|1. Project Data:
ICR Review Date Posted:
|Ir-northern Cities Water Supply & Sanitation Project
Project Costs(US $M)
Loan/Credit (US $M)
Cofinancing (US $M)
Board Approval Date
|Sewerage (70%), Water supply (30%)|
|Pollution management and environmental health (25% - P)
Urban services and housing for the poor (25% - P)
Other urban development (24% - P)
Water resource management (13% - S)
Other human development (13% - S)|
||ICR Review Coordinator:
|Elaine Wee-Ling Ooi
||Judyth L. Twigg
|2. Project Objectives and Components:|
a. Objectives: The project development objective (PDO) in the PAD (page 3) was consistent with that in the Loan Agreement (Schedule 2). The PDO was to:
1) Enhance the quality of life in the four northern cities of Rasht, Anzali, Sari and Babol by: (a) improving the reliability of the water supply systems through rehabilitation and extension of the water supply networks; (b) improving the health and urban environmental conditions by providing wastewater collection services and treatment facilities; and (c) contributing to the environmental protection of the natural resources of the provinces (especially the Anzali Lagoon, an internationally recognized wetland); and, to
2) Improve the operational efficiency and financial sustainability of the Water and Wastewater Companies (WWCs) in Guilan and Mazandaran
b. Were the project objectives/key associated outcome targets revised during implementation?
c. Components:A. Projects in Guilan Province
Component 1: Rasht Wastewater Collection & Treatment (US$81.5 million at appraisal; US$78.4 million actual)
This component aimed to extend and improve Rasht’s collection network through 70,000 new house connections, construction of approximately 560 km of laterals, interceptors, and trunk mains, and 16 pump/lift stations in addition to collection works already being executed under ongoing contracts. The project was also to upgrade the wastewater treatment plant under construction with a biological nutrient removal unit and measures to reduce the risk of discharge of untreated sewage in the event of temporary plant failure. There also was to be a study and an investment program for septage management (to address the wastes from households not connected to the wastewater network).
Component 2: Rasht Improvement of the Water Supply System (US$50.3 million at appraisal; US$65.7 million actual)
This component aimed to improve service provision in Rasht through regulating the pressure and availability of water in the distribution network, and to reduce losses due to leakage. This was to be achieved by rehabilitation and extension of some 700 km of primary and secondary distribution piping, additional ground storage (two tanks of 40,000 m3 each, in addition to a new reservoir at Lakan of 30,000 m3), and rehabilitation of two existing elevated storage tanks and associate pumping stations. There was also to be a program to improve operational efficiency and reduce unaccounted-for water (including some instrumentation for automation, operation and maintenance equipment).
Component 3: Anzali Wastewater Collection & Treatment (US$45.4 million at appraisal; US$52.3 million actual)
This component aimed to extend and improve Anzali’s collection network through: (i) provision of 27,000 new house connections; (ii) construction of approximately 250 km of laterals, interceptors, and trunk mains; and (iii) 14 pump/lift stations, in addition to collection works already being executed under on-going contracts. The Anzali wastewater treatment plant under construction was to be improved through: (i) upgrading it with a biological nutrient removal unit; and (ii) measures to eliminate the risk of discharge of untreated sewage in the event of temporary plant failure. The project was also to include the construction of the first module of the Ghazian wastewater treatment plant (12,000 m3/day capacity), and an investment program and associated studies for management of septage from those households that would have not been connected to the wastewater network in the first phase.
Component 4: Anzali Improvement of the Water Supply System (US$9.1 million at appraisal; US$15 million actual)
This component aimed to rehabilitate and extend Anzali’s water distribution network with: (i) 155 km of primary and secondary distribution network, (ii) a new 30,000 m3 reservoir at Ghazian; and (iii) associated pumping stations. There was also to be an investment program to improve operational efficiency and reduce unaccounted-for water (including instrumentation for automation, operation and maintenance equipment).
