Document ofTHE WORLD BANK

Report No -14831-GUI

STAFF APPRAISAL REPORT

REPUBLIC OF GUINEA

THIRD WATER SUPPLY AND SANITATION PROJECT

March 3, 1997

Water, Urban & EnergyCentral & Western AfricaCountry Department 16Africa Region

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CURRENCY EQUIVALENTS

Currency Unit = Guinean Franc (GNF)US$1.0 GNFI,000GNF 1,000 = US$ 1.0

WEIGHTS AND MEASURES

I meter - 3.28 feetI hectare - 2.47 acresI kilometer - 0.625 milesI liter - 0.220 Imperial gallonsI Imperial gallon - 4.545 litersI cubic meter - 220 Imperial gallons

ABBREVIATIONS AND ACRONYMS

ADB African Development BankCFD Caisse Francaise de Developpement

(French Development Agency)CREPA Centre Regional de l'Eau et de l'Assainissement

(Regional Center of Water and Sanitation)DATU Direction de l'Amenagement du Territoire et Urbanisme

(Directorate of Land Development and Urbanism)DNH Direction Nationale de l'Hydraulique

(National Hydraulics Directorate)EIB European Investment BankGDP Gross Domestic ProductICB International Competitive BiddingIDA International Development AssociationKfW Kreditanstalt fur WiederaufbauNCB National Competitive BiddingNGO Nongovernmental OrganizationOUA Organisation de l'Unite Africaine

(African Union Organization)PHI Programme Hydrologique International de I'UNESCO

(UNESCO International Hydrological Program)PRIM Programme Regional OUA d'Amenagement Integre du

Massif du Fouta Djallon(OUA Regional Planning Program of Fouta Djallon Massij)

PADEULAC Programme d'Amelioration de l'Environnement Urbain del'Assainissement de Conakry(Conakry Strategic Sanitation Program)

PPF Project Preparation FundSEEG Societe d'Exploitation des Eaux de Guinde

(Guinean Water Operation Company)SNAPE Service National d'Amenagement des Points d'Eau

(National Service for the Development of Rural Water Supply)SONEG Societe Nationale des Eaux de Guinde

(Guinean National Urban Water Development Company)

FISCAL YEARJanuary 1 to December 31

Vice President: Jean-Louis SarbibCountry Director: Mamadou DiaTechnical Manager: Max Pulgar-VidalTask Team Leader: Yao Badjo

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VI. PROJECT JUSTIFICATION AND RISKS ............................................. 27Project Benefits .............................................. 27Poverty Alleviation ............................................. 27Project Sustainability ............................................. 27Economic Analysis .............................................. 28

Project Risks ............................................. 29

VII. AGREEMENTS REACHED AND RECOMMENDATION .............................................. 30Agreements Reached ............................................. 30Conditions of Effectiveness ............................................. 31Condition of Disbursement ............................................. 32Recommendation .............................................. 32

ANNEXES

1-0 Water Resource Management - Institutional Framework1-1 Urban Water Supply Sector Organization1-2 Letter on Water Supply and Sanitation Sector Policy1-3 Stragegy Letter on Urban Sanitation1-4 Projected Urban Water Investments for the Next Ten Years1-5 Water Resources Management: TORs (Draft)

2-1 Project Components and Detailed Costs2-2 Project Financing and Implementation Schedule2-3 Project Implementation Schedule (bar chart)2-4 Monitoring Indicators2-5 Project Supervision Plan2-6 SONEG Organization Chart2-7 DNH Organization Chart2-8 DATU Organization Chart

3-1 Water Rates3-2 Past Financial Statements - SONEG3-3 Past Financial Statements - SEEG3-4 Past Financial Statements - Urban Water Supply Sector

4-1 Projected Financial Statements - SONEG4-2 Projected Financial Statements - SEEG4-3 Projected Financial Statements - Urban Water Supply Sector4-4 Assumptions for Financial Projections

5-1 Guinea Urban Water Demand5-2 Conakry Urban Water Demand

6-1 Note and Assumptions on Economic Analysis6-2 Summary Environmental Assessment & Mitigation Plan (water)6-3 Summary Environmental Assessment & Mitigation Plan (wastewater)

7-1 Project File

Map: IBRD 27322

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REPUBLIC OF GUINEA

THIRD WATER SUPPLY AND SANITATION PROJECT

Credit and Project Summary

Borrower Republic of Guinea

Beneficiaries Ministry of Natural Resources and Energy (MANE), Ministry ofUrbanism and Housing (MUCH) and the Guinean NationalUrban Water Development Company (SONEG)

Poverty category Program of Targeted Intervention

Amount SDR 18 million (US$25 million equivalent)

Commitment fee 0.5 percent on undisbursed credit balances, beginning sixty daysafter signing, less any waiver.

Terms Standard IDA, with forty years maturity.

Relenting terms US$16.8 million equivalent of the IDA credit would be providedby the Government to SONEG, of which US$8.40 millionequivalent would be on lent to SONEG at IBRD terms (twentyyears including five years of grace, at annual interest rate of 7.0percent), and US$8.40 million equivalent of the IDA creditwould be provided to SONEG in the form of equity. SONEGwould bear the foreign exchange risk. The remaining US$8.2million equivalent of the IDA credit would be provided to DNHand DATU as grants.

Project objectivesand description The proposed project would support four key objectives: (a)

Alleviating health problems and poverty: By increasingcoverage and access to safe water sufficiently to meet urbanhousehold demand, particularly in Conakry's fast-growing, low-income areas; (b) Improvement of urban environment: Bydeveloping sanitation service in Conakry; (c) Sultinablpricing: By instituting measures to recover costs for the watersupply, setting the stage for a second water managementcontract; and (d) Institutional development: By improving theregulatory capacity and human resources of institutionsresponsible for water and sanitation. The main components ofthe project comprise: (i) the rehabilitation and extension ofConakry water system; (ii) support to water resourcesmanagement and preparation of national water strategy; (iii)

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rehabilitation and construction of facilities for collection andtreatmnent of sewage and sludge.

Benefits The project is a poverty-targeted intervention. It would improveaccess to affordable safe drinking water for those who do notnow have it and provide sewerage facilities in targeted areas ofConakry. The project will support IDA's efforts to betterintegrate poverty issues in the design of urban investments.Systematic community participation would be encouraged atneighborhood levels to elicit the actual demand of users,particularly women, who are usually the main water carriers inlow-income neighborhoods. The proposed project would have agood impact on poverty alleviation in Conakry, by improvinghealth, hygiene and the capacity for economic activity of thepeople including the poorest. Employment opportunities wouldbe available during the completion of the rehabilitation andexpansion of water supply systems; most works will be carriedout by local contractors and/or subcontractors. More than 40percent of Guineans do not have access to safe drinking waterand proper sanitation facilities. The project would also improvethe viability of the water and sanitation sector and introducemore sustainable policy for the management of water resources.

Risks The risks involve: (a) water consumption lower than expecteddue to macro conditions or low demand for service connections;and (b) the pace at which communities would be mobilized andsensitized to participate, and their willingness to pay for water andsanitation services. An uncontrolled expansion of inadequatewater operations in secondary centers could jeopardize thefinancial viability of the sector. The implementation of thesector development strategy would help minimize any projectrisks. The first risk would be mitigated by introducing anextension social connections program. The second risk could bemitigated by a systematic use of beneficiary assessments andpublic information through the mayors, NGOs and communityleaders. The following activities which have been carried out willbe helpful to minimize the project's risks: a water demand review;beneficiary assessment including a general survey; andwillingness to pay studies.

This report Is based on the findings of the Bank appraisal mission which visited Guinea in July 1995 and on a post-appraisal missioncarried out by Yao Badjo In September 1996. The appraisal mission comprised Messrs/Mmes. Y. Badjo (Sanitary Engineer andMission Leader), A. Harth (Technical Specialist), N. Tin (Principal Operations Officer), J-L Aka-Adjo (Financial Analyst), T. Sato(Economist), P. Brook-Cowen (Private Sector Specialist), S. Dabomy and J. Toublanc (Sanitation Specialists), M. Fall (SanitaryEngineer). M/M. T. Damhaug (Water Resources Management Spec.), R. Verspyck (Principal Water Spec.), S. Haddour (ProjectAssistant) and E. Herczeg (Staff Assistant) participated in the preparation of the project. Mr. J. Briscoe is the Lead Advisor, A.Locussol and L. Obeng are Peer Reviewers. Messrs. Max Pulgar-Vidal and Mamadou Dia are the Technical Manager and theCountry Dictor, respectively, for this operation.

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Estimated Project Cost

&SS million equswdeniiocWf Foi'eign TeiaI1

EWjet componen

Urban Water SupplySystems rehabilitation and expansion 3.91 11.18 15.09Technical assistance, consultants'services, and on-the-job training 0.00 1.42 1.42

Water Resources ManagementConsultants services and training 0.07 0.36 0.43Equipment 0.13 0.32 0.45

Human Waste ManagementConstruction and rehabilitation oftreatmnent pond 0.83 4.67 5.50Training and technical assistance 0.15 1.70 1.85

Base cost estimateb 5.09 19.65 24.74

Physical contingencies 0.63 1.97 2.60

Price contingencies Q-A4 1.52 Q.60

Total Project Costc .6 22.14 28.00e

NQtk: Cost estimates based on consultant evaluations and detailed project design. All costsreflect unit prices as of December 31, 1996.

'Local costs are net of duties on imported equipment and material.b In December 1996 prices.C Based on conftrcts recently awarded in Guinea for similar works under the Water 11 project.d See Footnote (a).See Footnote (a).

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Financing Plan

Potenthl OJSS mU/oe equAleuFundhag Somrce -e. . F-e-n- ,,,, , aWater Supply

SONEG 1.80 0.00 1.80IDA 2.70 14.10 16.80

Subtotal 4.50 14.10 18.60

Water Resources ManagementGovermment 0.10 0.00 0.10IDA 0.13 0.77 0.90

Subtotal 0.23 0.77 1.00

Human Waste ManagementGovernment 1.10 0.00 1.10IDA 0.03 7.27 7.30

Subtotal 1.13 7.27 8.40

Total 5 .86b 22.14 28.00c

Estimated disbursement

IDA Fiscal Year

Disbrewnvnt 1998- J99 ioo 2if01 2002 2003

Annual 1.50 5.00 6.00 5.50 5.00 2.00Cumulative 1.50 6.50 12.50 18.00 23.00 25.00

Economic rate of return The estimated economic rate of return (ERR) of the project is 13%.

Map IBRD 27322

'Local costs are net of duties on imported equipment and material.b See Footnote (a).

See Footnote (a).

REPUBLIC OF GUINEA

THIRD WATER SUPPLY AND SANITATION PROJECT

I. INTRODUCTION

1.01 Guinea is a coastal country bordered by Guinea-Bissau, Senegal and Mali to the north andSierra Leone, Liberia, and C6te d'Ivoire to the south. It spans 245,852 square kilometers and has apopulation estimated at seven million in 1994, of which about 2,300,000 inhabitants (33 percent)live in urban areas and about 4,700,000 inhabitants (67 percent) live in rural areas. The populationis increasing at an average rate of about 2.5 percent a year.

1.02 Guinea is divided into four natural regions. Guinee Maritime (coastal Guinea) constitutes16 percent of the total territory and is home to about 20 percent of the population, 1,300,000 ofwhom live in the capital city of Conakry. The region is inhabited primarily by the Soussou ethnicgroup. Moyenne Guinee, or Fouta Djallon (mid-Guinea), constitutes 20 percent of the Guineanterrain and houses 24 percent of the population, predominantly Peulhs. The savannah of HauteGuinee (northeast) has the lowest population density, with 21 percent of the population on 40percent of the county's land. This area is mainly inhabited by Malinkes. Finally, GuingeForestiare (south), roughly 25 percent of the country, is home to 19 percent of the population.Several small ethnic groups (such as the Toma, Manon, Kissi and Guerzes) inhabit this region.

1.03 Guinea is endowed with substantial mineral resources, ample cultivable agricultural land,and rich fisheries. Yet, largely as a result of past mismanagement of resources and inadequatedevelopment efforts, the majority of its people have a per capita income of about US$450 andtherefore live in extreme poverty. Guinea is classified as one of the "least developed" countries bythe United Nations. The living conditions for urban residents, particularly in the capital, Conakry,are especially difficult. The quality of life, economic opportunity, and environmental conditionsthere are extremely poor. Guinea's social indicators are among the lowest in the world: the under-five mortality rate is 237 per 1,000 lives births; at I percent, Guinea has the highest maternalmortality rate, and life expectancy is just 47 years. Only 34 percent of school-age children haveaccess to primary education, and only 32 percent of the population has access to health services.

1.04 Yet, indicators show significant improvement in the past decade, especially with regard toaccess to potable water. Today 60 percent of the population has access to safe water, as comparedwith 15 percent in 1980.

1.05 The economic and financial reforms launched in 1985 were supported by IDA, IMF, andseveral donors through a first Structural Adjustment Credit. If successfully implemented,Guinea's new economic polices should increase private investment, improve exports, andeventually lead to an overall real growth of about 4 to 5 percent a year from 1996 and a 2 percentincrease a year in per capita income. But, this will require significant capital inflows, needed torebuild and maintain the country's infrastructure. Power, water, and telecommunication facilitieswill have to expand considerably to accommodate the growing needs.

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II. THE WATER SUPPLY AND SANITATION SECTOR

Water Resources

2.01 Surface Water. The surface water resources in Guinea are abundant, except for certain areasin the northern region near the borders of Mali and Senegal. Compared to neighboring countriesGuinea is well endowed with annual rainfall that normally varies from 1300mm to 2300mm in theFouta Djallon and the southeastern region, to somewhere between 1500 to 4500 in the coastalzone. It should also be noted that 13 of the 19 river basins in Guinea are shared with some twelveother counties in the region. The total annual renewable water resources in Guinea are in the orderof 450 billion m3 , of which about 166 billion m3 is considered exploitable. However, despite theoverall abundance of water, the users are not always located in the proximity of adequate waterresources in terms of water quantity and quality. All water supply schemes in the country rely onappropriate water treatment to reach drinking water standards.

2.02 Groundwater. There is limited information about the groundwater resources of Guinea, as theexploratory studies are mainly carried out in limited areas in connection with specific water supplydevelopment projects. However, the geological character and the topography of the countrysuggests that there should be a number of large aquifers. As surface water resources are comingunder increasing pressure due to intensified land use, growing water demands and increasingpollution, groundwater is becoming a more attractive water source of municipal water supply.

2.03 Legal Framework. The main legislative instrument for developing a water resourcesmanagement strategy is the Law L/94/005/CTRN of February 14, 1994 which serves as a basis for"Code de l 'Eau". This Law governs a rational management of the country's water resources at thelevel of river basin of groups of river basins, and includes the juridical basis for: allocation andutilization of water resources, protection of water quality, operation of hydraulic works,exercising authority of protected areas, planning and management of water resources, funding andsetting of water tariffs, and international water affairs. Other relevant laws include: "Code del 'Environnement", "Code Minier", "Code Forestier", and "Code Foncier et Domaniar'.

2.04 Institutions. There are many institutions and services involved in water resourcesmanagement, under various ministerial departments. The overall national coordinationresponsibility has been attributed to the "Commission Nationale de l'Eau" and the "ConseilNational de l'Eau" which were instituted in 1994. In the public sector the "Ministere desRessources Naturelles et de l 'Energie" (MRNE) is in charge of the process of developing a waterresources policy and accomplishment of the Government's policies concerning water resources,energy and environment. The principal agency in charge of water resources is "DirectionNationale de l'Hydraulique" (DNH). According to the Water Law, DNH is assigned to coordinatethe activities related to the national water policy, administration of the water resources and waterrights, and be in charge of water resources management responsibilities which are not attributed toother ministries or agencies. The MRNE also includes two other agencies, SONEG and SEEGwhich are in charge of the urban water sub-sector. Annex l-0 outlines the present institutionalframework related to water resources management.

2.05 Water Resource Management Issues. There are a number of issues that constitute thechallenge of effective management of Guinea's water resources. One of these are the constraintsrelated to spatial, temporal and quality dimensions of water resources: too much water, too little

3

water, water in the wrong place, water at the wrong time, and water with wrong quality. Theauthorities of Guinea are also giving emphasis to the need to make the legal and regulatoryframework for water resources management more operational. Another issue is the fragmentedinstitutional situation and lack of harmonization of responsibilities and action programs betweeninstitutions dealing with WRM. Hence it is important to make the overall coordinating bodies, the"Commission Nationale de l'Eau" and the "Conseil National de l'Eau", operational.Strengthening of human resources capacity within the key WRM institutions is also among theimportant challenges, and so is the enhancement of capacity of the hydrological and waterinformation services in the country. Another issue is the important position of Guinea concerningshared international river basins. Guinea's membership and active participation in river basinorganizations such as Programme Regional OUA d Amnnagement Intigrei du Massif du FoutaDjalon (PRIM), Programme Hydrologique International de l'UNESCO (PHI), is invaluable, andthis activity is closely linked to the development of a domestic water resources management policyand strategy. Strengthening of Guinea's hydrological and water management and informationservices is expected to have very positive effects for the region as a whole, and in particular for thepertinent international river basin organizations. The above mentioned factors justify the necessityto improve integrated management and protection of the water resources in Guinea.

2.06 Emerging Strategy. The Government of Guinea has decided to develop and enforce both anational water resources management policy and local strategies. As of today a Water ResourcesManagement Policy document is under completion, as a joint effort between representatives from"la Gestion et l 'Administration des Ressources en Eau", "I 'Hydraulique Urbaine", and"!'Hydraulique Rurale et l'Assainissement". The Water Resources Management Policy andStrategy are based on the following objectives: (i) strengthen the capacity of data collection andwater information services; (ii) rehabilitate the hydrological network and activate hydro-ecologicalmonitoring programs at river basin level; (iii) carry out planning of works and govern waterallocation principles on the basis of water as an economic good; (iv) strengthen the legislative andregulatory framework and promote their enforcement; (v) vitalize the administration of the "Fondsde l 'Hydraulique" as an instrument funding of the water sector policy; (iv) establish data bank onwater resources and related economic sector information, and institute routines for informationprocessing and dissemination; (vii) promote international river basin cooperation and integratedwater management between riparian countries and communities; and (viii) implement programsfor public information and awareness campaigns.

Urban Water Supply and Sanitation

2.07 In 1988 only ten out of thirty three urban centers, (including Conakry and the mining cityFria) were equipped with piped systems. And even these ten centers provided inadequate waterservice. Water production for Conakry was less than 40,000 cubic meters a day for a populationof I million. There were about 12,000 connections for the whole country, and only 600 (5percent) were equipped with meters. Conakry had 9,000 connections and the rest of the cities had3,000 connections. But by December 1994, eighteen urban centers were equipped with pipedsystems, and of 30,500 water connections (21,000 in Conakry), 95 percent were metered.Conakry's water production capacity is about 100,000 cubic meters a day. But, less than 55percent of about 2.3 million people (of which 1.3 million live in Conakry) have access to safewater through water system connections or standpipes. Everyone else must rely on unsafe sourcesto fulfill their needs. This situation will be progressively improved through future investments inpreparation with the collaboration of different partners.

