto cöntribute to increasing thedrinking watercapacity ofthe town
of Brazzaville to satisfy the population's drinking water needs up to the year 1990.
9.2 Today,a visitto the project's structuresand analysisofthe technicalresults oftheir
operation make itpossible to affirm thatthis objective has notbeen attained. In fact,the
treatmentplanthasneverbeenabletofunction atfullcapacity asaresultof:i)the sand deposit
which causes frequentstoppages for removalofsand from the decanters;ii) problems related
to electricity supply and iii) rapid aging ofcertain suppliessuch as the bar screen and m aster
control boards of the supercharger filters. In short, the project suffers from technical
weaknesses,itsdesign and implementation. The storage tank builtunderthe projectis also
seriously threatened by Iack of drainage efrain waters. Besides,the suspension ofworks on the
laying ofthesecondary networkseriously Iimitstheproject'sbenefits.
9.3 Apartfrom thesetechnicalshortcomings,thecurrentdifficultiesofSNDE,theproject's
beneficiary,constituteagreatrisk forthesustainability oftheproject'sachievements. Indeed,
the com pany does not have the financial, technical and hum an resources to ensure adequate
m aintenance of the structures.
24
10.
PERFORM ANCE OF THE BANK AND THE BORROW ER
Generaland Specific Performance
The Bank
10.1.1
Generally,theBank'scontributitm wasjustaveragebothintheprojectdesignand
implem entatio .
10.1.2
Asregardstheprojectdesign,theBank didnotescapetherushonthepartofthe
Congolekè par.ty. Ifitisadmitted thatthe sittlation oftljeDW S sub-sectorin 1982 called for
a fépid interv'
ention,the Bank could have taken time é1,
'
lthe same to detectthe inadequaciewsof
thebasiçstudyïbyfollowinglaiddownproceduiesinprojeetfinancing Therefore,aprè-preject
.
'
evaluation prJparation missionwould have perhapsavttided some oftheproblemscurrently
facingtheDjil
riplant
.
10.1.3
M oreover,stillforthesakeofpaéidity,theconditionsstipulated forgrantingthe
loan had no bi
jnding nature,being lim ited to '
fôi'tt.
ïaje àl
'Mitmentsand presentâtion ofrecovery
anb reimbursr'mentplans. Consequently,thei
tarjf
,filièreaseseiwisaged were notfully carried
otlt and the SND E debtrecovery plan was notim plzm ented.
10.1.4
On projectimjlementation,no mcommendation was made by the evaluation
m ission for a
ldenuate t'inancial manacement of the proiect throuch the keeoing of separate
accounts whos
*uditwould have bee'n financed unde
'
*'r-the project
*'
-'. SNDE;s poor financial
le a
situation att etime ofevaluation called forgreatercaution. Lastly,theBank neitherdem anded
:or received quarterly reports from the executing agency and the consùltant responsible for
supervigion a;
s indicated in the Ioan agreement. The factthatthe Bank did notfinance works
inùpection anj
'd supervision caused itpre*
i
'udice and itdid noteven receive the finalproject
.
èdmpletloh report.
k'
r
.
id4i*à
Thetwotechnicalsupervision missionscartiedoutin 1984and 1986turned out
'to be inadeuuate. lndeed.in view ofthe narttcvlarcondt
il
ticmsofimplementation,itwould have
'
been necessa
*
'r
1y to monitor
'theproject'sact
*'iviiiesortà,mûre regularbasis Furthennore,given
.
thevolumeoI
1ftheGovernment'scontributiontothisftoject(32.7%),thereshouldhavebeen
fipancialsupervision m issions.
10.1.6
However,within the contextofthisproject,the Bank carried outin November
1992 an auditm ission which helped to identify allthe problem s related to the im plem entation
!t
ofthisprojec
.
10.1.7
In the absence ofa completion reportwritten by the Borrower,the above views
wereobtaineldonthespotbythemission.FortheCongoleseparçy,theprojectsuffered,onthe
onehand frqm theBank'sproceduresregarding thes'
igning ofthecontractamendmentsand,on
the other,from
' the factthatthe sanctionsdid npttake accountofthe statusof im plementation
*.0 ....
25
of certain com ponents. Adm itting thatthere were delays in paym ents foradditionalw orks done
by firms,the mission observed thatin any case these worksshould have been the subjectof
contractam endm ents approved beforehand by the Bank. M oreover,the Borrower raised the fact
that because ofthe sanctions,the balance of the loan could notbe used to carry outthe plant's
technical audit, to repair the electricity supply system and carry out drainage w orks on the
platform of the water storage tank.