Component 5: Support to Guilan Water & Wastewater Company (US$ 20.9 million at appraisal; US$17.7 million actual)
Under this component the project aimed to provide technical assistance, training, and consultant services for institutional development and an environmental management plan, a Technical Support Unit (TSU), engineering design, and construction supervision.
B. Projects in Mazandaran Province
Component 6: Sari Wastewater Collection & Treatment (US$40.3 million at appraisal; US$46.3 million actual)
This component included construction of a wastewater collection and treatment system in Sari through: (i) the provision of 16,000 new house connections; (ii) the construction of approximately 240 km of laterals, interceptors, and trunk mains; (iii) two pumping stations; and (iv) construction of the first module of the Sari wastewater treatment plant (23,200 m3/day).
Component 7: Sari Improvement of the Water Supply System (US$4.8 million at appraisal; US$7 million actual)
This component aimed to extend and rehabilitate Sari’s distribution network through: (i) replacement of 50 km of existing pipe; (ii) extension of the network with 65 km of pipe; and (iii) addition of 85 km of lateral pipes, and some 5,500 new water meters. The component also was to include an investment program and studies to improve operational efficiency and reduce unaccounted-for water (including operation and maintenance equipment).
Component 8: Babol Wastewater Collection &Treatment (US$30.3 million at appraisal; US$58.4 million actual)
The wastewater component was to include: (i) the provision of 16,300 new house connections; (ii) the construction of approximately 130 km of laterals, interceptors, and trunk mains; and (iii) six pumping and lift stations. The wastewater treatment plant currently under construction was to be improved through the construction of a 4km outfall main plus the provision of facilities to store wastewater in case of emergencies.
Component 9: Babol Improvement of the Water Supply System (US$6.1 million at appraisal; US$3.5 million actual)
This component was to include: (i) the provision of pumping equipment for five existing wells and collection lines; (ii) the construction of a 20,000 m3 ground reservoir and pumping station; (iii) the replacement of 40 km of existing pipe mains; (iv) extension of the network with an additional 32 km of mains; and (v) some 125 km of lateral pipes and 4,500 water meters. There also was to be an investment program (and associated studies) to improve operational efficiency and reduce unaccounted-for water (including operation and maintenance equipment).
Component 10: Support to the Mazandaran Water & Wastewater Company (US$10.241 million at appraisal; US$0.06 million actual)
Under this component the project was to provide technical assistance, training, and consultant services for institutional development, technical support, engineering design, and construction supervision.
d. Comments on Project Cost, Financing, Borrower Contribution, and DatesProject Cost: 87% of the loan amount (US$ 196.7 million) was disbursed. US$ 27.32 million was cancelled. Many physical works (wastewater treatment plants and pumping stations) were not completed, and only US$ 8.83 million was spent (by utility companies and beneficiaries) against an expected US$ 60.8 million at appraisal. Some priority works are being continued/constructed after project closing using government and utility company funds.
Financing/Borrower Contribution: Cost overruns were absorbed by the government, resulting in a US$ 140.22 million government contribution against US$ 58.7 million planned at appraisal.
Dates: The project became effective 5 months after approval in May 2005.. United Nations sanctions were imposed against Iran in late 2006/2007, creating massive implementation delays (severely delayed release of project funds, requirement of corresponding banks, onerous procurement approval processes, and travel restrictions).. The Bank did not agree (ICR, page 9) to extend the project, and it closed as scheduled on December 31, 2010.
|3. Relevance of Objectives & Design:|
a. Relevance of Objectives:Substantial.
The project is consistent with the four objectives of the Country's Five Year Development Plan (2005-2010), which were to distribute benefits and services to a wider population, especially the poor; build an efficient, accountable, and transparent public sector; improve natural resource management and reduce pollution; and move to a market economy and reduce subsidies. The project was a product of the Bank’s Water and Sanitation note (2002) for Iran, which grew out of the Bank’s Interim Strategy for 2001-2004. At appraisal, 98 % of the urban population had piped water, but less than 23% had sewerage. Highly subsidized tariffs caused very high water consumption rates estimated at 70% more than international standards. Waste water and raw sewage were discharged into open drains, contaminating ground water and posing public health risks especially for the poor living in low-lying areas. Where sewerage existed, the collected wastes were largely not treated before disposal and therefore degraded the environment. The project would directly reduce the degradation of the Anzali Lagoon (an important wetlands in Gilan) and the Caspian Sea. The project is consistent with national plans, and also relevant in improving public health and environmental outcomes.
b. Relevance of Design:Modest.