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2.08 As of December 1995, Conakry houses about 1.5 million inhabitant and is currently servedby a combination of on-site waste disposal systems and sewerage, but the sewer network isdilapidated and needs rehabilitation. There are no treatment plants, and effluent is dischargeddirectly into the ocean. A study (financed by Japan and Luxembourg) estimated that only 9percent of the population is connected to sewerage. The remaining has access to facilities such aspit latrines, but these are mostly not built to adequate standards.

2.09 The Conakry Strategic Sanitation Program (PADEULAC) project reviewed all aspects ofsanitation and made recommendations for improvements such as: (i) changes in behavior, anincreased improvement of sanitation services, greater initiative at the community level and moreconcrete participation of the population in the rehabilitation of their immediate environment; (ii)implementation of an institutional framework with involvement of private and public sectors insupplying sanitation services; (iii) cost recovery from beneficiaries.

2.10 A survey conducted as part of this work estimated that 89 percent of the population haveaccess to on-site disposal facilities and that 10 percent are served by municipal sewerage. Butlatrines are not built to adequate technical standards. This high coverage level is offset by the factthat the design standards and maintenance of the systems are poor and the sewer requiresrehabilitation. Pit emptying is often carried out manually and in unhealthy conditions, becauseequipment and access are inadequate. The wastewater and excreta collected are illegally dumpedinto the sea or in open areas. There are also more difficult drainage conditions which result fromheavy rainfalls, and the drain network is inadequate and ill-maintained. The proper collection anddisposal of domestic and industrial waste is therefore hampered and carried out under unacceptableconditions.

Environment and Health

2.11 Few statistics are available on water and sanitation-related diseases. Morbidity due tocommon enteric and parasitic diseases is high throughout the country and outbreaks of cholera areregularly reported. According to the Ministry of Health's report, in 1994, 675 persons (330 inConakry alone) died in a cholera epidemic.. Highly inadequate wastewater and excreta disposalincrease health risks and reduce the quality of life, particularly in the densely populated areas ofConakry.

Rural Water Supply and Sanitation

2.12 In mid-1988 about 1,750 rural water points were operational, with 85 percent servingvillages and the remaining 15 percent serving small urban centers. By December 1994, about6,910 water points (90 percent) were operational, of which 834 provided water for small urbancenters that could not be equipped with piped systems. These water points include boreholesequipped with hand pumps (4,620, or 67 percent), open wells (785, or 11 percent) and tappedsprings (1,508 or 22 percent). Water points serve about 1.4 million people, 30 percent of the totalrural population. Water sector issues in rural areas can be summarized as follows: Lack ofsystematic community participation and hygiene education. Little or no user contribution to theinvestment of village water systems; the absence of local capacity; the ineffectiveness of sanitationand hygiene education programs and the total dependence of the sector on external resources.These issues will be addressed under a separate project to be prepared soon.

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Sector Organization

2.13 In 1989, to increase access to safe water in urban areas, the Government restructured theurban water sector and established two companies. The Societe Nationale des Eaux de Guinge(SONEG) is a state-owned, national water authority under the MRNE that plans and managesinvestments. SONEG, as the owner of the sector's facilities is responsible for sector development-including identifying, preparing, financing, and implementing new projects. SONEG is alsoresponsible for the debts of the sector. SONEG has the authority to hire and fire staff, set its ownsalary levels, and to sign and award contracts. It receives the bulk of its funds from lease feeswhich are paid by Societe d'Exploitation des Eaux de Guinee (SEEG) to use SONEG's waterproduction and distribution facilities. It is managed by a Directeur Gen6ral under the direction ofa Board of Directors, whose President is appointed by decree as well as the Directeur Gen6ral. Itoperates under the Ministry in charge of Hydraulics (MRNE) and is subject to external audit byindependent auditors. It employs 44 permanent staff. SONEG is fully operational with alldepartmental heads.

2.14 Socidtt d'Exploitation des Eaux de Guinee (SEEG) is a water management company, 51percent owned by a foreign consortium and 49 percent owned by the state, which operates andmaintains the country's water facilities at its own commercial risk. The establishment of thisinnovative private-public partnership, supported by IDA, has become a model world wide (see"Success of a Lease Contract Guinea's Water Supply," World Development Report 1994, p. 62).SEEG operates and maintains the facilities, bills the customers, and collects the charges within theframework of a ten-year lease contract with SONEG.

2.15 Service National dAmenagement des Points d'Eau (SNAPE), created in 1979, and nowunder the Ministry in charge of Agriculture, has responsibility for the rural water supply andsanitation planning, development, and maintenance. SNAPE carries out the major part of theworks (well digging, spring tapping, and borehole drilling) under force account subcontracts tospecialized contractors. Authority over operation and maintenance of the water points remain withthe villagers. In February 1992, SNAPE became a semi-independent entity responsible for ruralwater supply and sanitation, planning, development and maintenance for all rural water andhousehold facilities in the country. SNAPE receives the bulk of its funds for water works andmaintenance from national budget.

2.16 Direction Nationale de l'Hydraulique (DNH), or Directorate of Water Works, of theMinistry of Natural Resources and Energy, is responsible for gathering and updating hydrologicaldata and for formulating and monitoring regulations applicable to water use. DNH employs fiftythree staff at headquarters and in seven regional offices. Its temporary staff also varies with theamount of force account work in progress. Senior staff comprises twenty eight engineers andtechnicians and twenty five administrative managers.

2.17 Responsibilities for sanitation are divided among several agencies: The Ministry incharge of Urban and Housing is responsible for planning and executing sanitation works. TheMinistry in charge of Land management controls compliance with public healthiness regulations.The Ministry in charge of Natural Resources and Energy is responsible for environmentregulation. The Ministry in charge of Education is involved in sanitation through its healtheducation programs for children. The Ministry in charge of Public Health and Social Affairsdevelops health education programs and public health regulations. The Programme

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d'Amelioration de l'Environnement Urbain et de l'Assainissement de Conalay (PADEULAC)defines the strategies for the improvement of sanitation and the urban environment of Conakry.The Direction de l'Amenagement du Territoire et de l 'Urbanisme (DATU), under the Ministry incharge of Housing and Land management, implements sewage investments.

Sector Issues

2.18 Urban water sector related issues are significantly different from rural ones. Urbandrinking water: Conakry's water production capacity has increased to 100,000 cubic meters a day.Yet even today, less than 60 percent of the urban population has access to safe water throughconnections or standpipes, and the remaining 45 percent must rely on unsafe water. SONEG'songoing affermage contract, which will be in force until 1999, does not address the question ofmaintenance and rehabilitation of the network, yet Conakry continues to have high water losses.There is no long-term strategy for the shared use of water resources. In part because several watersupply systems, with numerous standpipes, were installed without enough attention to costrecovery, standpipes remain a significant financial burden for the Government.

2.19 These issues will be addressed by: ensuring cost recovery through vendors at thestandpipes (already effective); reviewing the contract between SONEG and SEEG to increaseefficiency in the network through water leakage detection and the implementation of arehabilitation program; making the costs of free water transparent and verifying the public'swillingness to pay for safe water in low-income areas; and preparing an integrated national waterresource management strategy.

2.20 The issues in the rural water and household facilities are: Community participation andownership: in spite of document setting up government policies, the village communities havealways been viewed as beneficiaries of projects planned by SNAPE, and are rarely the initiators;project identification is most often based on conditions set by the financing agencies. LocalCapacity Building: project execution is based on external intervention; no local consultingengineer has contributed directly to the preparation, supervision or monitoring of projects.Borehole drilling is carried out by specialized contractors prequalified on the basis of theirexperience and financial criteria and selected after competitive bidding. This has not supported theemergence of local private contractors. Handpumps installed are ill-maintained because the"artisans" in charge of maintenance lack adequate training and the maintenance system is notefficient.

2.21 Sanitation issues. Sanitation has received less attention than water supply both in ruraland urban areas but represents a serious threat to the health of the population. In the urban areas,the sanitation subsector is not adequately organized and lacks financial and human resources. Inpart as a consequence of this, sanitation service providers in urban centers are unable to offer evenbasic service to the citizens. In Conakry, the current system is ineffective in the disposal andtreatment of excreta and wastewater, household and industrial solid waste, and stormwater. It ischaracterized by an improper maintenance of the sewers and on-site facilities, inadequatelyaddressed institutional issues and poor cost recovery. In the rural areas, a few projects funded byUNDP and German assistance have been designed to promote latrines. The majority of the ruralpopulation including some schools and health centers have no access to sanitation facilities andlack hygiene education.

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2.22 To address these issues, it will be important to: increase sanitation service delivery,hygiene education, both in urban and rural areas; promote the installation of proper on-sitetechnologies; provide training and support for artisans to rehabilitate and construct on-sitesystems; support small contractors for pit emptying; rehabilitate, extend, and maintain theexisting sewerage and treatment facilities; establish institutional arrangements for the managementand cost-recovery of all services.

Sector Strategy

2.23 A policy.Qlttr, discussed during appraisal, is finalized, and sent to IDA (Annex 1-2). Asin most sectors of Guinea's economy, the most immediate needs in the water supply and sanitationsector are the rehabilitation of existing systems and associated improvements in operation andmaintenance. Rehabilitation would be followed by programs of carefully planned expansion andimprovement of existing systems to provide acceptable levels of service to a rapidly increasingpopulation, particularly the poor. A countrywide water resources plan and groundwater studieswould be prepared for the longer-term development of the sector.

2.24 SONEG's objectives are to develop water services in thirty-three secondary urban centers(serving as market towns for the rural interior) by the year 2005 and to increase access to safewater sufficiently to meet urban household demand, particularly in Conakry's fast-growing, low-income areas, by 2005 (see para. 6.02). The Government and SONEG's objectives andcommitments would be part of the revised enterprise contract, to be agreed upon on a three-year,rolling basis.

2.25 The short, medium, and long-term development strategy for SONEG will be to maximizethe supply of water available from existing sources and water systems by minimizing leakage, tomanage water demand more effectively by instituting an appropriate tariff policy based onmetered consumption, and to maximize the efficiency of SEEG's water supply operations. Tariffswill be adjusted to reflect volume consumed and capacity to pay through a program of socialconnections for the poor. The strategy -to maximize water supply from existing sources- isintended to defer high, long-term, capital costs until new investment becomes essential andconsumers are willing to pay for it. This will provide SONEG with time to consolidate itsoperational and financial position.

2.26 SONEG's main responsibilities consist in implementing the investment program,producing consolidated accounts for the sector, and ensuring service sector debts. They would beregularly revised in light of medium-term financial forecasts. For its part, the Government shouldadopt a reasonable investment program for the next ten years (that was prepared by SONEG),approve tariff increases, pay its water bills, and transfer standpipes to the users who pay for theirwater consumption. An investment program has been submitted and approved by the Bank duringnegotiations.

2.27 The signature of a three-year, rolling contract-plan that includes an investment programacceptable to the Bank would be a condition of Credit effectiveness. The contract-plan wouldinclude procedures for payment of the cost of public water consumption. As agreed beforenegotiations, SONEG has revalued its assets and the value of these assets has been included in thebalance sheet. Not later than two months before the end of each fiscal year, SONEG would be

8

required to submit to the Bank, financial forecasts for the following five years, with its annualoperating and capital expenditure budgets for the following year.

2.28 The goals of the strategy to improve sanitation are listed in the sector strategy letter(Annex 1-3). During negotiations, the Government agreed to contract out the management ofConakry's sewerage system by December 1998. The completion of the ongoing institutionalarrangement and cost recovery study and the selection of the private operator will be conditions ofdisbursement against expenditures related to the physical component for the sanitation works. Theurban environment project under preparation (FY98- GN-PA-1074) would cover the remainingcomponents of the sanitation strategy.

IDA's Involvement in the Sector

2.29 IDA's involvement in the water supply sector began with the Conakry First Water Supplyand Sanitation Project (Credit 870-GUI), that was approved in March 1985. The objectives of theproject were to: rehabilitate the water production and transmission facilities; extend the waterdistribution network including household connections installation; provide technical assistance tothe water supply company; and carry out feasibility studies for water supply/sanitation insecondary centers. According to ICR 6922, the physical components of the first project have beenfor the most part successfully completed. However their result remains below expectations,especially for the institutional reform to strengthen the sector's financial capability and to promotesystems' improvement.

2.30 The objectives of the Conakry Urban Development Project (Credit 1466-GUI) approved in1984 were : to strengthen the ability of central and local governments to plan, coordinate, andcontrol urban growth and development in Conakry and the surrounding area; to establish the basicmechanisms to fund urban service operation adequately from local revenues; and to improve themanagement of city-wide solid waste collection and drainage maintenance operations. To ensurerural water supply for 140 villages where more than 100,000 persons live in Kissidougou andGueckedou regions, IDA financed in 1990 (Credit 2106-GUI, SDR 3.9 million) theimplementation of 322 productive boreholes equipped with handpumps (Kardia), of which 94percent are operational. The objectives of the ongoing Second Water Project (Credit 1985-GUI),approved in 1989, were to strengthen the planning and management capabilities of SONEG, theagency responsible for sector development, and to rehabilitate SONEG's technical, commercial,and financial operations through a lease contract with a water management company (SEEG).

2.31 The ongoing Second Water Project is being implemented satisfactorily and on schedule.The percentage of access to safe water has increased from 15 percent in 1980 to 60 percent in1995. SONEG's capacity has improved with regard to financial management, rate-setting andreporting. Private sector involvement has improved water supply service through improved billingand collection performance, reduction of leakage at an acceptable level, expansion of the watersystem, and a decrease in contractual costs and delays. Water rates have been increased as agreed,revenue generation is adequate, and there is no problem with counterpart funding. Fees fromprivate consumers increased from US$0.10 in 1989 to US$0.75 in 1994. The average fee rate isUS$0.90 per cubic meter in Guinea. But in spite of these significant gains, procurement has beendelayed by Government interference and SEEG did not improve the efficiency of the network afterfive years of private operator management. Water losses are still about 47 percent compared toless than 20 percent in good practices.

9

2.32 The lessons learned from the Second Water Project have been taken into account in thepreparation of the proposed project. Government submitted to IDA a time table to renegotiateSONEG and SEEG's remuneration. In addition, SONEG and SEEG submitted to the Bank gnaction plan for improving the efficiency of Conakry's water network. The current procurementpractices and policies would be reviewed to ensure that efficient and transparent mechanisms arefollowed with regard to the proposed project.

m. THE PROJECT

Rationale

3.01 As noted in the Country Assistance Strategy (CAS) reviewed by the Board on February7th, 1994, "with the rural exodus within Guinea and the significant flow of refugees fromneighboring warring countries, Guinea has seen a rapid growth of basic settlements which lackessential public sanitation equipment and services (water and electric power supply, solid wastecollection, and hygienic disposal of human waste." IDA's continued involvement is thereforeimportant to sustain water sector reforms (considered a success worldwide), ensure financialdiscipline, help consolidate cofinancing (France and Japan are financing in parallel, water andsanitation works for $74 million) and ensure affordability. IDA support would also help Guinea todefine a sanitation sector strategy and investment plan to serve the growing low-incomepopulation in both urban and rural areas. Overall the proposed operation is part of acomprehensive, long-term water sector strategy which aims to : improve competitiveness of theeconomy by assuring adequate water supply to both enterprises and households, thereby reducingthe costs of inputs; reduce poverty by increasing access to safe water and sanitation for low-income households; and support private and public sector infrastructure partnerships.

Objectives

3.02 The overall development objective of the proposed project is to alleviate the effects ofpoverty and improve health by increasing access to safe and affordable water and sanitation; toencourage private sector participation by setting the stage for a new affermage lease contract; andto ensure sustainability by improving water pricing and cost recovery and developing Guinea'swater sector regulatory and planning capacity. Specific project objectives are:

* To improve Guinea's urban and rural water resource management by formulatingan integrated, multisectoral strategy for the shared use of water by households,industry, and agriculture, that would be coordinated with future developmentprojects in those sectors.

* To build institutional capacity by strengthening the National Service ofHydraulics, to develop SONEG's activities in urban water distribution, and toincrease coverage in Conakry, by 100 percent, and metered connections, by 100percent.

* To rehabilitate and extend Conakry's sewerage and to contribute to improvementsin environmental quality, through construction, rehabilitation and extension of the

10

existing network, and also by training private local contractors for pit emptyingand sewage management.

Project Description

3.03 The proposed operation has three components:

* Urban Water Supply (US$18.60 million). The rehabilitation and expansion of thewater supply network in Conakry - with about 300 kilometers of pipelines; theconstruction of two storage reservoirs for Conakry; and the installation of about10,000 household connections. SONEG is to strengthen its regulatory and policycapacity and to prepare an urban water strategy. This component also comprisestechnical assistance to SONEG to prepare / negotiate a new management contract.

* Urban Sanitation (US$8.40 million). Institutional arrangements including costrecovery study, and recruitment of a private operator to run the sewage service.Detailed studies. Promotion of proper technologies, training and support forartisans to rehabilitate and construct on-site systems, and support for smallcontractors for pit emptying; rehabilitation and maintenance of existing seweragesystem in Conakry; establishment of institutional arrangements for managementand cost recovery; construction of a sewerage treatment facility; rehabilitation of awaste stabilization pond for sludge and sewage treatment.

* Water Resources Management (US$ 1.00 million). Guinea is being supported in itsefforts to proceed with the national water resource management strategy, by theThird Water Supply and Sanitation Project and other development cooperationprojects supported by bilateral agencies. The overall objective of the IDA projectis to assist the Direction Nationale de l 'Hydraulique (DNH) to develop a nationalwater management policy and strategy. This project component is described indetail in Annex 1-5 , and the main activities will include: (i) organization of aNational Water Resources Management Workshop as a basis for an integratedstrategy; (ii) technical assistance to revise the water legislation; (iii) strengtheningof human resources and institutional capacity in the field of water resourcesmanagement; and promotion of regional river basin cooperation. IDA's assistancewill help finance technical assistance and studies required to develop a nationalwater management policy and strategy.

Costs

3.04 The estimated total cost of the project is US$28.00 million equivalent (excluding taxes), ofwhich US$22.14 million equivalent (80 percent) are foreign exchange costs (Anne 2-)..

11

Table 3-1. Estimated Project Cost

LSS mfion eidCalentZoca ForeigA Toted

Project Components

Urban Water SupplySystems rehabilitation and expansion 3.91 11.18 15.09Technical assistance , consultants'services, and training 0.00 1.42 1.42

Water Resources ManagementConsultants services and training 0.07 0.36 0.43Equipment 0.13 0.32 0.45

Human Waste ManagementConstruction and rehabilitation oftreatment pond 0.83 4.67 5.50Training and technical assistance 0.15 1.70 1.85

Base cost estimateb 5.09 19.65 24.74

Physical contingencies 0.63 1.97 2.60

Price contingencies 0.14 Q,52 .6

Total Project Coste 5.86d 22.14 28.00e

N_At: Cost estimates based on consultant evaluations and detailed project design. All costs reflectunit prices as of December 31, 1996.

'Local costs are net of duties on imported equipment and material.bIn December 1996 prices.c Based on contracts recently awarded in Guinea for similar works under the Water II project.dSee Footnote (a).See Footnote (a).

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Financing and Lending Arrangements

3.05 Total project costs are estimated at US$28.00 million. The local contribution (estimated atUS$3.00 million) would come from the Government (US$1.20 million) and SONEG (US$1.80million).