Borrower
10.1.8
The Borrower's perform ance is hardly any better. Apart from the general
conditionsofentry into force ofthe loans,the Borrower did nothonour any ofthe com m itm ents
m ade regarding the paym entofitsdebts and those of its departm entsto SND E,and particularly
regarding the increase in w ater tariffs.
10.1.9
Furthenmore,in view ofitsfinancialdifficulties,the Borrowerw as unable to fully
pay up itsshare oftheproject'sfinancing. W ork on thelaying ofthe secondary network was
therefore suspended and its relations w ith the consultantin charge ofsupervision and inspection
of works were strained in the finalyearofprojectimplemehtation. Besides,in spite ofthe
urgent nature of the works,the Borrower could have spared itself m any inconveniences by
avoiding to have the w orks carried outw ithoutthe prior agreem ent ofthe Bank.
10.2
W orkinc Relations
W orking relations between the Barlk,the Borrowerand the executing agency w ere
very poor. None of the partners fully played its role. There was no regular exchange of
information,observationsorsuggestionson the variousaspectsofthe projectimplementation
w ith the resultthatcertain problem s did notcom e to Iightnorcould solutions be found to them
(governmentcounterpart,technicaldefectsofstructures...).Inanycase,thespecificconditions
underwhich theprojectwasimplementedshould havecalled formuchcloserworking relations
intheinterestoftheproject.
26
11.
CON
USIONS AND LESSONS
11.1 C onclusions
11.1.1
TheBrazzavilleDW S strengtheningprojejtwasdesignedandimplementedunder
technicaland fiancialconditiönswhich seriously compromised itssuccess. Indeed,for'
the sake
öf rapidity, 1
lt was implemented with m any shortcomings in the feasibility and detailed
I
preliminqry studies,and preparation Ofthetenderdocuments. The initialcontractjtherefore had
tp ie àiflended
l for supplefnentary works. Technically, the stm ctures bu'
llt have sekeral
.
.
t,
ii
'Z
ll
-V'iilèt
sànd
! cannotachieve their operationaltatgets seton evaluation Finariclallyithe
.
ude rtiiflentdi
kd notattain theenvisaged levelofitsfinancing with theresultthàtthelaying Uf
the secondary1
Inetwork could not be carried out. M oreover, in spite of the many contract
amendmentsmai
I nly financed by the Bank,the ADB loan had a balance representing over 10%
of the loan am ount.
11.1.2
ln terms offinancialresults,the projeçt's objectives have notbeen achieved.
Apart fm m technical or
ems, this is due, on the one hand to the fact that the financial
'' obl
k
conditiohs lald down were not fulfilled by the Borrôwer, and on the other, to SNDE ,s
1 ronment. C urrently, this firm is totatly banknlptand, therefore, incapable of
institutionalenvi
l
m aintaining the
l structuresplacedatitsdisposal. Consequently,theprivatization processinitiated
'
.
by the Gover lnentis absolutely necessary for the rehabilitation of the firm and its production
facilities.
11.2 Lessons Learned from the Proiect
The Borrow er
11.2.1
TheBorrower'sfinancialsituation hasseriou@ly affected the project. Indeed,it
would be necessary to ensure thatcom m itm entsm ade for the financing of localcounterpartare
actuallybudgIeted fororifpossiblemadeavailablebeforethestartofprojectworks. M oreover,
itis importknt thatadequate allocations are made in annualbudgets to ùöver notonly the
m aintenance of vehicles butalso spare parts for the facilities built.
The Bank
11.2.2
Theprojectimplementationhasmainly suffered from inadequatepreparation. In
ourview,itis importantto stress thata strictcompliance with projectfinancing procedures
w ould have helped to avoid m any problem s in its im plem entation. In the future, the Bank
should avoid financing projectswithoutconducting itsownpreparatory studies.
11.2.3
The Bank's poor supervision has also affected this project. In fact,regular
supervision missions (1 to 2 per year) would have made it possible not only to ensure
compliance rith the financialconditionsbutalso to detecttimely certain technicalanomalies.