The project's design put appropriate emphasis on sewerage and sanitation, which were its core issues. Besides civil works for waste water treatment plants, the project also introduced biological nutrient removal technology, technical studies on sludge management and disposal, and public outreach programs to gain greater acceptance, including to future tariff increases. It introduced new concepts to the sector (environmental management plans, emergency operating plans for earthquake-prone northern Iran, monitoring and studies on environmental and health outcomes, and health and safety issues at the workplace).
The primary PDO was stated as "to enhance the quality of life in the four cities," but this is a very broad objective and the project did not articulate how planned activities would produce enhanced quality of life, nor how this would be measured. The outcome measures the project planned to track -- reliability of water in the distribution network; health conditions (measured by incidence of diarrhea in children under 5 years) in the urban environment; and water quality in the Anzali Lagoon (an important wetlands) -- could reasonably have served as measures of enhanced quality of life, but this was not articulated in the project's results framework. The project's design would have been improved through the articulation of a more specific and focused objective than "enhance the quality of life."
Otherwise, the individual sub-objectives were clearly stated, and in the results framework project interventions were plausibly linked to intended outcomes. Rehabilitation, construction, and appropriate operation of wastewater collection networks and treatment facilities would lead to an improved urban living environment, as well as reduce pollution of natural water bodies. Introduction of improved technical and business practices to the utility companies, and improved instruments for automation, tracking, operation and maintenance, should lead to improved operational efficiency and financial sustainability.
|4. Achievement of Objectives (Efficacy) :|
Under the first objective, efficacy is assessed against the following three sub-objectives in the cities of Rasht, Anzali, Sari and Babol: improving reliability of water supply systems; improving health and urban environmental conditions; and contributing to environmental protection of natural resources.
Reliability of water supply systems: Substantial
The majority of planned physical works was completed. Almost 100% of the planned distribution networks in all 4 cities were completed. The underground reservoirs (20,000 and 30,000 cu.m) in Anzali and Babol were completed and operational. In Rasht two smaller water reserve tanks (4,000 cu.m) were completed, while the 30,000 cu.m unit was near completion at project closing. Targets for rehabilitation and expansion of distribution lines for all 4 cities were met or overachieved: Rasht (680 km); Anzali (200 km); Sari (180 km); Babol (195 km).
Some interventions (UFW studies and installation of control equipment) to reduce water losses in the distribution network were completed.
The project reached its targets for reducing water losses in both provinces: Guilan from 35% to 27%; and Mazandaran from 33% to 28%.
Health and environmental conditions: Negligible
(Sari and Babol)
All planned wastewater treatment plants (WWTP), sewerage outfalls, and sludge storage tanks were completed. Both pumping stations in Sari were completed, while Babol had just begun construction on 3 at project closing (out of targeted 6). 369 km (target was 240 km) of sewerage main lines and interceptors were completed in Sari. Babol completed 20Km against a targeted 127 km. Two thirds of 16,000 planned wastewater household connections were completed in Sari, compared to a 50% completion rate in Babol.
Rasht and Anzali
One WWTP was completed (Anzali) with another (Rasht) under construction. The planned upgrade of the WWTP to include a biological nutrient remover was cancelled. The 24-hour emergency waste water reservoir planned for Guilan was also cancelled. Fifteen out of the planned 30 pumping stations in Rasht and Anzali were under construction at project closing. With respect to household sewage, all 27,000 connections in Rasht were completed. In Anzali only 20,000 out of 70,000 connections were achieved.