Table 3-2. Financing Plan

.>ntentialItJ.S;S millitn equivalentFundiuig Sourec Local' Foreign TotalWater Supply

SONEG 1.80 0.00 1.80IDA 2.70 14.10 16.80

Subtotal 4.50 14.10 18.60

Water Resources ManagementGovernment 0.10 0.00 0.10IDA 0.13 0.77 0.90

Subtotal 0.23 0.77 1.00

Human Waste ManagementGovernment 1.10 0.00 1.10IDA 0.03 7.27 7.30

Subtotal 1.13 7.27 8.40

Total 5.86" 22.14 28.00c

3.06 The proposed IDA credit of US$25 million would be made to the Government. Of thisamount, US$0.90 million would be made available to DNH to implement the water resourcesmanagement and water regulation studies components and US$7.30 million would go to DATU toimplement the urban sanitation component. Under a subsidiary loan agreement satisfactory toIDA, US$16.80 million equivalent of the IDA credit would be provided by the Government toSONEG, of which US$8.40 million equivalent (50 percent) would be onlent to SONEG at IBRDterms (twenty years including five years of grace, at annual interest rate of 7 percent), andUS$8.40 million equivalent of the IDA credit would be provided to SONEG in the form of equity.SONEG would bear the foreign exchange risk. Interest during construction would be capitalizedand repaid over the life of the subsidiary loan. Counterpart funding for the water supplycomponent would be provided by SONEG from its own resources.

* Local costs are net of duties on imported equipment and material.b See Footnote (a).' See Footnote (a).

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It has been agreed during negotiations that the subsidiary loan agreement between the Governmentand SONEG would be executed as a condition of effectiveness of the proposed credit.

3.07 With respect to the Government's counterpart funding for duties and taxes on importedequipment and materials for the project, the Government would expedite the clearance of suchgoods through customs. To provide the remaining counterpart funding for the financing of theproject (other than those to be provided by SONEG for its own project components) and to ensurethat such funding would be timely and adequate to expedite project implementation, theGovernment would deposit counterpart funding which total amount is US$1.20 million. As.acondition of effectiveness, the Government would establish in a commercial bank in the names ofthe implementing agencies -DATU and DNH- to cover required payments for projectexpenditures, two project accounts with an initial deposit of US$150,000 for DATU and US$50,000 for DNH. The rest of the government counterpart funding will be deposited on a half-yearly basis into these project accounts.

IV. IMPLEMENTATION

4.01 Project preparation started under the financing of the Water II project; consultants havealready prepared a Review of water demand. The first step in assessing demand was to determine thewater use patterns and location of potential users. Present demand for water services in urban centerswas not well known, and -given the absence of adequate facilities- actual consumption does notreflect effective demand. In addition the recording of metered consumption started only recently,with the rehabilitation of existing networks. Beneficiary assessment. The second step was to assessactual demand from domestic customers, through a general survey of the public's willingness to payfor water. A survey on willingness to pay indicated that more than 75 percent of householdsexpressed a strong interest in water service by individual connection, although 40 percent ofpresent standpipe users preferred to keep their current means of water supply because they couldnot afford other methods. Among the people who preferred individual water connection, only 10percent in Conakry (and 20 percent in other centers) were willing to pay the full cost of a serviceconnection (GNF 300 000). Moreover, majority of the population were not willing to pay even theaverage consumer rate ( 880 LF/m3) which is among the highest in the region. The majority ofpeople would accept a subsidized social connection and only pay about GNF 40,000. Detaileddesign studies. Preliminary design studies, carried out for the expansion of Conakry's waterdistribution system, were completed by appraisal. The design of a Conakry water distribution masterplan is also under way. The identification of sites for a waste station pond, and the environmentalassessment and reports have been the basis of the IDA project appraisal of June-July 1995, thatwas followed by IDA post - appraisal mission in September, 1996.

Preparation and Implementation

4.02 To speed up the preparation of the project, a Project Preparation Facility is approved fordisbursement of the first tranche (US$800,000). The Project Preparation Facility would berefinanced from the proposed IDA Credit. Activities financed by the Project Preparation Facilityinclude: for DNH, preparation of Terms of References for the selection of consultants and forwater resource management studies; and for DATU, preparation of Terms of References for the

14

selection of consultants and for sanitation works studies. SONEG. DATU and DNH have preparedseparately, and submitted to the Bank. an action plan and project implementation manual. Theproject would be carried out in accordance with the implementation manual, which would not beamended without Bank approval.

4.03 Water Resource management: The DNH would implement the water resourcemanagement strategy which will cover: (a) the management and use of water for conservation andenvironmental protection and for the benefit of the community; (b) stockholder involvement; (c)the allocation of water; the investment of public funds; and (d) pricing. The component comprises:(i) a stakeholder seminar on water resources; (ii) review of water sector; (iii) strategy for waterresources management; and (iv) change required to implement the policy and strategies(institutional arrangements, capacity building and stakeholder involvement). DNH would finalizeTORs for consultant service.

Urban Water Supply: SONEG would implement this component (prepare, review, and evaluate biddocuments; award and sign contracts; supervise works; withdraw funds from the special account).SONEG would strengthen its technical department before Board presentation, and appoint anengineer to run the study and works division. SONEG would be assisted by engineeringconsultants. The Conakry water distribution plan is being implemented by SAFEGE/ThorburnColquhoun and the preparation of detail design and tender documents for water networkexpansion is underway by Thorbum Colquhoun. In addition SONEG will have a two-yeartechnical assistance for studies and works.

Urban Sanitation: DATU would implement the Conakry sewerage component. This arrangementwas accepted by the concerned authorities and agencies during the appraisal mission. DATU willcarry out technical design and detailed studies for the rehabilitation and the expansion of thesewerage network, rehabilitation and construction of treatment plants based on therecommendations of PADEULAC. DATU will carry out an institutional arrangements study thatwill allow for establishment of cost recovery and for contracting of a private operator for themanagement of the sewage system. The institutional study should be completed by June 1997 andthe private operator would be contracted by December 1998. DATU will be assisted byengineering consultants. The completion of the ongoing institutional arrangement and costrecovery study, and the selection of the private operator will be conditions of disbursement againstexpenditures related to the physical component for the sanitation works.

Procurement

4.04 Procurement and decision-making under the ITF for FY 97 will follow the WorldBank's official guidelines on procurement of good and services in all respects, except thatprocurement will be limited to contributing donors and IDA/IBRD borrowers. Theprocurement methods for items to be financed by IDA are summarized in Table 4.1 below. Nospecial exemptions, permits or licenses need to be specified in the credit documents for ICB, asGuinea allows Bank procedures to take precedence over any contrary local regulations or uses. ForICB, the Bank's standard bidding documents for civil works will be used. The major types ofprocurement in the project would be for civil works, equipment, and consultant services. Civilworks would consist of the rehabilitation of the existing water and sewage networks, construction

15

of reservoirs and treatment ponds, and installation of water pipelines. Contracts for worksavailable locally valued at US$250,000 or less, up to an aggregate amount equivalent to$6,000,000, would be procured by National Competitive Bidding (NCB) -which include localadvertising, public bid opening, clearly stated evaluation criteria- and award to the lowestevaluated bidder are acceptable to IDA. Foreign firms would be allowed to participate, inaccordance with procedures acceptable to IDA.

4.05 Further miscellaneous goods (such as office equipment and vehicles) estimated to cost lessthan US$50,000 per contract up to an aggregate amount equivalent to $0.5 million, would beprocured through shopping with the evaluation of price quotations from at least three suppliers.

4.06 Consulting Services and on-the-job training. Consultants would be hired for studies,supervision, technical assistance and monitoring on terms and conditions acceptable to theAssociation and in accordance with the Bank's Guidelines for the Use of Consultants. Prior IDAreview of the consultant invitation package would be required for all contracts over US$100,000 invalue for consulting firms and US$50,000 for individual consultants.

4.07 Assurance has been made during the negotiations that the Bank's Standard BiddingDocuments for Goods or Works under ICB and the Standard Letter of Invitation Package forConsultant's Services will be used. Prior IDA review of advertisements, bidding documents,tender evaluations and recommendations for award would be required for each ICB and NCBcontract over US$250,000 equivalent in value, covering over 95 percent of the value of allcontracts to be awarded. Smaller contracts would be subject to post review. SONEG, DNH andDATU are equipped to plan, manage and monitor procurement activities. The Government hasrecently decided to improve the transparency and efficiency of public procurement. TheGovernment is currently undertaking with the Bank's assistance a review of procurementregulations and practices to: (i) promptly revise the procurement code; (ii) radically simplify theprocedures and channels for awarding and signing contracts; and (iii) permit payments tocontractors in less than twenty days. In order to expedite project implementation before crediteffectiveness, consultants would prepare all major bidding documents relating the project. Theproposed project would be completed by June 30, 2002. SONEG has submitted to IDA duringnegotiations: (a) a satisfactory procurement plan; and (b) satisfactory procedures for the projectmanagement and procurement.

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Table 4-1. Summary of Proposed Procurement Arrangements(US$ millions)

Irems Procured ICs .CB OTHERS T OTAL

1. Civil Works(a) Reservoirs, Transmission

and Distribution 11.00 6.00 - 17.00(10.00) (5.20) - (15.20)

(b) Treatment Ponds &sewer network rehabilitation 6.40 - - 6.40

(5.40) - - (5.40)2. Equipment and Vehicles

(c) DNH - 0.50 0.50(0.40) (0.40)

3. Consulting & Technical Assistance(d) Technical assistance

and training - - 0.50 0.50(0.45) (0.45)

(e) Project design & supervision - - 3.60 3.60(3.55) (3.55)

Total 17.40 6.00 4.60 28.00

Total Financed by the IDA Credit (15.40) (5.20) (4.40) (25.00)

NDte: Figures in parentheses are US$ million equivalent, to be financed by IDA. Local costsare net of duties on imported equipment and material.

Disbursements

4.08 The closing date of the proposed credit would be December 31, 2002. The disbursementprofile of the proposed project is faster than the average disbursement profile for Bank/IDAfinanced water projects in Africa, and reflects the strong disbursement performance of the ongoingSecond Water Project. The proposed IDA credit would be disbursed against the followingcategories:

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Table 4-2. Allocation and Disbursement of IDA Credit(US$ million)

Amount of the Interim % ofFund Credit Allocated Expenditures

Category (US$ million, net of Taxes to be Financed

1. Civil Works

a. Reservoirs, Transmission 100% of foreign expenditure && Distribution 13.60 90% of local expenditure

(SONEG)

b. Network rehabilt./ treatment ponds 100% of foreign expenditure &(DATU) 5.00 90% of local expenditure

2. Vehicles/ Equipment 100% of foreign expenditure &(DNH) 0.45 90% of local expenditure

3. Consuling Services 100% of total expenditure

a. SONEG 1.40b. DATU 1.35c. DNH 0.40

4. Refunding of PPF 0.80

5. Unallocated 2.00

TOTAL 25.00

4.09 To facilitate disbursement of funds, three special accounts will be set up, one for eachimplementing agency i.e. DNH, SONEG, and DATU, in a commercial Bank under terms andconditions acceptable to IDA. The authorized allocation for SONEG's special account amounts toUS$350,000, and to US$200,000 for DATU's account, and to US$100,000 for DNH's account.Upon effectiveness of the credit, half of the initial deposits will be made available to each specialaccount and the remaining balance as needed. Replenishments of the special accounts should bemade every month and must be fully documented, except for contracts valued at less than (i)US$250,000 equivalent for civil works and goods, (ii) US$100,000 for consultants (firms), (iii)US$50,000 for individual consultants. Documentation for withdrawals under SOEs would beretained by SONEG, DATU and DNH for review by IDA supervision missions and for semi-annual audits. Under Credit 1985-GUI, SONEG was representing the Borrower and will be the

18

representation for its disbursement purposes. The Department of Finance and Plan will berepresenting DATU and DNH for disbursement purposes.

Accounting and Auditing

4.10 The Borrower possesses a satisfactory accounting system and adequate internal controlsare in place to ensure the reliability of SOEs as a basis for disbursement. Accounting for projectexpenditures and special account transactions (including statements of expenditures) would bemaintained by each implementing agency for its respective project components in accordance withsound and intemationally recognized accounting principles and practices that are acceptable toIDA. Agreement has been obtained during negotiations for SONEG. DNH and DATU. to have theproject accounts, special accounts, and statement of expenditures audited annually by qualifiedindependent auditors acceptable to IDA, including a separate opinion on the use of SOEs(including the review of procurement-related decisions), the operation of the special account, andthe statements of water collection by SEEG; the audited accounts, together with the auditors'reports be submitted to IDA no later than six months after the close of their fiscal (or financial)year.

Reporting and Monitoring

4.11 SONEG, DNH and DATU would each prepare quarterly progress reports covering allproject components within one month after the end of each quarter. These reports would includeprogress achieved against agreed implementation and disbursement schedules and keyperformance indicators and work programs and cost estimates for the coming quarter and the totalproject. The main purpose of the reports would be to provide timely and updated information onimplementation of project components, to highlight issues and problem areas, to recommendactions, and to comment on the progress made toward implementing previous recommendations.The Government, with assistance of SONEG, DATU and DNH would prepare a completion reportwithin six months of the final disbursement in accordance with IDA guidelines. Reportingrequirements and key performance indicators have been discussed and agreed upon with SONEG,DNH and DATU. SONEG will periodically report on its operating and financial performance andof SEEG's, using the agreed upon monitoring indicators. It has been agreed during thenegotiations that SONEG, DNH and DUTU, would submit to IDA copies of all consultants'reports and studies financed under the proposed project.

4.12 Disbursements will be made in accordance with procedures and policies outlined in theBank's Disbursement Handbook. IDA, and the Government would carry out a detailed mid-termreview of the entire project two year from the date of credit effectiveness, that is no later than May31, 1999. During this review particular attention would be paid to compliance with projectscovenants, particularly those affecting financial effectiveness and audits, to the progress made inimplementing the project components, and to the performance and efficiency covenants of theSEEG's management contract. The reviewers might then suggest modifications in the scope of theproposed project.

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Supervision Plan

4.13 Bank supervision missions would occur at least twice a year. The supervision program forthe project and key performance indicators for monitoring the project's progress were discussed atappraisal and agreed upon during the negotiations (Annex 2-4).

Environmental Aspects

4.14 The Government has prepared a satisfactory National Environient Action Plan focusingon the natural resources management (including water) and the environment. The most pressingissues in Conakry are those of solid and human waste disposal, both of which would be addressedunder this project and the ongoing Urban II Project (Cr. 2112). The proposed physical workswould not generate resettlement or have any negative environmental impact. In addition, acomplementary proposed Third Urban Environment Project under preparation would address solidwaste management, secondary roads and environmental issues related to drainage. Anenvironmental impact assessment study carried out in June-July 1995, placed the proposed projectin environmental Category B. According to the environmental impact assessment, all physicalcomponents of the proposed project should have a positive impact on the environment, throughimprovement of water supply and sanitation service in Conakry (Annex 6-2). In addition, anenvironmental assessment of the sewage component was also carried out and an executivesummary in English is attached (Anne.x6-1). The Government has sent i the Bank officiallv,and it will be available thereafter at the Bank's Public Information Center.

4.15 Since the project's investments consist mainly of maintenance and rehabilitation ofexisting sewerage systems and extension of the water supply network, no major environmentalimpacts are foreseen. Mitigation and compensatory measures of negative impacts have beenstudied with Guinean authorities. Pipelines would not have any significant long-termenvironmental impact following their construction and the reinstatement of all surfaces. Carewould be taken when sitting pipe-fittings to ensure, as far as possible, unobtrusive locations forany chambers, the covers of which should be flush with the road surface. Exposed pipes would beprotected against corrosion by bitumen-based paints. The extension and the rehabilitation of theexisting sewerage system would also have no long-term significant adverse environmental impact,except for temporary transit disruptions. This component, which would serve the immediate needsof the city, would significantly improve the environment. The construction of the water supplyand sewerage system would temporarily disrupt the local area. To keep disturbances to aminimum, SONEG, and DATU would limit the amount of trench allowed to be open at any time;to limit contractors' stringing operations (to avoid having long lengths of unlaid pipes strung outby the roadside); to provide financial incentives within the contract for the prompt temporaryreinstatement of trenches; to restrict the dumping of trench spoil in unsuitable or inconvenientlocations; and to ensure that road plates are provided to allow trench crossing.After works, negative impact could come from a bad maintenance of lagoons or a breakdown ofthe system of supplying the lagoons with wastewater. The only major negative impact (bad smells)could result of a bad monitoring of wastewater treatment. Follow-up and evaluation of lagoons andmore generally, of all sanitation systems, should be carried out by means of convention with theUniversity of Conakry under a supervision of a specialized consultant. The mitigation plan hasbeen integrated into the design of the project components, and will be funded under the project.The Department of Environment within the Ministry of Public Works will be charged with the

20

responsibility for coordinating the environmental activities and overseeing the mitigation planunder the project.

V. FINANCIAL ANALYSIS

Introduction

5.01 In 1989, SONEG, the holding company, and SEEG, the management company, were setup, drastically modifying operating conditions and performance within the sector and significantlyimproving its financial standing. Both the lease contract that guides the operations of SEEG andthe structuring of the management company's foreign currency income have been instrumental inimproving the sector's overall performance. But while the water-metering program proved aneffective control on actual water consumption and helped to improve bill collection, performancecould have been even further improved if the lease contract had provisioned incentives andpenalties for operating efficiency. Past financial indicators are summarized in the table below andthe sections that follows.

Past Financial Analysis

Table 5-1. Past Financial IndicatorsGJVFiuIlejIg

199. 1991 1'993 1994 95Urban Water Supply SectorTotal revenues 4,556 6,122 12,314 19,495 19,933Total operating expenses 4,829 5,814 9,541 13,792 11,133Debt service 87 164 372 1,838 5,418Net income (318) (177) 2,402 3,901 3,069Net intemal cash flow 900 3474 (797) 2,936 3,213Cash at end of year 1.030 1,601 3,803 5,419 1,788Accounts receivables 984 3,192 11,494 14,972 7,992Net fixed assets 17.566 31,764 89,125 90,392 92,772Long tern debt 14.140 19,300 72,197 89,559 79,694Equity share capital 8.244 19,311 43,396 45,466 47,960S.O.N.E.G.Total revenues 624 1,681 4,706 8,144 6,026Net income (519) (196) 2,214 3,323 5,882Operating ratio 176% 83% 48% 42% 44%Net internal cash flow 684 2,475 (2,009) (153) (48)Cash at end of year 546 1,116 3,264 5,381 1,755Internal cash contribution to investments 5% 5% 13% 36% 390/oNet fixed assets 16.353 30,540 87,998 88,708 91,014Total assets 24.645 47,141 127,791 147,068 146,314Long term debt 14.125 19,300 72,197 89,559 79,694Equity share capital 6.945 18,011 42,096 44,166 46,660

Revenues from Tarif exploitant local 2,189 4,890 6,890 5,447Revenues from Tarif exploitant etranger 1,934 2,415 2,425 2,034Total revenues 3,932 4,440 7,608 11,350 13,906Operating ratio 95% 99% 96% 92% 95%Net internal cash flow 216 1,009 1,211 1,323 3,261Cash at end of year 483 485 538 38 33

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Urban Water Supply Sector

5.02 Under its reformed institutional arrangements, revenues collected by the urban watersupply sector have grown significantly, going from GNF 172 million per month in 1990 to GNF1.12 billion per month in 1995. The level of water billed grew from 4 million cubic meters to 14million cubic meters, and the rate charged for water consumption was raised from GNF 150 percubic meter in 1989 to GNF 880 per cubic meter in 1995. The sector's operating ratio, however,was consistently more than 70 percent over the last five years. Although this ratio is now falling(having gone from 122 percent to 71 percent), these values are still too high for an efficientlyoperating urban water sector.