TheBank sh'ould therefore monitorongoingprojectsregularly.
r- .
t
27
11.2.4
Themitigated resultsofthetrainingcourseabroad financedundertheprojectare,
to a large extent, due to the fact that the course beneficiaries did not have adequate basic
training. On itspart,the Bank did nOtcarefully exam ine the curriculum vitae submitted by the
executing agency. Consequently, the Bank should in the future see to it thatthere is a perfect
correlation betw een courses proposed and the basic training of prospective beneficiaries.
Furthennore, the Bank should take measures so that as m uch as possible, beneficiaries of
training courses are m aintained attheir postfor a num ber of years. This'
w ould help to ensure
s/00th implementationofprojectsand training ofotherstaff.
11.2.5
Itis im portantto ensure com pliance w ith Bank procedureson loan adm inistration.
There were serious shortcom ings in both the m onitoring of com pliance w ith other loan
agreementconditions and financialimplementation ofthe projectaswellas in the technical
supervisionofthisproject. Inthisregard,theimplementationOfrecommendationsmadeby the
internalaudit service especially in the preparation of a log book forthe dispatch and receiptof
various docum ents, registers and technicalor financialreports would help bring about a better
adim inistration of loans granted by the Bank.
11.2.6
Anotherlesson Iearned from thisprojectconcerns measures to be taken by the
BanktogettheBorrowerpay upitsshareofthefinancingofprojects. Furthermore,provisions
could be included in loan agreem ents to dem and from the Borrower a com m itm entto cover the
maintenancecostsofequipmentprocured underprojectsaswellasspare partsneeded forbuilt
structures.
11.2.7
Lastly,the public utilitiessectorin Africa isstillm anaged by operating com panies
w ith m any institutional, accounting and financial shortcom ings. Therefore, in view of the
im portance of its interventions,the Bank should take the necessary m easures to draw up a policy
on theprivatization ofsuch companies. Inthecase ofthepresentproject,thestudy initiatedby
the W orld Bank willpropose a form of privatization as wellas a m anagem ent structure of the
watersector. ln itsposition asmajordonorin thesector,theBank should take an active part
in aIlphases of this study.
b:congo.pcr
# ';J
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ANNEX 3
REPUBLIC OF CONGO
-
-
COMPLETION RtPORT
REHABILITATION 0F BRAZZAVILLE
DRINKING HATER SUPPLY PROJECT
%
Costs on evaluation
(ln UA million)
Fa
Component
-
C1v11 eng., Hdr. equip./elect. 6,27
(Components A, B, C, D, E, 1, 8)
-
Supp14 pjqes (F) (Primary) .
6,23
Dlstrlbutlon network (G)(:ec'dan)6.62
operating vehlcles (J)
0.34
Training of personnel (K)
0,13
Horks superv. & lnspection (L)' r
e'Tarlffs study (M)
o 19
Rlsks & contlngencles
6
8j
v *
-
L .C.
10,23
4.01
9,07
8,39
0,34
0.16
0.32
0.19
10.82
12.93
39.52
2.84
1.77
-
-
0.03
0 32
.
a
Total
26.59
Total
Current costs of nrol
'ect
(1n UA million)
Comnonent
F kE .
civip eng., Hdr. equip./elect. 12.09
-
L rC.
Totale
2.08
14.17
0.68
0.34
12.00
2-99
0.37
0,12
1,24
0.12
(Components A, B, C, D, E, 1, 8)
-
sqpplt piqes (F)(Prlmary)
0.:0
ulstrlbutlon netWork (G)(Second.)2.65
operating vehlcles (J)
0.37
Tralning of personnel (K)
0.12
Horks superv. & lnspection (L) 0.10
Tariffs study (H)
0.12
-
1.14
-
Total
(*)lncledlng risks + contingellcùes
23.836
7.174
31.01
>
=.
P m*F%w
A N N EX 4
REPUBLIC OF CONGO
co/pLiTIl
:i
N.
uR,
E,
poRT
REHABILITATION OF DRINKINd'WATER SUPPLY
tzkvjjj.n
INSTALLATIONS IN Bju k
PRoJEcT
-
-
Loan G rantiàg CoAdl
i/ions
.
)'
'
ConbitionsPrecedentto FirstDisbursefnent
h.