At project closing, fewer than half the total number of pumping stations were completed, and less than 50% of the planned length of sewerage lines in the networks had been laid down. About 66,000 household connections (out of 130,000 planned) were constructed. Crucially, none of the planned household sewer connections were operational at the time the project closed because the rest of the network system was incomplete (Annex 2, ICR). The waste water/septage management studies planned for both provinces were completed. The studies provided options for sanitary and hygienic treatment/disposal of waste for those households that would not be covered in the sewerage network.
The ICR reports that an additional 10-15% of waste water in Anzali, Babol and Sari were being treated. No evidence is presented, however, that this may have affected health conditions. The indicator selected by the project to measure improved health conditions was the incidence rate of waterborne diseases (acute diarrhea in children under 5 years). No baseline is available for 2005/6 for this indicator, and a health study in 2009/2010 of the four cities showed an incidence rate of 8-12 %. Since the project-supported sewerage components were largely non-operational, the outcome is assessed as negligible.
Environmental protection of natural resources: Negligible
Environmental protection of the Anzali Lagoon (which drains into the Caspian Sea) relies on the operationalization of the WWT facilities in Guilan province, involving processing of household sewerage at the Rasht and Anzali treatment plants. Since the network is not yet operational, there can be negligible improvement in the water quality in the Anzali Lagoon. Moreover, the Biological Nutrient Remover and the 24-hour emergency waste water reservoir planned for Guilan had been cancelled at MTR due to the slow implementation. At project close achievement of this subobjective is therefore rated as negligible. The Government and WWC have indicated they will continue the rest of the planned project activities and construction using their own resources.
Under the second objective, efficacy is assessed against: improving the operational efficiency of the Water and Wastewater Companies (WWC) in Guilan and Mazandaran; and improving those WWCs' financial sustainability.
Operational efficiency: Substantial
Specific interventions to address operational efficiency of the utilities and unaccounted-for water (studies, operational, maintenance, and control and analytical equipment) were partially completed for Sari and Babol but cancelled for Rasht and Anzali. Nonetheless, at project closing the government was promoting private sector participation in performance-based operations and maintenance contracts for the WWCs.
The project achieved its set targets (Guilan 27 % and Mazandaran 28%, from 35%) for reducing losses due to unaccounted-for water. The ICR also reports that collection efficiency improved, but no specific data are provided. Improvement in the operational efficiency of the WWCs is therefore assessed as substantial.
Financial sustainability: Modest
In December 2010 the government planned the elimination of subsidies to the various utilities, replacing these with targeted subsidies to low-income beneficiaries. This would imply that average tariffs would rise from 8 cents/m3 to 28 cents/m3. The implementation of such reforms would in principle ease cost recovery for WWCs and promote financial sustainability.
Planned increases in tariffs were not yet in place at the time of project closing. The working ratio (WR) had deteriorated: Guilan was 1.98 and Mazandaran was 1.6, compared to 1.15 and 0.97 respectively in 2005.
Originally rated by IEG as Negligible, financial sustainability has been raised to Modest, in light of additional comments by the Project Team that the Government is seriously implementing private sector participation and performance based operation and maintenance contracts, and will likely implement the tariff changes.
At appraisal, the Financial Rate Return (FRR) for Mazandaran and Guilan was estimated at 23% and 12% respectively. Coverage would be for the entire project and based on: (i) savings from maintenance of wells/non-piped sources; ii) reduction in water-borne diseases and associated costs of hospitalization, medication, and loss of workdays and school days; (iii) reuse of treated waste water in irrigation with associated increases in agricultural value-added; and (iv) increase in tourism activity in the popular summer resort in Anzali. The main assumption behind the calculations was that tariff increases would fully cover operations and maintenance expenses.
No FRR was estimated by the ICR because a large part of the civil works had not been completed. Given the tremendous delays and poor progress, the efficiency of the project is assessed as Modest.
a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:
* Refers to percent of total project cost for which ERR/FRR was calculated