5.04 The large investments in the sector financed through the Second Water Project werestarted in 1992 (both work in progress and investments in fixed assets), and most of them werelargely completed and put in operation by 1993 and 1994 (with gross fixed assets of GNF 40billion in 1992 and GNF 89 billion in 1993). Investments in fixed assets totaled 132 billion GNFduring the 1989-1994 period. They were financed by long-term debt (88 billion GNF), grantsfrom donors (42 billion GNF), and self-financing (2 billion GNF). Part of the equity capitalincrease was supplied by IDA under the Second Water Project agreement. The rest came fromgrants from bilateral donors. The combination of tariff increase, increase in water billings, andsubstantial external financial assistance (credits and grants) has enabled the sector to accumulate asignificant cash reserve which was valued at about 5.4 billion GNF at the end of 1994. However,the debt service in 1995 has already started decreasing that cash reserve.

SONEG

5.05 Over the past five years, SONEG's total revenues have grown significantly, going fromGNF 624 million in 1990 to GNF 6,026 million in 1995. But, despite a 14 percent average cash-operating ratio over the period, SONEG's activities were characterized by an average operatingratio of 75 percent (having gone from 176 percent in 1990 to 44 percent in 1995).

5.06 SEEG's numerous delays in transferring the redevance collected to SONEG directlyaffected SONEG's provision for bad debt, and the significant increase in sector investment raisedthe level of depreciation. Both represented more than 77 percent of total revenues on average overthe period, so that the company experienced net losses in 1989 of GNF 138 million, in 1990 ofGNF 519 million, and in 1991 of GNF 197 million. Since 1992, however, the company hasincurred net profits, going from GNF 1,099 million in 1992 to GNF 3,323 million in 1994 and to5,881 million in 1995. SONEG's financial results would have been better had SEEG efficiency incustomer management improved and the proposed yearly tariff increases been effective on January1st every year.

5.07 Cash generated internally has fluctuated in proportion with the investments made in fixedassets. Internal cash flow represented about 7 percent on average of the total uses of funds(investments in assets and management contract).

5.08 The investment program of the Second Water Project was financed mostly with externalfinancing through credits and grants. Indeed, investment expenditures (including the purchase of

22

fixed assets and a management contract for SEEG) grew from GNF 16 billion in 1989 to GNF 25billion in 1994, with peak years in 1992 (GNF 35 billion) and 1993 (GNF 41 billion).

5.09 With the execution of the projects-related investments, the value of the sector's net fixedassets went from GNF 13 billion in 1989 to GNF 91 billion in 1995 and (a portion of fixed assetshave been revalued in fiscal 1995 by an independent expert).

SEEG

5.10 SEEG's water sales revenues increased more than six-fold, going from about GNF 100million per month in 1989 to about GNF 620 million per month in 1995, and its total revenuesincreased even more than ten-fold between 1989 and 1995, going from GNF 1 billion to GNF 14billion. Foreign management fees increased significantly (GNF 87 million per month in 1989 toGNF 202 million per month in 1994). Revenues from works also increased dramatically (GNF 1million per month to GNF 148 million per month in 1994). Loaded with a 70 percent averagecash-operating ratio over the period (which peaked in 1991 at 82 percent), SEEG averaged a 100percent operating ratio (which went from 116 percent in 1989 to 95 percent in 1995).

5.11 Three reasons explain SEEG's low profitability. Salary expenses are still very high (GNF342 million in 1989, GNF 2.1 billion in 1995), because the transfer of operational managementresponsibilities has yet to occur between foreigners and nationals at SEEG. Other operating costssuch as maintenance equipment and activities and French Partner related expenses are also high;and after five years of private operation the efficiency ratio (50 percent) of the Conakry waternetwork is low compared to an average of 80 percent in good practices

5.12 Provision for bad debts, moreover, averaged roughly 18 percent of water sales revenues ayear over the past five years, an exceedingly high ratio. These large provisions were mainly meantto cover Government arrears (GNF 3,200 million in 1994), and late payments from privateconsumers. Net profits were therefore limited, and no dividends were distributed to shareholders.It is difficult to assess SEEG's real finance situation because since the beginning of the leasecontract, SEEG fails to provide SONEG with detail accounting data as agreed in the lease contract.

Cost Recovery

5.13 Agreement under the Second Water Supply Project to progressively increase the waterrates to achieve full cost recovery was adequately executed. The declining subsidies provided bythe budget (support to SONEG's debt service) and under the IDA financing (payment of theforeign portion of SEEG remuneration) were discontinued in 1995, as expected.

5.14 The Government had approved on time, the proposed tariff increases. The current tarifflevel (GNF 880 per cubic meter or US$0.90 per cubic meter) compared with the 1988 level (GNF60 per cubic meter or US$0.12 per cubic meter) is higher than the levels expected in the StaffAppraisal Report of the Second Water Supply Project (GNF 561 per cubic meter or US$0.76 percubic meter). The current tariff, as it now stands, represents about 175 percent of the "tarifexploitant" (both foreign and local portions included), compared with 69 percent when the twoinstitutions of the sector were created.

23

5.15 SONEG was supposed to pay to the state an increasing portion of the debt service of theurban water investments, beginning in 1991: 20 percent in 1991, 40 percent in 1992, 60 percent in1993, and 80 percent in 1994. SONEG and the state proceeded partly with a cross-debtcompensation and SONEG paid the rest in cash to the state in 1993, 1994 and 1995. As of July 31,1996, SONEG has paid all its service debt to the Government.

Rate Structure

5.16 The average water tariff is made up of the following two elements: the tarif exploitantand the redevance. The tarif exploitant is intended to cover SEEG's expenses, both foreign andlocal. The foreign currency portion is provided by donors at a decreasing rate --100 percent in1990, 1991, 1992, and 1993; 80 percent in 1994; and 60 percent in 1995-- in order to smooth outthe burden on water consumers. The local currency portion is the part of the tarif exploitantcollected to cover SEEG's local expenses. Although fixed, both portions of the tarif exploitanthave provisions that allow them to be modified according to economic criteria. The redevancewill cover SONEG's operations, investment expenses, and related debt service. This portion ofthe water rate is collected by SEEG and transferred to SONEG. Currently, although the averageconsumer rate stands at 880 GNF/m3, the poorest section of the consumers benefit from a "socialrate" equivalent to 680 GNF/m3. Also, the cost per connection averages 300 000 GNF, whereasthe consumer only pay 60 000 GNF.

Accounting and Internal Auditing

5.17 SONEG has set up to install and use efficient accounting procedures and systems whichenable it to efficiently monitor its accounting and financial management. SONEG has establisheda manual covering management, accounting, and internal control procedures. The internal auditfunction, however, is not as adequately carried out, and SONEG should recruit by March 1997 aninternal auditor with accounting and managerial skills.

Government Water Bill Collection

5.18 Government billing was based on a lump sum structure until 1990 and was grosslyovervalued. An individual lump sum billing structure was implemented for each publicconnection in 1990, and later, water metering equipment was installed. As a result, Govermnentwater consumption has changed drastically from 7.5 million cubic meters with global lump sum toabout 5.4 million cubic meters in 1993. In 1995, the Government implemented two measures tofurther reduce its water consumption and improve its payment ratio. It established a list ofGovernment services for which water consumption will be paid by the Government, andtransferred public standpipe water bills to local communities.

5.19 Government arrears periodically bring financial transactions between SEEG, SONEG, andthe state to a standstill. SEEG would make up for its Government arrears by not transferring thewater revenues owed to SONEG. And SONEG, in turn, would not submit withdrawal applicationsto the Bank for payment of TEE to SEEG. SONEG was able to negotiate compensatory cross-debtstructuring with the state to ease the burden of not receiving its portion of revenues from watersales. As of September 23, 1996, the state owed about GNF 4 billion in payment arrears to SEEG.On 25 September 1996, the state, SEEG and SONEG proceeded to a compensation of their cross-debts. Currently, the Government owes GNF 660 million to SEEG that also owns GNF 608

24

million to SONEG. The settlement of all Government arrears shall be paid to SEEG and SEEGalso should pay all arrears due to SONEG before Credit effectiveness.

Future Financial Analysis

Table 5-2. Projected Financial Indicators

GNF mi/ibmi996 1998 2001) 2002 2004

Urban Water Suply SectorTotal operating revenues 20,229 31,018 35,592 38,293 38,750Total operating expenses 20,687 24,192 26,527 28,458 27,049Debt service 6,033 13,052 13,224 14,168 13,535Net income (3,318) 1,467 3,765 4,289 7,174Net internal cash flow 2,481 4,845 8,189 9,476 10,490Net cash at the end of year (2,141) 2,687 3,565 5,093 7,243Accounts receivables 8,071 8,119 9,348 10,874 11,434Net fixed assets 125,422 162,297 189,786 203,877 233,263Long term debt 97,446 140,519 154,123 182,229 179,653Equity share capital 47,960 47,960 47,960 47,960 47,960

S.Q.N.E.G.Total from redevance 5,702 14,276 16,224 17,510 17,150Net income (4,110) 210 1,543 2,089 4,719Operating ratio 78% 62% 48% 56% 46%Net internal cash flow (1,080) 454 2,205 2,508 2,886Cash balance 1,668 1,505 1,358 1,226 1,106Internal cash contribution to investments 33% 22% 17% 17% 17%Net fixed assets 104,000 141,559 167,679 181,340 209,402Total assets 166,498 213,590 222,527 260,232 264,579Long term debt 99,665 140,519 154,123 182,229 179,653Equity share capital 46,660 46,660 46,660 46,660 46,660

Total revenues 14,527 16,742 19,368 20,783 21,600Operating ratio 95% 92% 88% 89% 88%Net internal cash flow 3,561 4,391 5,983 6,968 7,604Cash at the end of year 135 1,182 2,207 3,867 6,136

25

Urban Water Supply Sector

5.20 Conservative assumptions were used to make the following financial projections (Anne5-4). In conformity with the terms of the Second Water Project, the Tariff Exploitant Etrangerended on July 31, 1995. Sector's revenues will grow from 20 billion GNF in 1995 to 39 billionGNF in 2004. Revenues from water account for 13 billion GNF in 1995 and 31 billion GNF in2004 and water billed will increase from 14 million cubic meters to 35 million cubic meters. Netincome will rise from 6 billion in 1995 to 7 billion in 2004.

5.21 Disbursements of the proposed Third Water Supply Credit would start after mid- 1997 andinterest would be capitalized during construction. Interests and principal payments will start mid-2002 when assets thus financed are put into operations. Projected net internal cash flow figuresincrease by an average of 31 percent a year from 5 billion to 19 billion GNF which demonstratethe sector's financial viability and capacity to invest in productive assets, service the debt thuscontracted and maintain those investments. The sector's cash balance is continuously increasingfrom GNF1.8 billion to 7.20 billion in 2004. Long term debt represents an average of 78 percentof fixed assets as some debts are retired and some assets are financed with grants and internallygenerated cash. Possible internal contribution to investment averages 56 percent for the wholesector. Return on net fixed assets averages 4 percent, and current ratio averages 3.0 for the nextten years.

SONEG

5.22 Having progressively established a sound financial basis, SONEG has emerged as acommercially autonomous and financially viable institution. If the redevance rate stays at aroundGNF 420 per cubic meter in 1995, and thereafter is maintained from 1997 at a level adequate forSONEG to fulfill sector investments and debt service obligations (Annex 5-4). SONEG'srevenues will grow from about GNF 6 billion in 1995 to about GNF 17 billion in 2004.

5.23 The operating ratio continues to average a low value of about 58 percent, since SONEG'smain function remains to borrow to make sector investments, and to maintain assets. Theassessment of the value of fixed assets by an independent expert was finalized on schedule. Thisassessment brings down the total value of assets by about US$6 million, and book values arechanged accordingly for the projections. Using these, depreciation increases from GNF 4.3 billionon 1995 to about GNF 5.1 billion in 2004. SONEG's assets will be annually revalued on a pMfoQrm basis along procedures acceptable to the Bank. SONEG holds the total long-term debt ofthe sector, as well as its debt service. Interest owed is projected at GNF 2 billion in 1995 and GNF4 billion in 2004. Principal owed is estimated to be GNF 1.8 billion in 1995 and GNF 8.9 billionin 2004.

5.24 The possible contribution of internal cash to SONEG investments is estimated to average24 percent. The debt service coverage ratio averages 1.6 times (and the current ratio averages 1.5times) over the next ten years. The level of receivables whose reasonable objective can beforecasted at sixty days of sales will depend on SEEG's commercial and collection record. It willalso depend on SEEG transferring to SONEG, as soon as collected, the amount of revenuesequivalent to the redevance owed to SONEG as agreed in the lease contract. The cash balancewill be positive over the next ten years.

26

5.25 To comply with these yardsticks, assurances have been made during negotiations:

* That SONEG not enter into new borrowing arrangements unless a reasonableforecast of its revenues and expenditures which is acceptable to the Bank,indicates that projected internal cash generation by SONEG, for each year duringthe term of the debt to be incurred, will be at least equal to SONEG's projectedtotal debt service for that year.

* That SONEG not make any new investment until the end of the project that isestimated to cost more than US$5 million (or equivalent) each, unless suchinvestment is, in the opinion of the Bank technically, financially, andeconomically viable based on detailed financing plans and forecasts.

* That SONEG provide the Bank with consolidated financial statements for theurban water supply sector at the end of each fiscal year.

* That measures will be taken, including tariff adjustments, to ensure that SONEGand SEEG's revenues generate an annual rate of return of no less than 4 percent ofthe average current net value of their fixed assets for each fiscal years of 1998 and1999, and no less than 5 percent for each of the fiscal years thereafter.

SEEG

5.26 Ultimate responsibility for the sound development of the urban water supply sector restswith SEEG. The sector's actual financial performance will continue to depend on the pace atwhich this operating company reduces unaccounted for water level. As mentioned above, themanagement contract will be renegotiated in 1999. But, SONEG and SEEG have alreadysubmitted to the Bank an action plan to improve the Conakry water network and Government hasalso submitted a proposal time table to review SONEG and SEEG's remuneration. This isdesigned to improve the efficiency of the water supply sector and to assure compliance withcontract covenants already accepted.

5.27 According to the present contract, the current Tariff Exploitant Local (GNF 425 per cubicmeter in 1994) has increased to about GNF 550 per cubic meter in September 1995 to make up forthe stopping of the government financial support. Revenues from water sales based on this billingshould grow from GNF 7.4 billion in 1995 to GNF 14.3 billion in 2004 and operating ratioaverages 70 percent over the period since operating expenses (mostly salaries, operatingequipment, and French Partner remuneration) will remain high.

5.28 Other revenues from SEEG consist mainly of revenues from establishing new connectionsand other works. Assumptions regarding new connections are as follows: 6000 connections from1995 to 1996 at GNF 290,000 per connection, 7000 connections from 1997 to 2002 at the baseprice escalated by inflation, and 5000 connections thereafter at the base price escalated at theinflation rate. SEEG's investment activities will be limited to acquiring equipment for theinstallation of connections and the execution of works. The level of investment will be directlytied, therefore, to the actual cost of the equipment necessary to execute the works. Current ratio

27

averages should therefore be 3.5 over the next ten years, on top of rapidly increasing cash balance(33 billion GNF in 1995 and 6.1 billion GNF in 2004).

VI. PROJECT JUSTIFICATION AND RISKS

Project Benefits

6.01 The project key benefits would be threefold: (a) on the poverty and health side, the projectwill improve the quality and the access to safe drinking water and basic sanitation of urban and ruraldwellers; (b) on the financial side, the project will improve the viability of water and sanitation andstrengthen sustainable policy in urban water; and (c) on the productive side water would be availableto meet the demand of commercial and industrial users, removing an obstacle to the developmentof these sectors, and allowing of urban areas to become more efficient and competitive. Theproject will allow for increased, time savings for women and children, particularly in poor urbanareas. The latter would translate into greater opportunities for education and employment.

Poverty Alleviation

6.02 The project will target this population and, at the same time, better integrate poverty issuesin the design of urban and rural investments. Systematic community participation would beencouraged at neighborhood and village levels to elicit the actual demand of users, particularlywomen, who are usually the main water carriers in low-income neighborhoods. The proposedproject would have a direct impact on poverty alleviation in Conakry, by improving health,hygiene and the capacity for economic activity, particularly the poorest. Employmentopportunities would be available during the completion of the rehabilitation and expansion ofwater supply systems and the rehabilitation and extension of the sewage facilities; most of theworks will be carried out by local contractors and/or subcontractors. More than 40 percent ofGuineans do not have access to safe drinking water and proper sanitation facilities. The proposedproject would not only ensure accessibility to safe water by these disadvantaged people but wouldalso allow affordability through a water tariff structure. In order to offer further opportunities forpoverty alleviation, the medium and long-term strategic plans will enable future investments inwater supply and low cost sanitation services.

Project Sustainability

6.03 The development of the sector's long term policy, the institutional design with privatesector participation (SONEG's regulatory framework and SEEG's private lease-contract financialstructure), cost recovery and resource mobilization would continue to ensure the sustainability ofsupplying safe affordable water to a larger proportion of the population in urban areas and set thefoundation for extending safe water in areas. Operation and maintenance of the water andsanitation systems would be independent from government's subsidies, a rare situation indeveloping countries. In addition combining water supply, sanitation and hygiene educationwould maximize the health benefits and ensure a long-term impact. The sustainability of the sectorwill depend also on:

* Strengthening local capacity to plan, manage, and organize the sector.* Diversifying technological options.

28

* Improving the sustainability of the sanitation sector.* Clarifying responsibilities among both public and private actors.* Developing labor-intensive method.* Hiring local people.

Economic Analysis

6.04 The overall development objectives of the proposed project is to alleviate the effects ofpoverty and improve health by increasing access to safe and affordable water and sanitation; toencourage private sector participation by setting the stage for a second-generation affermage leasecontract; and to ensure sustainability by improving water pricing and cost recovery and developingGuinea's water sector regulatory and planning capacity (para. 3.02).

In terms of health benefits, the project would reduce the water-borne morbidity whichconstitutes the dominant cause of death among infants and children in Guinea. (For example,diarrhea diseases accounts for the largest share 20.3% of cause of death among the age group 0-4.)This would contribute to higher labor productivity of the population. It would also contribute toreducing public spending on health.

6.05 Economic analysis of the proposed project (ANNEX 6-1) focuses on quantifiableeconomic benefits from the urban water supply component, the largest component of the project,taking into account of a reduction in un-accounted for water due to improved managerialefficiency and the immediate rehabilitation of the water system, as well as consumer's surplusgenerated from the increase in water consumption per capita. In addition, the analysisincorporates benefits from urban sanitation components.