Priorto
lfirstdi
sbursementthe Borrowershall:
,
1.
undertaketomakeannualbudget:allocationstomeetitsshareoftheprojdctcosts
.
in accordance w ith the financing plan;
2.
undertakeinwritingto find additionalfttndsin theeventofthe'project'scurrènt
costoverruns;
3.
uhdertake in writing notto use thç prpcyedsofthe loan to pay variousdj
utikqànd
'
taxesongoodsand servicesreqp.
ired forthetmpletentationoftheprbjçct;
4.
undertake to on-lend the loan to SNDE on the same conditionsas the ADB loàn;
!.
cause SNDE to submita recovery plan of its arrears from subsctibers and
m easures envisaged to ensure the recovçry of the sai.
d arrears over a fivé.
-year
period from the date ofthe ajreement;
6:
subm ita plan fOrthe paymentofitsd#bts and those ofits departments to SNDE
for the said debts to be w iped off over a five-yeat period from the date of the
agreem ent.
B.
O ther Conditions
I
The Borrower shallalso:
authorize a m inimum increase in tariffofm 3 ofwater by 50% overa five-year
period from 1stJanuary 1983 upless itprefersto grantan eqdivalentsubjidy tb
SN D E .
2.
..x=..).à.
L.i.. '
1.
i:
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a.....
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take account in any case f0r future increases in tariffg and grantg, of the
conclusions of the tariffs study to be conducted.
9
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ANNEX 6
REFUBLIC QF COFGQ
COMPLEtIO'q REPORT
REIIABILITATION OF BRAtZAVI'
LLE DHS PROJECT
.
J'
.
Summarv of SNot's Balancà Sheets
(ln milllon CFAF)
..
Assets
1986
1987
1988
4;.
,'
1949
..
1990
1991
1992
1943
#et flxed assets
Operatlng values
Real. + Available
Total Assets
18,435 19,785 20,252 20,789 21,628 20,872 18,440 16,037
1,058 1,450
518
730
592
533
455
527
6,438 5,887 9,019 10,657
t 12,192 13,362 33,364 21.116
25,941 28,122 29,799 32,176 349412 34,767 52,259 37,680
Llabllltles
Capltal
LMDT
8,236 5,896 6,094 5,726 5,920
81O -2,092 -5,392
12,700 15,437 15,607 18,306 19,426 20,492 19,477 25,152
'
STD
5,005 5,789 8,09! 8,144 9,06'6 13,465 34,874 17,920
Total Llabllltles 25.941 28,122 19,799 32,176 34,412 34,767 52,259 37,680
/
Horklng capltal
Debt ratlo
,
2612r
.
+2,501 +2,548 +1,439 +),243 +3,748
1.54 2.23 2.56
3.19
3.28
'
+429 -1,055 +3,723
i
*
h.
v'
9
A N NEX 7
REPU BLIC OF CO NG O
PROJECT COM PLETION REPORT
REHABILITATION OF DRINKING W ATER SUPPLY
IN STALLATION S IN BM ZZAVILLE
AssumptionsofFinancialProiections
A.
FINA N CIA L RETU RN
1.
Currency
A nalysis m ade in currentCFA Francs
2.
Investm ents
Investm entexpenses acm ally incurred
3.
Econom ic life
Economiclifeof30yearsestimated fortheproject
4.
M aintenance costs
Estim ated annually at3% ofthe investmentamount
Tariff
U ntil 1984 the average tariff of m 3 of water was
CFA .F 81. It was raised to CFA .F 93 in 1984,
then to CFA .F 103 in 1985, CFA .F 108 irt 1986
and has been CFA .F 131 since 1994.
Production
Account has been taken of the total additional
production of w ater in Brazzaville
6.
B.
Tariff
ECON O M IC R ETURN
The long term m arginal production cost of w ater
estimated at CFA .F 531 is considered as an
econom ic value.
,
1
* .s
u
I
s; .
AdNEX 8
REFUCSIC OF CONGO
COMPLETIOA RCFORT
REFABILITATIO.OF BRA/ZAVSLLEDHS FROJECT
Ca1cu
)
atlon Tab1e of 1FRR
(1n CFAF m1111on)
Investment
Malntenance
Income
2772
5132
2800
1382
151
325
210
15
49
IFRR = 0.075454
Benef!t
-'+t
ANNEX 9
REFUBLIC 0F CONGO
COMFLETION REFORT
RE8ABILITATION OF BRAZZAVILLE DHS PROJECT
Calculatlon Table'of IERR
(ln CFAF million)
II
lveStment
Halntenance
-
Income
2772
5132
2800
1382
151
325
21O
15
49
IERR
18.481
Beneflt