6.06 Affordability and willingness to pay. A nation-wide survey on willingness to payindicated that more than 75 percent households expressed a strong interest in water service byindividual connection, although 40 percent of present standpipe users preferred to keep theircurrent means of water supply because they could afford other methods. Among the people whopreferred individual water connection, only 10 percent in Conakry (and 20 percent in othercenters) were willing to pay the total cost of water use. Moreover, the majority of the populationwas not willing to pay even the average consumer rate, estimated as 880 QF/lm3 in 1995, which isamong the highest in the region. The high consumer rate is due to low water sales, and it isrecommended to be reduced to a more affordable level. Currently, although the average consumerrate stands at 880 GNF/m3, the poorest section of the consumers benefit from a "social rate"equivalent to 680 GNF/m3. Also, the cost per connection averages 300 000 GNF, whereas theconsumer only pays 60 000 GNF.

6.07 Marginal Cost. The long-run marginal cost (LRMC) of the water supply system, asexpressed by the average incremental cost (AIC), is estimated at 1,027 GNF per cubic meters,using a 10 percent discount rate to reflect the opportunity cost of capital (for detailed calculations,see ANNEX 6-1).

6.08 Economic Rate of Return. The economic rate of return of the water component wascalculated taking into account the probable benefits that would occur from the incrementalquantity of water the project supplied. This incremental amount of water would be used by thebeneficiaries both to replace previously used sources (water from vendors), and to increase water

29

consumption. To calculate the benefits from the increase in water consumption, we have estimatedthe additional consumers' surplus, which arises from the increase in water consumption assuminga linear demand curve and price elasticity of -0.2. The estimated economic rate of return (ERR) ofwater supply component is 13 percent with shadow prices adjusted. The ERR does not take intoaccount the benefits from positive externalities such as improved health and productivity as theresult of the better availability and quality of water cannot be quantified.

6.09 Sensitivity Analysis. A sensitivity analysis has been carried out to measure the effect of therisk of cost-overrun, lower demand, and delay in implementation as shown in table below.

Table 6-1. Estimated Rates of Return for Various Project Scenarios

iPeo)w/r .S;ce,arie Lsiun eed IRR

Base Case "most likely" scenario 13.3%

10% increase in water investment costs 12.8%

10% increase in water operating costs 13.2%

10% increase in total water costs 12.8%

20% increase in water investment costs 12.3%

20% increase in water operating costs 13.2%

20% increase in total costs 12.3%

50% lower projection water demand 10.0%

2 year delay in implementation 10.2%

Project Risks

6.10 The risks involve: (a) water consumption lower than expected due to macro conditions orlow demand for service connections; (b) and the pace at which communities would be mobilized andsensitized to participate, and their willingness to pay for water and sanitation services. The first riskwould be mitigated by introducing an extension social connections program financed by the projectat a low cost, and by reducing water rate for the poorest portion of the population; in addition, otherdonors (France, Japan, Germany) are financing in parallel water works and water connections forhouseholds at low cost for the consumers in Conakry and in other urban centers with an extensiveconnections at a low cost. The second risk would be mitigated by a systematic use of beneficiaryassessments and public information through the mayors, NGOs and community leaders. Thefollowing activities carried out will also help to minimize the project's risks: a water demand review,beneficiaries assessment including general survey, and willingness to pay studies. However, anuncontrolled expansion of inadequate water operations in secondary centers could jeopardize thefinancial viability of the sector; to minimize this risk, it has been agreed during negotiations thatSONEG will not make any new investment estimated to cost the equivalent of more than US$5

30

million each, until the end of the project, unless such investment is in the opinion of the Banktechnically, financially and economically viable, based on detailed financing plan and forecasts.The implementation of sector development strategy would also help minimize any project risks. Anetwork rehabilitation action plan agreed between SONEG and SEEG, has already been submittedfor review to the Bank. In addition, at the end of the ongoing contract, a second-generation leasecontract, with terms and conditions acceptable to IDA, should be signed no later than July 31,1999. On sanitation side, the completion of the ongoing institutional arrangements and cost-recovery study and the selection of the private operator for the waste water management will beconditions for disbursement against expenditures related to the physical component for thesanitation works.

VII. AGREEMENTS REACHED AND RECOMMENDATION

Agreements Reached

7.01 The following agreements have been obtained from the Government of Guinea andSONEG:

(a) Submission by SONEG to IDA of its financial forecasts for at least the followingfive years, with its annual operating and capital expenditure budgets for thefollowing year, for review no later than two months before the end of each fiscalyear (para. 2.27).

(b) Submission by the Government and SONEG to IDA of a revised version of thecontrat-plan for the three coming years no later than two months before the end ofeach fiscal year (para. 2.27).

(c) Contracting of sewerage service management to a private operator by December,1998 (para. 2.28 and 4.03).

(d) Government' s counterpart funding of a total amount of $1.2 million (para. 3.07).

(e) Implementation by SONEG, DNH, and DATU, of the agreed action plan forimproving the overall water and sanitation sector in Guinea; and project's carryingout in accordance with the implementation manuals (para. 4.02).

(f) Standard bidding documents recommended by the Bank will be used to preparethe procurement documentation. A procurement plan and procedures formanagement and procurement have also been submitted for review by SONEG toIDA (para. 4.04 to para 4.07).

(g) Submission by the Borrower and SONEG to IDA, no later than six months afterthe close of their fiscal years, of auditor's reports including: audited financialstatements of the special accounts, project accounts, SOEs audited by independentauditors acceptable to IDA (para. 4.10).

31

(h) Periodic reporting by SONEG on its operating and financial performances, andSEEG's ones, using agreed upon monitoring indicators (para. 4.10 and 4.11 ).

(i) A project mid-term review to be carried out by May 31, 1999, involving IDA andrelevant Government agencies (para. 4.12);

() SONEG will not make any new investment estimated to cost the equivalent ofmore than US$5 million each, until the end of the project, unless such investmentis in the opinion of the Bank technically, financially and economically viablebased on detailed financing plan and forecasts (para 5.25).

(k) Measures will be taken, including tariff adjustments, to ensure that SONEG andSEEG's revenues generate an annual rate of return of not less than 4 percent of theaverage current net value of their fixed assets for each fiscal years of 1998 and1999, and not less than 5 percent for each of the fiscal years thereafter (para 5.25).

(l) SONEG or the Government, on behalf of SONEG, will not enter into a borrowingarrangement unless its projected internal cash generation would be at least equalto the project sector debt service not reimbursed by the Government (para. 5.25).

(m) Signing of a new management contract with terms and conditions acceptable toIDA, no later than July 31, 1999 (para. 6.10).

Conditions of effectiveness

7.02 The following will be the conditions of effectiveness:

(a) The signature by the Governient and SONEG of a three-year rolling contract-plan that includes an investment program acceptable to the Bank (para. 2.27).

(b) Signing of the subsidiary loan agreement between the Govermnent and SONEG,acceptable to the Bank (para. 3.06).

(c) Opening by the Government of two project accounts in a commercial bank in thenames of DATU and DNH, with an initial deposit of US$150,000 for DATU andof US$50,000 for DNH.

(d) The settlement of the Government' s arrears to SEEG (GNF 660 million) and thesettlement of SEEG' s arrears to SONEG (GNF 608 million) (para. 5.19).

32

Condition of disbursement

7.03 The following will be the condition of disbursement:

(a) The completion of the ongoing institutional arrangements and cost- recovery studyand the selection of the private operator for the waste water management byDecember 31, 1998, will be conditions of disbursement against expendituresrelated to the physical component for the sanitation works (para.2.28 and 4.03).

Recommendation

7.04 With the above agreements and actions, the proposed project would be suitable for IDAcredit of SDR 18 million (US$25.00 million equivalent) on standard terms to the Republic ofGuinea.

a ;l R

I r oh i5 I ,.xi a at ~~~~~~~~~~~~~~~~~~CL a

I!. ~~~ I'.9 g. 0 .. wt~L. C0. jg~.i 1 fC C V

R~~~~~~~K[i

ir~~~~~~~~~~ I B

RELATIONS BETWEEN THE ACTORS

49°/e 5 1% ,STATE ..... FOREIGN .NVESTOR.

shareholders agreement MANAGER

sector strategy & investments management contractentreprise contract

NATIONAL WATER AUTHORITY Lease contract WATER MANAGEMENT COMPANY(SONEG) (SEEG)

Redevancew T subscription contract

* -- * Contractual links(CONSUMRS

,,,...> Ownership

4 Financial transfers

Iii -

ANNEX 1-2Page 1 of 7

REPUBLIQUE DE GUINEETravaiI-Justico-Solidant6

L MIlnlstr de L'Urbanisme LeMlnistre de I'Agricultur. La Ministre des Ressourceset de r'abitat des Eaux et Forts Naturulles at de l'Energib

,L Ff1

ANNEX 1-2Page 2 of 7

I

I- INTRODUCTION

La prescnte lettre a pour but de d6crire la politique de d6veloppcment du Gouverncment dans lesocteur des ressources en eau ainsi que les sirat6gies et principes d'action dans les sous socteursde la gestion et 1'administration des caux, de l'alimentation en eau potable en milieu urbain et ruralainsi que de l'assasinissement.

11- STRATEGIE GENERALE DU SECTFAUR

L'cau en tant que source de vie, a toujours constitui pour le Gouvernement de la Republique deGuinde uno prfoccupation prioritaire dans sa politique dc d6veloppement social et cconornique,tant dans les villes et agglorncrations periurbaines qu'en milieu rural.

La recherche de Ia mobilisation et la mise a disposition des usagers dc cette ressourcefondamentale a toujours occupe une place de premier plan. C'est ainsi qu'au cours de la dernieredecennie ddcretce par les Nations unies "IDcennic Internationale de 1'eau Potable et deI'Assainissement", la Republique de Guinec avec le concours de differents partenaires aud6veloppement, a 61abor6 et cxecute plusicurs projets de planificaLion des eaux ainsi quod'alimentation en eau potable et d'assainisscment. Ces Projcts ont permis de realiser diverscsactivitis de maltrise et de mobilisation des ressources eii eau ainsi que de couvrir les besoinsurgents Jes populations desservies.

La con:orence mondiale sur l'eau potable et l'assainissemcnt tenue a New Delhi en lnde en 1990, ad6gag6 pour chaque pays la n6cessite de sc doter d'une strategie dans It secteur de l'eau.

La mise en oeuvre de la strategie de d6veloppement du sectcur scra articulce autour des soussecteurs suivants:* Gestion et administration des ressources en eau;* Hydraulique urbaine;* Hydraulique rurale; et* Assainissement (urbain et rural)

A - GESTION ET ADMINISTRATION DES RESSOURCES EN EAU

La strat6gie sp6ciEque de cc sous sectcur s'ariicule autour de Ia mattrise et de la cohorence desactions suivantes placoes sous la responsabili16 de la Direction Nationale de I'Ilydraulique (DNII)qui en a la charge selon Ia Loi en vigueur portant Code dc l'Eau de la Republique de Guinee* R*7. + .... ... ...

ANNEX 1-2Page 3 of 7

2

e. D6finition. mnise en place des organes du Fonds de l'Hydraulique ct prise de toutes Icsmesures utiles pour leur fonctionnement continu on vue de&participer au financement dusecteur,

f Constitution et gestion de banque de donn6cs et d'information sur les ressources en eau(quantit#, qualit6, utilisation); publication d'azuiuaires ct de bulletins hydrologiqucs;

g. Formation, information sensibilisation et animation des institutions ct du public impliqu6 dansla gestion et l'administration des eaux (services et organismes publics, collectivitesd6centralis6es et locales, utilisateurs des caux);

h. La promotion de la cooperation internationale, inllergouvcrnementale et intercomnunautaireen maticrc de miso en valcur et de gestion inlegr6es des ressources en eau notanunent descaux partagees tranafionti&es

Plan d 'Actions

La plan d'actions envisage dans le sous secteur comprend principalcment ls travaux ci-aprds dontle financenent sera assur6 par le 3cme Projet Eau et Assainissement dans sa composante "Gestiondes ressources en cau":L. definition globale du cadre national de gcslion et d'administration des ressources en eau ainsi

quo du r81e de planification/programriation du sec;teur;ii. poursuite de I'etablissement et la mise :n oeuvre de textes d'applic4tion du Code de 1'Eau et

d'a.itres Lois connexes;iii. mriLe en place et equipement des organes du Fonds de l'hydrauliquc a tous les niveaux requis

er. vue d'assurer le recouwrmentt des recettes (redevance pour utilisation de l'eau brute,cortr6le de la pollution, taxes, amend-s etc.) et lour gestion,

iv. 6ftues spdcifiques permettant unc gesuion int6gric des caux de surfaces et souterraines parbak. n versant (r6seau de survcilancc, Au .lite des eaux, lignes directrices et plan d'actionsdit. U.), d6finition des r6scaux de pr-visions hydrologiqucs, pi6zometriques ainsi que desuii hydro-icologique;

V. Poursuite de la formation du personnel de la Direction Nationale dc I'Hydraulique;vi. acquisition des 6quipemrnts logistiqucs, teciniques et scientifiques necessaires aux unit6s

op6rationnelies au niveau central, r6gional ce sub-r6gional,vii organisation de seminaires et aleliers ainsi que de campagnestsensibilisations i l'intentiondu personnel de l'Adniinistration, la Police des caux et respectivement les collectivitesd6esntralis6ecs et les utilisatcurs des caux.

B- BYDRAULIQUE URBAINE

La Soci6t6 Nationale des Eaux de Guinee (SONFG), soci6te de patrimnoine a capital public, a 6t6mise on place et devenue op&ratiosunelIr Ic ler Aout 1989 avec commg tAche principal.I'approsisionn.ment an eau potable des crilrer iulrhmins do Gulni. (planifio&6ion, inv 3stiacuaz,execution des projet, exploitation des installations, service de la dette).La fonction "exploitation" a &d sous traitee i la Socidt6 d'Exploitation des Eaux de Guin&e(SEEG), soci6te d'Aconomic mixte constiLu6c par l'Etat guineen ct les partenaires priv6sprofeasionnmls de l'au. Ls prestations assigndes i la SEEG font l'objet dun contrat d'exploitationconclu avec la SONEG pour wic dur6c de 10 ans (I1988-1998). Ladoption do cc nouveau cadreinstitutionnel et l'ex6cution parallile du Sccond ProjeL Eau de Conakry ont contribue i ahnliorersensiblanent la situation g6n6rale du secteur.

ANNEX 1-2Page 4 of 7

3

La Strategic envisagec pour le d6veloppemcnnt du sectcur comporte:1. Ia realisation de travaux ncufs el de tiavaux de rchabililation en vue d'une part d'assurcr une

utilisation maximale des capacit6s actuciles dc production d'eau potabic, d'autre part defavoriser l'acc6s i l'eau au plus grantd nombre possible de m6nages par l'execution debranchement privds;

2. l'adoption et l'application de mcsures appropriecs pour une lutte efficace contre les p"rtes ctgaspillages d'eau;

3. I'am6lioration des arrangements institutionnols adopt6s an 1988 pour les sectours urbains del'eau;

4. I'adoption de mesures appropriees d'aJustement dcs tarifs en vue de parvenir a un taux derentabilit6 interne positif;

S. l'application des mesures efficaces pour l'animioration du rendcment du reseau notanunent iConakxy; ces mesures seront ex6cuties en collaboration avec l'exploitant;

6. I'adoption des tnesures appropri1es visant a renforcer la viabilitd financiere du secteur urbainde l'hydraulique par I'am6lioration du taux de recouvrcment des facturcs pour les abonunesprives et pour l'Administration.

Plan d'Actinns

Pour atteindrc les objectifs vises, Ic plan d'actions envisagd par la SONEG comporte:Ia uise en oouvre d'un 36mo Projet Eau et Assainissernent qui scra articulc sur le programme detravaux durgence visant le renforcernent et 1'extension des sysL6mes d'aiimentation en eau deConakrv. Dans le cadre du 3eme projet cau, la composante relativc a l'alimentation en eaucomport.cra principalement les travaux ci-apr-s: (i) la rehabilitation et 1'extension du reseau dedistribution d'eau de Conakry pour 300 kin de canalisation; (ii) la construction de deux r6servoirspour Conakry; (iii) le raccordement de quelqucs 20.000 m6nages supplementaircs a leaucourante.

Recouvrcment des factures

A partir de Janvier 1995 le Ministcre des Finances, qui est charg6 du r6glement des facturcs d'eaude l'Administration, a d6cidc de procdder a partir dLi budget 1995 i la d6centralisation des facturcsau niveau des diffcrents consommnateurs (Ministeres, Ltablissements ct collectivit6s publics etc.).Cette nouvelle disposition, scion laqucile chaquc entitc est directemcnt rcsponsabic du reglementdes factures amcnera celle-ci a mieux contr6ler sa consomiiation.

C- HYDRAULIQUE RURALE

L'objectif pour ihorizon 2005 a ctd fixe a 15.000 Points d'Eau (P.E) en prenant en comnpte leschiffres des 3 premiers niveaux d'urgences du logiciel de programnmation, los capacit6sdabsorption des financements par le SNAPE (capacitd de r6alisation basee sur les stalistiqucs,capacit6 d'assurer le contr6le ct l'animation des populations), les capacit6s du Minist6re desFinances i mure on place ls contrcpartics provues dans les conventions do financerntnt, Icscapacitcs des bailleurs de fondis a poursuivre les iznvestissernents dans le sous secteur deI'alimcntation cn eau potable du monde rural, l'existencc d'une demande solvable de la part descommunautes. Le chiffre de 800 ouvrages par an est apparu au terme de ranalysemultidirectionnelle comme parfaitement raisonnable,

ANNEX 1-2Page 5 of .7

4

Avec 15.000 P.E en I'an 2005, pour une population rurale estimne a 5.400.000 habitants i ecCte6poque, la population moyenie scra de 360 habl/P.E au lieu de 625 actucllement.

La programmation 1995-2005 sera basee sur les principes suivants:* aptitude des b&ndficiaires a garanlir la durabilite des equipements reposant sur la prisc en

charge des frais r6currents corrcspondafit i l'entreticn et au renouvcllernent des moyensd'exhaure;

* rdpondre i une demande solvable pour un servicc d'une qualitc donnec i un codt donnd, lescrit6res des dernandes pouvant ctre quantitatifs ou qualitatifs (distance de partage, accessibilit6des points d'eau, qualite de 1'eau, etc.);

* associer les comznunaut6s au processus dc d6cision depuis la conception jusqu'i la mil enoeuvre;

• am6liorer les conditions d'hygiene, et mettre en oeuvre des actions d'assainissemnent telle quo1'6ducation sanitaire pour completer l'apport de l'eau potable pour la sante;

* assurer Ia pircnnitd de la prdsence des op rateurs economiqucs proches des comrnmunautes,artisaas et commercrants, que le pi-ogratnme devra s'attacher a promoouvoir et a suivre;

• d6veioppement de J'utilisation des structures de cr6dit (rural ou mutuel) pour la mobilisation deN'cpaigne et du crtdit pour l'accession au renouvellement des 6quipcments d'exhaurc.

Ces nouveaux objectifs imposent un r66quilibirage gcographique en faveur de la Guince Foresti6recl Maritimle, oz leas eaux do surface sont .ceites abondantes mais pas toujours d'acclk facile atsurtout irtpropres i la boisson. Auzenient dit., Ic criLercs d'intervention qui ont dcl jusqu'en 1995ossentiellement quantitatifs vont pour la prockaiv.- d6ceMie devenir surtout qualitatifs: qualit6 dci'cau en premier lieu, puis qualitc du service. La selection dcs villages i dquiper se fera dans lerespect des principcs pr6cidents. La prograimatiuni des r6alisations s'appuicra sur une promotiondes demanides d'6quipements menees a parLir des bascs r6gionales ainsi qu'a l'occasioli des etudesde faisabii5 t6 des projets et de Ieur cxecution.

Pour perniettre de maniere effective la durabilit6 des equipements qui repose sur sa pLisc en chargepar les unapcrs, le dispositif de suivi maintenance s'oriente d'abord vers I'accroissement desstructures regionales qui en sont charg,6es afin qu';l y ait correspondance avec Ics nouvelles regionsadministratives, en mime temps une serie d'actions d6vclopp6es au chapitrc 4 de V'annexe 2, d6jien cours seront poursuivies et d'autrcs nouvelles seront rises en oeuvre.

Plan d'Acrions

Le 3 eme ,,rojet comporto uno composantc aliinentation cn eau et l'assainisseiment des villages.Cette coni. Nosantc pilote comprend: (i) un prograinmc de distribution d'eau et d'assainzsscment auniveau dt~ comnunautes; Cii) la promotion d'un programme d'education et dhygiene pourmobiliser et fonner lea menages.Cetto composante soutiendra 6galemcnet Ic SN AE pour 6tablir un progranime d'alimentation eneau ct d'assainissemcnt an milieu rural ci iliettr en place un syst6me pilote d'assainissemcnt ennilicu rural (assainissement A faible coOt), an associant, au deli des communaut6s, les ONG ct oules autres agences privdes intervenant en milieu rural avec le d6veloppement de programmed'6ducation publique et d'hygienc.

Le plan d'actions envisag6 par le SNAPIi dians Ic cadre de ses activites se r6sume ainsi qu'il suit:

ANTNEX 1-2Page 6 of 7

5

i. poursuite des actions en cours. prograiimatioi, planificatinrr;suivi ivaluatioiA, pJdtage clesroaponabelit6s;

ii. d6centralisation, cxtensions des actions a 1'cnsemble du pays: 6quipement des ccntresseconaires;

iii. coordination avec les autres scrvices intervenant dans lc secteur de l'eau;iv. assainissement, suivi de la ressource-impact sanitaire;v. vulgarisation agricole.

D- ASSAINISSEMENT URBAIN

Le Prograirne d'Amelioration del'Environnement Urbain et de I'AssninisscliLnnt de Conoksy(PADEULAC ) u. pour objec.tif cssential d'aniliurer la situation physique, sanitaire et socio-economique de la population urbaine de mnaniere significative par:- la r6habilitation d'infrastructures urbaines (dont le rdscau d'cgout de Kaloum, Kip6, Universite,Dixinn, viabWisation des marches, rehabilitation de la voiric non revetue);- la rtalisation d'op6rations d'amenagement de terrains et d'espaccs publics;- I'arndioration des services urbains de base tdrainage ct ramassage des ordurcs).- Promotion des activt6s de recyclagc dcs d6chets

Les m6canismes de financemeiit reposent sur les principes suivants:* adaptation du niveau des services urbains aux ressources effectivement mobilisables auprcs

de leurs benificiaires,* d6centraUisation maxinale des setvices urbains afin de perrnettre la r6cup6a atiion de 1cur coOt

par un paicziaLnt direct de leui s bdndficiaircs;* facturation aux administraLions publiques des frais r6els des services urbains dozit clies

bn6ficient afin d'assurer une transparcnce des couts, en remplarant notamment lessubventions d'6quilibrcs par les dotations budgetaires; et

* financement des services non d6centralisables ou non facturables (infrastructures prirnaires etsecondaires) par des budgets de IT'Eat, de la ville et de cormnunes en fonction de I'aircrespective desserte de l'infrastructure conceinde (identification des usagers/beneficiaires)-

En premiere phase le 3eme Projet Eau et Assainissenciet comporte dans sa composantcassainissement Faction suivante:

Assainissenient des eaux usees ct des cxcreta:

Etude institutionzielle et recouvromczit des coats pour la gestion du r6seau d'eaux usies deConakry; identification d'un opdraLeul prive pour la gestion des eaux usees; rehabilitation etextension du reseau collectif existant; promotion des technologies autonomes d'assainissemcntindividuel pour la plus grande partie de la population urbaine (programme de sensibilisation et deformation); ameiioration des circuits de vidange des fosses par l'amnnagement et la gestion deslatrines publiqucs existantes et construction dc nouvelics latrines publiques lorsque les conditionsde gestion de ces equipements justifieront de tels investissements (equipcmcnts et participationcommunautaires, comitds de gestion, operateurs prives); et traitement des effluents par desstations de lagunage.

ANNEX 1-2Page 7 of 7

6

Z. CALENDRIER

Un calcndrier dstailld dc mise cn ocuivre dcs actions et principcs definis ci-dcssus cstdon6 dans les tabicaux joint ci-apr6s.

Fait a Conakry le... .......... I6

Le Ministre de L'Urbanismc Le Ministre de l'Agriculturc Le MinisLre des Ressourcesct de I'Habitat des Eaux et Forets Naturelles ct de IlEncrgic

Dr. Aplha ousls8/ tn PsuL FIMF2£1 \I

ANNEX 1-3Page 1 of 2

Sector.! Stra1v Letter for the Imorovement of Urban Sanitadon

A sa result of the Mash 1993 seminar. a sectoral sty letter for the improvement of urban sanitationdwas eveloped an atified by the participants. It serves as a frae of reference for the various actors of

the sector and has most notably served as a basis for developing the third IDA projet on urbnnitation and the environment

SECTORAL STRATEGY LETTER FOR THE IMPROVEMENT OF THE URBAN SANfTATION

1. Geneal orfncides

Desire to attack simultaneously the problems caused by;deeioration ot the urban emironmentpoverty and under-employment in the city; anddebriorafton of public financing.

Implementation of an approach aimed at:

O developing human resources at all levels of intervention;O promoting end supporting grassroots-level initiatves (listening, awareness-aising, training);O mobilizing the unemployed labor force by promoting appropriate technologies, using whenever possible smal

and medium-sized businesses and labor-intensive methods;O progressively assuring replicablity of operations by matdcing thm to human resources and available

flnancial resources and by use of mechanisms which allow for continued cost recovery of services renderecdand

O choosing technical solutions which emphasize on-site, decentralized and evoMng solutions, with maximumparticipation of the target population.

2- Insftufnal f/tmework

Need for clear assignment of roles and responsibilities among public and private sector agencies andbenefiidaries, as regards training, project design, funding, implementation, management and maintenance.

Q Identification of priorKy actions, by means of responding to and dialogue with the populations concemed, byencouraging their participation and representation in residents' assocations, NGO's, and neighborhood,district and city councils;

O Approval and montoring of the Strategic Sanitation Plan In its environmental aspects by the National Councilon the Environment;

O Creaton of the Committee for the Strategic Sanitation Plan which will replace the Monitoring Committee ofthe PADEULAC. This committee will associate the relevant administrative services, the districts, NGOC andother organizations which are active in the urban sanitation sector.;

O design and preparation of annual action programs (consciousness-raising, training, implementation) by theTechnical Services of the city and the districts (Integrating in particular the experience and lessons leamed bythe UPSU, the PADEULAC, and the PADSEICAT/IDA);

O approval of the action plans by the City Council;O management of the serAices under the jurisdiction of the decentralized administrative services,

Implementation and tasks assigned to the private sector;O contractng authority: AGECO or any other specialized organization, which will be assigned the task of

managing the maintenance, rehabilitation and construction of infrastructures and public spaces, carried outby small and medium-sized businesses using labor-intensive techniques.

3. Funding mechanisms

In order to ensure the replicability of the actions to be undertaken, funding mechanisms will be based on thefollowing principles:

O adaptation of the level of urban services to the resources actually available to the beneficiaries;O maximum decentralization of urban services in order to allow for cost recovery by means of direct payment

PADEIA.AC - Summary of Strategc Proposals p

ANNEX 1 3Page 2 of 2

by the beneficiaries (short circuit):O biling of public administrative services for the actual cost of the urban services which they rec In order to

ensure accuacy of costs, In particular by replacing subsidies by budgetary allocations; and• financing of services which cannot be decentralized or billed (primary and secondary infrastructures) by state.

municipal or district budgets, depending on the respective coverage zone of the infrastructure in question(identification of users/beneficiaries).

4. Hkh Pforitv Actions

4.1 Wastewaer and ercrete disposal

a promotion of on-site sanittion technologies (improvement of existing fcilities and/or construction of Improvedlatrines) for the majority of the urban population (via consciousness4ralsing and training programs);

a improvement of drcuits for emptying of latrine pits by Installing and managing dump sites (immediate choicoe ofsit of OBK oxydation ponds) and training and promotion of sanittion agents who will do the emptying;

O Improvement of managemnnt of ewdsting public latrines and construction of new latrines when conditions justiysuch Investments (community equipment, management committees, private operators); and

O treatment of city sewage by oxydation ponds (immediate choice of site of Petit Bateau).

4.2 Impovwement of solid waste managent

O support for organization of pre-collection and'armnging for dumping sites;a privatization of collection services for solid wastes;a direct payment by the beneficiaries (households, neighboring communities, buinesses, markets, administrative

servies) for the services which they receive; and3 arrangement of the Miniere site as a controlled landfill to be managed by a privt. contractor.

4.3 DrOIng and urban Infrastructures

0 Reduction of volume of water to be drained by construction of smaU dikes and tering mechanisms upsbma improvement of the functioning of existing drinage mechanisms (secondary and tetiary networs) by a

program of continuing maintenance (cleaning), periodic mainenance (repair) and rehabilitation (critical pointsdand

0 improvement of the cleanliness of the adminitative and busines district, collective equipment and maukts, bysweeping and cleaning operations assigned to private contractor.

4.4 mprovemnt of the environment within neghborhoods

Support for grassroots-level initifatives and for taking of responsibility by the population concemed for managingmaintenance and Improvement of4hder Immediate environment by means of integrated trining programs.consdousness-aising and micro-installations as follows:0 wastewater and excreta disposal: (i) promotion of on-site technologies for indMdual and public latrines; (li)

disposal of wastewater (soakaway pits, infiiterafion ditches), and (tii) latrines, showers and public washhoues;0 improvement of solid waste management (i) organization of pre-collection; (tt) equipping of dump sites;O drainage and urban infrastructures: (i) small dikes and drainage ditches; (ii) protection against erosion; (tti)

cleaning and maintenance of drainage ditches; andO arrangement of public spaces: (t) sweeping, maintenance and arrangement of public spaces, (ti) gardens; (il)

arrangement of pedestrian walkways; and (iv) neighborhood beautification.

. Secon vel orlondtv wctions

A1 Wshtwater and *xerets disposal

a Identification of a private contractor for management of the network for wastewater disposal, and a fundingmechanism; rehabilitation of the existing collective network and extension to densely-populated neighborhoodsand heavy polluters:

52 lmpwoement of solid waste management

0 promotion of activities for recycling of wasteO construction of a new landfill

5.3 Drainage and urban infrastructures

0 small construction projects (sidewalks, public open spaces), gardens and maintenance of public parks

4 Imprvnement of the environment within neighborhoods

0 Improve_ent of solid waste management sorting of trash by the consumer, recycling, re-use.

PROJECTED TEN-YEAR INVESTMENT PROGRAM(US s '000)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 TotalSECOND WATER PROJET 12,930 6,790 720 - - - - - - - 20,440

IDA loan 5,491 3,256 - - - - 8,747Odter loas 5,239 2,465 720 - - - 8,424Grants 480 - - - - - - - - - 480Seff-finacing 1,720 1,070 - - - - - - - - 2,790

THIRD WATER PROJECT - 175 6,887 17,305 14,470 5,653 - - - - 44,488Conakry (IDA) - 145 4,624 6,443 4,412 2,015 - - - - 17,638Conakry (odter lons) - - 289 6,324 5,891 2,788 - - - - 15,292Second Cete (other lo) - - 944 1,938 1,998 - - - - - 4,879Grants - 20 690 1,730 1,450 570 - - - - 4,460Self-fincing - 10 340 870 720 280 - - - - 2,220

OTHERPROJECTS 15,950 35,880 18,010 4,000 - 2,380 2,450 - - - 78,670Loans 10,060 19,490 11,360 4,000 - - - - - - 44,910Grants 5,890 16,390 6,650 - - 2,380 2,450 - - - 33,760Self-financing - - - - - - - -

FOURTH WATERPROJECT - - - - - 406 18,280 29,770 12,320 1,360 62,136IDA loan - - - - - 306 4,565 6,877 2,032 - 13,779Other loas - - - - - - 8,646 14,634 6,869 990 31,138Grants - - - - - 50 2,740 4,460 1,850 200 9,300Self-financing - - - - - 50 2,330 3,800 1,570 170 7,920Gmnd Total 28,880 42,845 25,617 21,305 14,470 8,439 20,730 29,770 12,320 1,360 205,734IDA loans 5,491 3,400 4,624 6,443 4,412 2,321 4,565 6,877 2,032 - 40,163Loans 15,299 21,955 13,313 12,262 7,888 2,788 8,646 14,634 6,869 990 104,642Gmnts 6,370 16,410 7,340 1,730 1,450 3,000 5,190 4,460 1,850 200 48,000Self-flnsndng 1,720 1,080 340 870 720 330 2,330 3,800 1,570 170 12,930

aqNo -

M,l0

ANNEX 1-5

Page 1 of 5

GESTION DES RESSOURCES EN EAU

TERME DE REFERENCE

I- INTRODUCTION

1 - Cadre general

Le troisieme projet eau et assainissement de la Guinee qui sera cofinance par la BanqueMondiale et par d'autres bailleurs de fonds a trois objectifs principaux: (a) Social (i)augmenter l'acces a 1'eau potable des menages, surtout dans les quartiers a faibles revenus etsurpeuples de Conakry et dans certains centres secondaires; (ii) dans le milieu rural, creer uncontexte favorable a la prise en charge effective de l'alimentation en eau potable et del'assainissement et l'education sanitaire par les communautes rurales en fonction de leurcapacite financiere reelle; (b) La gestion des ressources en eau (i) mettre en place une strategienationale de la gestion des ressources en eau; (ii) mettre en place une strategie dudeveloppement du secteur de l'eau potable et de I'assainissement; (c) Renforcer le cadreinstitutionnel du secteur.

2 - La Republique de Guinee appartient a la zone du climat tropical dont l'une descaracteristiques principales est I'alternance au cours de l'annee de deux saisons s&he ethumide qui commande le regime des eaux dans leur cycle naturel.

La position geographique particuliere du pays par rapport a la c6te Atlantique du continentainsi que les caracteristiques de son relief et de son reseau hydrographique conferent a ladorsale guineenne un r6le de veritable chateau d'eau naturel pour l'Afrique occidentale;

La Loi guineenne en vigueur definit les ressources en eau comme d( 1'ensemble des eauxcontinentales de la Republique de Guinee dans toutes les phases du cycle de l'eau >, et elledefinit la gestion rationnelle de ces ressources comme l< 1'ensemble des mesures a prendre afind'en assurer l'inventaire quantitatif et qualitatif permanent, la protection, la mise en valeur etl'utilisation optimale, compte tenu des besoins sociaux, economiques et culturels de laNation )>.

1'ensemble des instruments directeurs regissant les procedures et modalites de gestionrationnelle des ressources en eau guineenne doivent prendre en compte les caracteristiquesphysiques et hydro-ecologiques particulieres mentionnees ci-dessus.

II - SITUATION ACTUELLE DES RESSOURCES EN EAU

2.1 - Contexte h% droclimatologique

Quatre regions 11,Aurelles differenciees aux plans hydroclimatologiques et ecologiquescomposent le territoire national guineen:* La Guinee Maritime: environ 34.600 Km2 de superficie constituee en tine bande longeant la

c6te Atlantique sLir pres de 300 km, avec une pluviometrie moyenne annuelle de 2.500 mmrepartie sur 6 a 7 inois de Mai a Novembre;

ANNEX 1-5

Page 2 of 5

* Ia Moyenne Guinee: environ 67.000 km2 de superfice dominee par le Massif du FoutaDjallon, avec des precipitations de 1.700 mm en moyenne par an, reparties sur 5 a 6 moisde Mai a Octobre;

* Ia Haute Guinee: environ 113.000 km2 correspondant au bassin superieur du Niger enGuinee, avec 1.500 mm de pluviometrie annuelle, repartie sur 5 mois de Juin a octobre;

* Ia Guinee Forestiere: environ 30.800 kin2, constituee d'ecosystemes montagneux dominespar le Massif du Daro et la chaine des Monts Nimba, avec 2.250 mm de pluie annuellerepartie sur 9 A 10 mois de mars A Novembre.

Le reseau hydrographique rayonne A partir de la dorsale guineenne qui traverse le pays duNord-Ouest au Sud-Est comprenant les massifs dominants du Fouta Djallon et du Daro-Nimba.

Du massif foutanien et de ses contreforts occidentaux partent les principaux fleuves soudano-saheliens vers le Nord (Koliba-Corubal, Gambie, S6n6gal) et cotier vers l'Ouest et le Sud-Ouest (Cogon, Tinguilinta, Fatala, Konkoure, Forecariah, Melakhoure, Kolente ou LeattleScarcies et Kaba- Mongo ou Great Scarcies).

Des contreforts orientaux du Massif du Fouta Djallon et du massif du Daro-Nimba partent lefleuve Niger vers le Sahel et les fleuves forestiers dont les principaux sont la Makona-Moa, laLofa, le Diani - Saint Paul, le Mani - Saint John et la Cavaly.

Ainsi on compte quatorze fleuves transfrontieres prenant leurs sources de la dorsale guineenneet qui arrosent directement en aval de vastes territoires de onze (11) pays de l'Afrique del'Ouest que sont Benin, Cote d'lvoire, Gambie, Guinee-Bissau, Liberia, Mali, Mauritanie,Niger, Nigeria, Senegal et Sierra Leone.

2.2 - Situation des eaux souterraines

Les ressources en eaux souterraines de la Republique de Guinee sont peu connues, les etudesd'inventaires et d'evaluation y relatives sont fragmentaires et ponctuelles, n'interessant quedes projets d'alimentation en eau potable d'etablissement humains localises.

III - STRATEGIE DE DEVELOPPEMENT A METTRE EN PLACE

Elle s'articule autour de la maitrise des actions suivantes:

3.1 - Inventaire et evaluation quantitative et qualitative continue des ressources en eau

Une meilleure connaissance des ressources en eau disponibles et mobilisables, aussi bien leseaux souterraines que de surface, est prealable pour la planification de leur utilisation dans lesdivers secteurs de l'economie d'eau (alimentation en eau; irrigation et drainage;hydroelectricit6; etc.);

3.2 - Mise en place de systemes de prevision hydrologique et de suivi hydro-ecologiqueintegr6 des bassins fluviaux de Guinie

ANNEX 1-5Page 3 of 5

Ces systemes assurent d'une part la prevention et le suivi des impacts du developpement dusysteme d'utilisation des eaux (agriculture irriguee, industrie, alimentation en eau potable desetablissements humains , etc.) sur les ressources disponibles en quantite et en qualite. et,d'autre part, le suivi du systeme des ressources naturelles en relation avec les eaux(ecosystemes aquatiques).

3.3 - Planification generale et sectorielle de mise en valeur et d'utilisation des ressourcesen eau

Elle se fera en respectant les unites de base de la gestion des ressources en eau que sont le(< bassin versant)> ou le << groupe de bassins de versants >> et en tenant dfument en comptel'approche integre des divers objectifs sociaux et economiques de developpement ainsi que lecaractere d'interet partage de certains cours d'eau transfronti&es.

3.4 - Mise en place d'un cadre legislatif et reglementaire approprie pour la gestiondurable des ressources en eau et pour l'administration des droits d'eau

Le systeme d'utilisation multiple des ressources en eau avec les besoins quelque foiscontradictoires des divers usagers, combine aux caracteristiques hydro-ecologiques desbassins versants, entrainent l' urgente necessite de doter l 'administration d' instrumentsjuridiques necessaires pour regir toutes les activites liees a l'inventaire, 1'evaluation, la miseen valeur, la conservation et l'utilisation des ressources en eau de Guinee.

3.5 - La mise en place d'un cadre institutionnel et administratif coherent en harmonieavec celui des autres composantes du secteur de l'eau

La gestion saine et efficace des ressources en eau ndcessite des organismes et servicesorganises et dotes des capacites necessaires et suffisantes aux plans des ressources humaineset financieres, notamment par la mise en place des organes du Fonds de l'Hydraulique etl'organisation de leur fonctionnement.

3.6 - La promotion et le developpement d'activites de recherche-developpement, decommunication et de formation interessant le secteur de 1'eau

Les ressources en eau en tant que composante essentielle de l'environnement interessent tousles secteurs de developpement economique et social. Leur maitrise et leur gestion concernentet doivent preoccuper tous les acteurs de ce developpement (Etat, Chercheurs, operateurseconomiques des secteurs public et prive, populations rurales et urbaines, bailleurs de fonds etd'assistance). C'est pourquoi une attention soutenue dans ces domaines doit etre observdepour assurer un developpement durable de la Nation.

3.7 - La promotion de la cooperation internationale, intergouvernementale africaine etintercommunautaire en matiere de mise en valeur et de gestion integrec desressources en eau

L'ampleur des besoins en ressources humaines, techniques, technologiques et financieres pourla mise en valeur et la gestion des ressources en eau, notamment des eaux transfrontieres enGuinee, entraine la necessite de deployer des programmes de cooperation tant au niveau

ANNEX 1-5

Page 4 of 5

national entre les communautes riveraines des fleuves nationaux. qu'a celuiintergouvernemental sous-regional entre les Etats riverains des fleuves originaires de Guindeet celui international avec les institutions specialisees du systemes des Nations Unies, del'OUA et de la CEDEAO.

IV - PLAN D'ACTIONS: TACHES A ACCOMPLIR

II s'articule autour des sous-composantes ci-apres:4.1 Definition du cadre national pour gestion globale et l'administration des ressources en

eau de Guinee;4.2 Renforcement du cadre Iegislatif et reglementaire regissant les eaux en Guinee;4.3 Renforcement des capacites d'intervention des organismes et services de la Direction

Nationale de I'Hydraulique charges:

a) de l'inventaire et de I'evaluation quantitative et qualitative permnanente des ressources eneau;

b) de la prevision hydrologique et le suivi hydro-ecologique des cours d'eau de Guinee;c) des etudes de planification generale et sectorielle des ressources en eau;d) des etudes et de la realisation de projets d'ouvrages et amenagements hydrauliques

experimentaux pilotese) de la legislation-reglementation des ressources en eau et de I'administration des droits

d'eau en Guinee;f) du suivi-coordination des programmes et projets de cooperation relatifs aux ressources en

eau de Guinee, ainsi que de concertation inter-institutions nationales, de gestionnaires etusagers des eaux;

V - CALENDRIER DE MISE EN OEUVRE DU PLAN D'ACTIONS(voir tableau ci-dessous)

VOLET GESTION D0 RMSOURCES EN EAU

CALENDRIER DE MISE EN OEUVRE DU PLAN D'ACTIONS

No Sous-programme Durde 1998 1999 2000 2001 2002assistance .__

Semi Sem2 Semi Scm2 Sem I Sem2 Semi SIm2 SemI Sem2I Preparation du seminaire 3 semestres

2 Elaboration du document introduction Seminaire, 3 semestres

3 Synth6se ci rapport sdminaire 3 semestrcs

4 Harmonisation ligislation S semestres

5 Administration des droits d'cau 6 semestres

6 Mise en place fonds de I=i)ydraulique 4 se_estres

7 Formation personnel DNH 7 semestres

8 Equipements informatiques et formation 4 semestres

9 Equipements logistiques 2 semestres -_ __

10 Acqisition de atricl S semestres- --

o 1*__ _ _ _ _ _ _ _ _ _ __ - …………- 0 V

Rkeicqzh din COW dui wais

tyede ft"w a unite prni quanth Total 1997 199S 200 I01 20c_J) unitaim twale Cost son. i sesem12 son. I m2 sem. 2i sem. 2 sm. I

.________ _______________KUSS KUSS ___L Hydraique nrbuoie (L*hm J 1sqL)

Ft (&4,) EWudsAPDctDAO(s*) H/M 21 420 50 100 100 100 70Aul_c (rwc Ant Asnce Technique SONEG (Calrt.) Ann6e 1 200 50 50 50 50RItsaous (asw) Extesmion rservoir simbaya (asrap ,srnwr) m3 0.46 2 500 1163 163 300 350 300 50R6enoirs (awg) Rhxvoir i deux cuva cime(aie ( rnw) m3 0.46 1500 697 . 197 200 200 100Rdhabilitation Ramplacementtyau cite de lair(200. 100) m 0.06 8 800 500 100 150 150 100(RehabUada) (Repiaeam ofrpipelin dar 2100 -)Extension (pipelne Conduite d'eau trait6e (DN I 100) m 0.64 3 300 2 120 350 650 700 420

(7-ed w.epone)R6seaux principaux Raccords au rdser. cimenterie (DN400) m 0.34 2500 862 262 300 300

(Coiercg to cemete ry servoir)Rseaux principaux Rseaux principux (200-400mm) m 0.22 7 869 1731 231 300 400 500 300Mhipopelhws) (MbInpldher cws r 200-0r)

Rdseaux secondaire Reseaux secondaires(100-250mm) m 0.06 45833 2750 350 400 500 600 600 300(aecodyp0d.bws)

R6seaux tertiaires Reseaux tertiaires(60-80mm) m 0.03 70 700 2121 221 300 350 350 350 350 200(t-r -)oyps)Branchements Branhements (c d-ecu) u 0.18 9 000 1 620 220 250 250 250 250 200 200Branchements Densification r6seau/branchements m 0.02 76500 1,530 130 150 250 250 250 300 200(C-el) (DiLtribhtkpl,pcbw.aConeciloa,)Supervision Supervision (Styervision) h/mois 20.00 40 800 100 100 100 150 ISO 100 100

Total 1 CoOt de base (Base Cost) 16,514 50 250 1749 2163 2570 3162 3150 2300 1120Aleas physiques (Physical C-irngencies) 1,652 5 25 175 216 257 317 315 230 112Al6as financiers (P11cc condninc,es) 434 I 6 39 57 72 89 82 60 28_______________ CoOt rotal 1 (Total I costI _____2_ _____ 18,600 _ t6 261 1963 2436 2899 3566 364U 2690 1260

2. Gestion des ressources en can(Cowidttt Service) (Wc Re M- aJ)Formation Prdparation du sdminaire (Seituarpreparation) h/mois 3 40 15 15 10Formation Elaboration de doc. s6minaire (prep. nmina doc) h/mois 3 40 10 15 15Formation Synthese et rapport s6minaire (mainar rapo prep.) h/mois 2 30 10 10 10Etudes Harmonisation ligislation (Waw Lgisadon Snidy h/mois 6 80 10 20 20 1 5 i Etudes Administration des droits de l'eau (stuay) h/mois 6 80 10 15 20 IS 10 10Etudes Fonds hydraulique (waterFuFd study) h/mois 4 40 10 1 0 10 10Formation Formation personnel DNH (trainng) h/mois 6 120 25 15 15 20 20 15 10Equipements Equipements informatiques (computers) 150 50 50 30 20Equipements Equipements logistiques (vehKles) [so 20 30 30 30 30 10Equipements Acquisition de mat6riel (officc supply) 150 30 40 40 30 10

Tsta 2 CoGt de base (retd 2 Base Cost) 550 25 30 150 165 160 1B15 100 65 40Al6as physiques (Phyical Conrigearle-s) 92 3 3 16 17 16 15 i I 7 4Aldas Financiers (Price Cotingencies) 28 I 2 4 5 5 5 3 2 1Colt Total 2 (Total 2 Base Cost) 1000 29 35 170 187 181 165 114 74 45 J co 2

R6captut des coOts du projet

type de travaux description unite prix quantite Total 1997 1999 1 2000 201 2002(CqcpnsIC) unitaire totale Cost s 2sm.I ii sem. 2 sem. I scm. 2 sem. I sem. 2 I ms sem. IKUSS KUSS3. Getion des ddcbets (wasteivat)_

Eawdes f,Av*') Elude institutionefle (en tours)Eudes (s14) Diagnostic du rcseau enterrUcurage (clean out) h/mois 15.00 20 300 150 150Enude (:-d) APD rchabilitation du rdseau (study h/mois 15.00 20 300 50 150 100Etudes (snu4) APD rehabilitation Bassin OBK (study) h/mois 15.00 13 200 50 100 50Contrt de gestion Selection du gestionnaire (Consuiont service) h/mois 18.50 8 150 100 50Rchabilitation Rhhabilitation reseau et lagunage OBK 1500 100 300 400 400 200 100(Rel-lialon) (Eristingfacdiltles Rehalbitiatlon)Constuction Bassinsde lagunage(conu.trearntpiond) 4000 200 400 500 700 800 800 600Formation Formation de vidangeurs/Artisans h/mois 9.00 21 200 50 50 50 50(rr-inl,g) (Job- ltainng)Supervision Supervision assainissement (Work supervision) h/mois 18.50 37 700 50 100 100 100 150 100 100rotal 3 Cofit de base (Total 3 Base Cost) 7350 350 450 550 850 1050 1250 1150 1000 700Aleas physiques ( Phsical conlngencles) 856 35 45 61 99 126 153 140 120 77Aides financiers (Price Contingencies) 194 8 10 14 23 30 35 30 26 18Coft Total 3 (Towi3 Cost) 8400 393 505 625 972 1206 1438 1320 1146 795

Total ProjeDt CostGrand total CoOt du Prolet

Total 1 (SONEG) 18600 56 281 1963 2436 2899 3568 3547 2590 1260Total 2 (DNH) 1000 29 35 170 187 181 165 114 74 45Total3(DATU) 8400 393 505 625 972 1206 1438 1320 1146 795

Grand Total 280001 478 821 2758 3595 42861 5171 4981 3810 21 00

4~~~~~~~~~~~~~~~~~~~~~P

t-i

ROcfkiW does coOtd pruIs

description Total Toit PanGvtPtiIDA Procuremint cadtone depensesDevises Local local (Ca iy)

1. Hydraullque Urbaiae (Urhm wJat)Etudes APWDAO (study) 420 420 420 SL ConsultantsAsise Tech. (Te,* Assist.) 200 200 200 SL ConsultantsReservoir Simbaya (smbqvay raerwor) 1163 814 349 116 1047 ICD Genic Civil (ciwi rks)

Reservoir deux cuves (stog merser) 697 487 210 70 627 ICD Genie CivilRemplacement tuyau cite de l'air (200- 100) 500 400 100 50 450 ICB G6nie CivilRerent ofpipline (200-100 .)Conduite d'eau trait6e (DNI 100) (petllne) 2 120 1696 424 212 1908 ICB G6nie Civil(Treaed rp4ieln)

Raccords au rser. cimenterie (DN400) 862 690 172 86 776 ICB Genie Civil(Cotuicng to cewetry resernir)

R6seaux principaux (200-400mm) 1 731 1384 347 173 1558 ICB G6nie Civil(Mn pipeles dJa-er 200e-4000.)

Rdseaux secondaires(l00-250mm) 2750 1930 828 276 2482 ICB G6nic Civil(Secwmhstpoimh )Reseaux tertiaires(60-80mm) 2121 1484 637 191 1930 ICB Genie Civilcr(enia,pplines)Branchements (cor'ections) 1 620 1200 420 162 1458 ICB Genic CivilDensification rdseaubranchements 1530 1100 438 154 1384 ICB G6nie Civil(DisributihappelbwislCoemectlons)

Supervision ( 800 800 40 760 SL ConsultantsTotal I Coltdebase (Taouldbwcm) 16514 12605 3925 1530 15000Altes physiques (Pyka Contingenies) 1652 1261Aleas Financiers (Prke Conosexcies) 434 316Total I Coat (Total I cost) 1800 14162 4416 16WC 16s00

2. Gestion des resborces en esn

Preparation du e6minaire (Seu.rprepart) 40 30 10 40 SL ConsultantsPreparation doc.s6minaire (seuiwardJc prep. 40 40 40 SL ConsultantsRapport seminaire (Sea rprt) 30 20 10 30 SL ConsultantsHrmnonisatonLdgistation Eau Qkgie&atms 8n 0 70 10 10 70 SL ConsultantsistrationlDroit de l'eau (Water Low study) 80 70 10 10 70 SL ConsultantsFondsHydr. (WaterFwmdseub.) 40 30 10 10 30 SL ConsultantsFormation (trawng) 120 100 20 20 100 SL ConsultantsEquipements Informatiques (Conputers) 150 135 15 15 135 SL Fournituwe (equipment)Equipements logistiques (vehdes) ISO 135 15 15 135 SL FoumitureMateriel de bureau (offkce sup,y) 150 50 100 15 135 SL FournitureTotal2Codtde ba s(otoA2 Mre ouo) JW 6o0 200 95 715Aldas physiques (hysikal contingencies) 92AIdeas financiers (pice contingencies) 28CoOtTotsl 2 (rotla2ca) 1000 773 227 100 900 O

Rbcaiuatif des coOts du projet

description ota Total Part vt IDA Procurement categone depensesDevises Local local

3. Gestion des dechets (wastewater)Etude institutionellc (en cours) SL ConsultantsDiagnostic reseau/curage (cleaning out) 300 250 50 50 250 SL ConsultantsAPD rehabilitation reseau (sudy) 300 300 300 SL ConsultantsAPD rehabilitation bassin OBK (Sudy) 150 150 150 SL ConsultantsSelection du gestionnaire (Consl. service) 100 100 100 SL ConsultantsRehabilitation reseau et lagunage OBK 1500 1275 225 225 1275 ICB Gcnie Civil (civi et )(O5K -.rLngfacillties rehobilolathn)

Bassins de lagunage (ponds costruction) 4000 3400 600 600 3400 ICB Genie CivilFormation de Vidangeurs/Artisans 200 100 100 100 100 SL Consultants(o-Job. frangforartimans)

Supervision (snperisvilo) 700 700 700 SL ConsultantsTotal 3 Cofit de base (Tot 3 base cost) 7250 6275 975 975 6275Aleas physiquei s(phwacomtgencies) 927Aleas financiers (price contIgencies) 223Cofit Total 3 (Towr3 mm) 8400 7270 1130 1100 7300

Tol Pject CostGrand total CoOt du Prolet

TotedI 18600 Govmtr 1200Total 2 1000 SONEG:180CTotal 3 8400 3000

Grand Total 28000

ANNIM2-

IMPLEMENTATION SCHEDULE1997 1998 1999 2000 2001 2002

sem.2 sem. I sem.2 sem. I sem.2 sem. 1 sem.2 sem. I sem.2 sem.l.

Hydrrillque urbaine (Urban Water)

Etudes/APD et DAO(Study)

sistance technique SONEG(TechAssist.) _ - -Extcnsion reservoir simbaya(reservoir) _ - - _

R6servoir A 2 cuves cimenterie(storage reservoir)

Remplacement tuyau cite de l'air(200-100)

onduite d'eau traitee(DN I 00)piMpeline) - - - -Raccords au r6ser.cimenterie(DN400) - - -Rcseaux principaux(200-400nim) _ - _ - -R6seaux secondaires(100-250mm) _ -Reseaux tertiaires(60-80mm) _ _ _ - -Branchements(connections) - - - _ -Densification reseau/branchements _ -Supervision Conakry _ - - -Gesdon des Ressources en ecau (WRM)Preparation du s6minaire(Seminarpreparation)

Elaboration de doc.seminaire

Synthese et rapport seminaire(Seminar report)

Harmonisation legislation(legislation study) - - -Administration des droits de 1'eau(water law study) - - - - _

Fonds hydrauliques(waterfund setting) -Formation personnel DNH(training)

Equipements informatiques(computers)

Equipements logistiques(vehicles) _ _ _ _

Acquisition de matcriel(office supply) - - -Gestion des Dechets (Waste water)

Diagnostic du reseau enterre/curage(cleaning out)

APD rehabilitation du reseau(study)

APD rehabilitation Bassin OBK (study) _ _

Selection du gestionnaire(consult.service)

Rchabilitation reseau et lagunage OBK - - - - - -Bassins de lagunage(ponds construction) -_ - - - -Formation de vidangeurs/Artisans(on-job-training) _ _ _

Supervision assainissement - _ -

-i f 0SS Xr gE g " 8w 2 Si i.M8 2n

ig~~~~~~~ X. 11 r..X

| gN Ii I' l II 0'0

i I : t1 I.i T-~~~~~~~~~~~~~~~~~

1-<l l X tt1}

Annex 2-51 page of 3

REPUBLIC OF GUINEATHIRD WATER SUPPLY AND SANITATION PROJECT

Project supervision Plan

1. IDA supervision Inputs. Field supervision needs are 35 staff-weeks described in thefollowing tables. In addition, regular supervision needs for the review of progress reports,procurement actions and required staff-weeks per year are estimated. IDA supervision will beassisted by the Resident Mission which will provide each year about three staff-weeks.

2. Borrower's contribution to Supervision.. Project's progress and performance will beevaluated internally by DNH, DATU and SONEG and externally through annual operationalaudits. Keys actions would be as follows:

(a) Progress reports would be submitted quarterly to IDA. These reports wouldinclude a summary of implementation under each component, financial statements onproject expenditures, progress against agreed schedule activities and key performanceindicators and procurement information and cost estimates, updated as needed.

(b) Mid-Term Review. Two a year after the efectveness of the credit, DNH, DATUand SONEG would organize a joint IDA/ Government review of project implementationcovering:

(i) progress reports, annual work program, budgets and counterpartfunding; (ii) status of monitoring indicators listed in Annex 2-4; (iii)effectiveness of project management with respect to key indicators and(iv) the sector investment program. Other donors represented in Conakrywould be invited to facilitate the dissemination of lessons learned andexperience accumulated during implementation. DNH, DATU andSONEG would prepare and transmit IDA an evaluation report one monthin advance of the annual review.

3 . SONEG would be responsible for coordinating arrangements for IDA supervisions.

Annex 2-5Pagc 2 of 3

REPUBLIC OF GUINEA

THIRD WATER SUPPLY AND SANITATION PROJECT

PROJECT SUPERVISION PLAN

AppdiateActity Expectud skill requirementudate ________ __ I________ _ ..

06/97 Project launch wurkshop Task manager 1.5a) implementation procedures Economist Ib) workshops on bidding and Procurement specialist 1disbursements procedures Disbursement specialist 1c) checking of the effectiveness Resident Mission 1conditions /

06/97 Supervision mission Task manager 1.5a) implementation of the project Sanitary Engineer Ib) analysis of the main issues Resident Mission 1

10/97 Supervision mission Task manager 2a) implementation of the project Sanitary engineerb) analysis of the main issues

Resident Mission I

02/98 Supervision mission Task manager 2a) implementation of the project Sanitary engineer 1b) analysis of the main issues

Resident Mission

06/98 Supervision mission Task manager 2a) implementation of the project Resident Mission 1b) analysis of the main issues

10/98 Supervision mission Task manager 2a) implementation of the project Sanitary engineer Ib) analysis of the main issues Resident Mission 1

02/99 Supervision Mission Task manager 2a) implementation of the project Sanitary engineer Ib) analysis of the main issues Resident Mission I

.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~07/99 Mid-term review Task manager 2

a) action plan Sanitary engineerb) implementation of the project and Financial analyst Iinstitutional set up Environment specialist 1c) accounting and disbursements R M 1d) impact of the project (socio- Resident Missioneconomic and environmental)

Annex 2-SPage 3 of 3

REPUBLIC OF GUINEA

THIRD WATER SUPPLY AND SANITATION PROJECT

PROJECT SUPERVISION PLAN

[ ppzuuimale.1| Appate | ~~~~Activity| Expected sldl _ki

Supervision mission Task manager 2a) implementation of the project Resident Mission 1b) analysis of the main issues

11/99

02/00 Supervision mission Task manager 2a) implementation of the project Sanitary engineer 1b) arnalysis of the main issues Resident Mission 1

06/00 Supervision mission Task manager 2a) implementation of the project Resident Missionb) analysis of the main issues

10/00 Supervision mission Task manager 2a) implementation of the project Resident Nission Ib) analysis of the main issues

02/01 Supervision mission Task manager 2a) implementation of the project Resident Mission 1b) analysis of the main issues

02/01 Supervisionr mission Task manager 2a) implementation of the project Sanitary engineer Ib) analysis of the main issues Resident Mission 1

06/01 Final supervision mission Task manager 2a) discussions with the Govt Sanitary engineer Ib) preparation for the completion Environment specialist 1report Financial specialist I

Resident Mission 1

O R G A N I G R A M M E

SOCIWE NATIONALE DES EAUX DE GUINEESONEG

CONSEIL D'ADMINISTRATION(11 MEMBRES)

, | ~~~~DIRECI1ON GENERALE|-

DIRECTION DES ETUDES ET DIECTION ADMNISTRTIVETRAVAUX NEUFS _ ET FINANCIERE

i

1' ZTRAVAUX iCOMPTAILITE SERVICES SERVICES AUDITl l I NEUFS | | | | ADMINISTRATIFS GENERAUX INTERNE

ANNEX 2-7Page 1 of 1

ORGANIGRAINIME DE LA DIRECTION NATIONALE DELUHYDRAULIQUE

Directeur

National

Directeur National

Adjoint

I~~~~Dvso Etudes[ Division ] Dv n Etudes Div. L6gislation

Hydrologie &Planification &R6glementat.Q

nJ~~~~~~~~~~ eJ -=,W

; I;'liUl 1U U'D C9~~~~

ANNEX 2-8Page 1 of 1

ORGANIGRAMME DE LA DIRECTION NATIONALE DE L'AMENAGEMENT

TERRITOIRE ET DE L'URBANISME

DIRECTION NATIONALEDE L'AN1ENAGEMENT DU TERRITOIRE

ET DE L'URBANISME.

Division Etudes Gbnbrales Division Operations Urbaines Division Voirie Urbaineet Planification Urbaines et Espaces Verts Assainissement et Reseaux

Section G n SectionEtudes GOpr. Urbaines .o|r

Section Section Contr6le SectionPlanif. Urb, des Op6r. Urb. Assainisement

Section collecte et Section Sectiongest. de donn6es - _ Espaces Verts Rbseaux Divers

Ampex 3-Ipage I of I

GUINEA: URBAN WATER RATE

EVOLUTION EltSTRUCTURE, DU TARIF MOVEN PAR METRE CUBEI Conakry, GuIn6e

(en GNF)

FLEMVENTS -" -9 -" 1992 299 1994 i1'5 1996 1997 1998 1999 2000 201 2002 '2003 2004CONSTITUTIPS 28 90 19

Tarif Coosommateur ___

_________ - - s~~~~~~~~~~~~~~~~~~~~~~~ ~ 4j 380 380":: 400 .405: 405 410 410I. Tw,jF1bNpoilani 86 1051 114 1651 223 353 1 425

1.2. Rcdc%vancc _ _ _ _ _ __ _ _Fonic2iomrncnient It I IS 3 32 38 36SONEG ___ __ ___ _*luvcstissemnwl 53 35 84 160 278 211 211*Serv'iccd1 In- 27 63 163 278 208

DCOC - - - - ~~~~~~~~~~~~~~~~~:':~:~37G 530 560 560m- 520 515- 515 4940Sous Trotal 64 46 126 253 473 527 4355 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

I atal Tiarif Consommtaleur IS0 151 20 418 696 88ao 880 80 90 9490 90 90 9290 90JIoyca

1. Soulien au Tarif _ _ _ _ _ _

- ---

-Soulien au TEE 109 141 170 293 226 197 112-Soutien Scrvice 139 92 2011 94 222 88 -Dclic

-

Toain Smiksc an TAn( ITS 232 7 278 217 338 285 112 ___

REPUBLIC OF GUINEATHEIRD WATER SUPPLY AND SANITATION PROJECT

SOCIETE NATIONALE DES EAUX DE GU1NEEINCOME STATEMENTS

(GNF 000)

1989 1990 1991 1992 1993 19945 mondus

Operatng RevonuesWater Sales Fees 275,741 624,284 1,681,412 3,023,521 4,706,696 8,144,760Operating Subsidies - - 10,767 655 -Miscellaneous - - 600 5,472 -

Total Opraing Revenues 275,741 624,284 1,692,779 3,029,648 4,706,696 8,144,760

Operating ExpensSalaries & Wages 21,850 77,460 153,166 208,506 216,164 231,268Operating Expenditures 20,020 70,587 93,863 149,016 229,810 294,964Taxation 1,370 8,606 7,911 10,237 15,281 12,357Provision for Bad Debts 12,425 110,355 244,835 466,966 520,780 963,425Provision for Depreciation 338,240 828,589 900,255 737,974 1,269,796 1,873,081Miscellaneous 1,650 4,302 8,450 11,585 11,080 12,020

Total Operating Expenses 395,555 1,099,899 1,408,480 1,584,284 2,262,911 3,387,115

Operating Income (119,814) (475,615) 284,299 1,445,364 2,443,785 4,757,645

Interests Payments on Credits (18,308) (76,400) (159,650) (318,839) (224,086) (1,434,543)Othernon-operating Income (296) 33,027 (321,334) (27,173) (5,065) 396

Net Income for the Year (138,418) (518,988) (196,685) 1,099,352 2,214,634 3,323,498 X X

Retained Profit Brought Forward (138,418) (138,418) (657,406) (854,091) 245,261 2,459,895 ° ti"RetainedProfitCarriedForward (138,418) (657,406) (854,091) 245,261 2,459,895 5,783,393Operating Ratio (Oper. Exp./Revenues) 143% 176% 83% 52% 48% 42%ReturnonNetFixedAssetsinOper. -1% -3% 1% 4% 4% 5%

Page 1 of 1

REPUBLIC OF GUINEATHIRD WATER SUPPLY AND SANITATION PROJECT

SOCIETE NATIONALE DES EAUX DE GUINEECASH FLOW STATEMENTS

(GNF '000)

1989 1990 1991 1992 1993 19945 months

Sources of FundsNet Income (138,418) (518,988) (196,685) 1,099,352 2,214,634 3,323,498Depreciation Expenses 338,240 828,589 900,255 737,974 1,269,796 1,873,081Provision for Bad Debts 12,425 110,355 244,835 466,966 520,780 963,425Non-Cash Working Capital (Var.) (264,499) (1,526,900) (9,864,183) 6,014,588 4,547,275

Internal Generation of Funds 212,247 684,455 2,475,305 12,168,475 (2,009,378) 1,612,729

Principal Repayment

Net Internal Cash Generation 212,247 684,455 2,475,305 12,168,475 (2,009,378) 1,612,729

Funds & Grants 2,384,014 8,305,545 15,369,540 5,213,196 11,441,085 2,542,766On-lent Credits 13,839,537 286,202 5,146,486 26,863,671 25,704,577 16,987,321

Total Sources of Funds 16,435,798 9,276,202 22,991,331 44,245,342 35,136,284 21,142,816

Applications of Funds

Management Contract 1,451,815 3,173,121 2,610,659 4,045,702 1,378,517 3,864,682Fixed Assets Additions 13,770,505 4,300,630 17,154,634 10,157,263 50,204,476 4,104,521 1 |

Revaluation Reserve 1,125,328 2,480,133 5,274,429 315,068 - - OQWork in Progress 10,488 798,521 910,915 26,684,932 (21,504,720) 8,903,601

0I1

Variation in Cash Balance 2,328,318 3,484,063 7,589,552 3,672,513 5,058,011 4,270,012 "

Internal Cash contribution to invest. 1.39% 5.08% 4.590/o 5.64% 13.32% 36.51%

Page 1 of 1

REPUBLC OF GUNEATHRD WATER "MPPLY AND SANfrATIO PROJECr

3OCETE NATIONALE DES EAUX De UUI4EEBALANC SEET STATEMENTS

(GWNFW)

1989 1990 1991 1992 1993 1994

AJbInvmny . . 63,277 48,984 623,353 283,528Accounts Receivb 282,793 262,183 919,364 2,548,027 4,623,361 5,934,707Cah md Bnk 139,579 546,554 1,115,973 2,138,524 3,264,522 5,3S1,340

Cinvit Ases 422,372 808,737 2,098,614 4,735,535 8,511,236 11,599,575

Gfr.F xed Assets 13,770,505 18,071,135 35,225,769 45,383,032 95,587,508 99,692,029Deprecition- 338,239 1,718,016 4,685,194 5,664,828 7,589,229 10,983,909Net Fixed Aetb 13,432.266 16,353,119 30,540,575 39,718,204 87,998,279 8S,708,120

Wok in Progr 10,4S8 809,009 1,719,924 28,404,856 6,900,136 15,S03,737Supprt to Management 1,451,815 4,624,936 1.235,595 11,281,297 12,659,814 16,524.496Exchange Rate Trandation Var. 940,458 1,618,323 4,374,957 6,528,270 8,009,452 10,189,501Sbndby Account - 431,093 1,171,081 2,138,022 3,712,012 4,243,331

Total Ase 16,257,399 24,645,217 47,140,746 92,806,184 127,790,929 147,068,760

UshUiltas & Owinrs' EquityAccoumb Pab 16,961 384,918 1,895,599 12,611,321 8,189,945 4,751,327ShortTamMaturityofL-TDebt 72,400 13,400 135,538 511,248 1,263,542 414,169Creditor SEEG 76,975 - 295,706 303,903 598,863 1,540,884Miscelans 5,930 17,837 336,670 715,594 724,831 495,047

ShortTTonLiabiis 172,266 416,155 2,663,513 14,142,066 10,777,181 7,201,427

Long Term Debt 12,899,079 12,507,416 14,897,268 39,607,626 63,831,021 78,638,293Exchange Trnslation on Loans 940,458 1,618,323 4,374,957 6,528,270 8,009,452 10,189,501

Tota Liablt 14,011,803 14,541,894 21,935,738 60,277,962 82,617,654 96,029,221

Equity Sae Capibt 1,227,992 6,944,681 18,010,854 22,699,897 42,096,284 44,166,682Provisions & Reserves 1,156,022 3,744,878 8,048,245 8,572,398 617,096 1,089,464 OQ ZInveahatt Subvntion - 71,170 1,010,666 .- triRetaied Eniigp (138,418) (657,406) (854,091) 245,261 2,459,895 5,783,393 W

0 ITotdal Own Equity 2,245,596 10,103,323 25,205,008 32,528,222 45,173,275 51,039,539 et, N

Toal Liabilities Owners' Equiy 16,257,399 24,645,217 47,140,746 92,806,184 127,790,929 147,068,760

Net W-iag Capal (GNF VW) 250,106 392,582 (564.899) (9,406,531) (2X265,945) 4,398,148C.rmnt Rato (tin) 2.5 1.9 0.8 0.3 0.8 1.6Cmh Rdio (%) 81% 131% 42% 15% 30% 75%

IMB Term Ddb % Told Captalit 86% 58% 43% 59% 61% 64%Totl Lblim % Totl C azabnm 87% 60% 49% 77% 71% 69%

REPUBLIC OF GUINEATHIRD WATER SUPPLY AND SANITATION PROJECTSOCIETE DEXPLOITATION DES EAUX DE GUINEE

INCOME STATEMENTS(GNF '000)

1989 1990 1991 1992 1993 19945 months

Operating RevenuesWater Sales Fees 561,916 1,443,424 1,286,077 1,921,228 3,034,880 4,793,820Foreign Management Fees 437,380 2,004,591 1,934,152 2,434,948 2,414,859 2,425,544Revenues from Connections 6,615 56,088 161,014 120,202 266,957 1,779,993Financial Revenues - 177,821 156,136 87,037 36,567 53,774Miscellaneous 1,799 250,279 903,034 1,846,613 1,854,821 2,297,215

Total Operating Revenues 1,007,710 3,932,203 4,440,413 6,410,028 7,608,084 11,350,346

Operating ExpensesSalaries & Wages 320,812 898,194 1,306,085 1,732,809 1,994,062 2,498,449Operating Expenditures 485,931 1,224,930 1,688,892 2,725,793 2,923,776 5,107,661Taxation 9,485 31,402 39,207 52,880 55,923 102,040Provision for Bad Debts 275,888 1,198,006 956,383 1,597,040 1,833,487 2,168,494Provision for Depreciation 67,746 260,878 321,217 348,065 349,503 447,332Financial Exp. & Miscellaneous 9,680 116,232 94,247 112,723 121,321 80,734

Total Operatmg Expenses 1,169,542 3,729,642 4,406,031 6,569,310 7,278,072 10,404,710

Operating Income (161,832) 202,561 34,382 (159,282) 330,012 945,636

Non Operating Income - 8,033 264 1,779 6,000 35,404Non Operating Expenses (183) (10,277) (4,831) (78,169) (148,602) (403,317) I'd

NetlncomefortheYear (162,015) 200,317 29,815 (235,672) 187,410 577,723 t X

RetainedProfitBroughtForward (162,015) (162,015) 38,302 68,117 (167,555) 19,855 0 oRetained Profit Carried Forward (162,015) 38,302 68,117 (167,555) 19,855 597,578 " WOperating Ratio (Oper. Exp./Revenues) 116% 95% 99% 102% 96% 92%Net Income % Revenues -16% 5% 1% -4% 2% 5%Return on Net Fixed Assets in Oper. 20% 18% 82% 94% 108% 77%

REPUBLIC OF GUINEATHIRD WATER SUPPLY AND SANITATION PROJECTSOCIETE D'EXPLOITATION DES EAUX DE GUINEE

CASH FLOW STATEMENTS(GNF '000)

1989 1990 1991 1992 1993 19945 months

Sources of FumdbNet Income (162,015) 200,317 29,815 (235,672) 187,410 577,723Depreciation Expenses 67,746 260,878 321,217 348,065 349,503 447,332Provision for Bad Debts 275,888 1,198,006 956,383 1,597,040 1,833,487 2,168,494Non-Cash Worling Capital 1,443,596 298,245 289,914 601,603 122,389Provision Write-off (322,513) (556,828) (1,768,775)

Internal Generation of Funds 181,619 215,605 1,009,170 1,097,006 1,211,969 1,302,385

Assets Sales - - - 406 - 21,048

Net Intenal Cash Generation 181,619 215,605 1,009,170 1,097,412 1,211,969 1,323,433Equity and Grant Increase 1,300,000

Increase in L-T Debt - - - 40,961 18,434 419,780

Total Sources of Funds 1,481,619 215,605 1,009,170 1,138,373 1,230,403 1,743,213

Applications of Foods

Investments in Fixed Assets 957,280 584,657 331,205 292,504 313,989 1,026,959Investments inOtherAssets 98,159 67,805 55 1,562 - 3,696 %oInvestments in Financial Assets 427 427 13,955 15,918 17,787 21,129

Total applications of Funds 1,055,866 652,889 345,215 309,984 331,776 1,051,784

Net Capital Resources 425,753 (607,296) 1,783 45,040 8,247 (501,043)Cash at end of Year 1,090,906 483,610 485,393 530,433 538,680 37,637

REPUBUC OF GUINEATHIRD WATER SUPPLY AND SANITATION PROJECTSOCIETE DIXPLOITATION DES EAUX DE GUINEE

BALANCE SHEET STATEMENTS(GNF 000)

19S9 1990 1991 1992 1993 19945 montdi

AsohInvtmy 90,540 346,215 346,382 424,451 420,012 875,731S-T Inestments - 604,562 335,257 50,272 - -Accounts Receibe 415,972 721,922 2,273,181 3,893,534 6,871,217 9,037,767Cah and Bank 1,090,906 483,610 485,393 530,433 538,6S0 37,637

Cunenl Atsb 1,597,411 2,156,309 3,440,220 4,8,690 7,129,909 9,951,135

GrossFPxedAas 957,210 1,541,937 1,373,142 2,152,987 2,449,477 3,410,349Depqcciation 64,746 321,616 649,692 990,620 1,322,624 1,726,404Net Fxed Aats 192,534 1,213,251 1,223,450 1,162,367 1,126,153 1,613,945

WetinProgre 91,159 67,105 55 - - 9,923FiAncial Aset 427 427 13,955 15,911 17,717 21,129Standby Accounb - 16,916 2,652 43,499 1,992 33,970

Total Asse 2,511,531 3,454,701 4,680,332 6,120,474 3,976,541 11,700,102

L1bid & Owner' EqityAccouAs Payb" 1,193,510 192,546 1,116,971 1,097,643 1,475,472 2,441,244Va Critor (MdL Soneg 64,754 226,076 985,527 2,121,371 4,071,911 5,239,799Short Term Debt 137,767 - - - - 366,227

Short Term Labdities 1,396,031 1,111,622 2,102,505 3,226,021 5,547,390 1,047,270

Long Term Debt 4,522 12,452 27,125 39,615 51,049 111,602

Standby Accounts - 1,796 10,972 31,594 19,664 -

Equity Shart Catl 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000Provisnm & Rers 50,000 913,536 1,170,913 1,683,799 2,031,513 1,643,652Retined Ean,ig (162,015) 31,302 61,117 (167,555) 19,155 597,571

Toa Liabfti & Ownes' Equity 2,58,531 3,454,701 4,680,332 6,120,474 1,976,541 11,700,102

m X

Net Workng Cit (GNF 00) 201,3S7 1,037,687 1,337,715 1,672,669 2,2S2,519 1,903,S65 0 GCumrnt Ratio (times) 1.1 1.9 1.6 1.5 1.4 1.2 L.)Cash Ratio (%) 71% 43% 23% 16% 10% 0.47%Long Tam Debt % Tobl C _phta o 0.31% 0.53% 1.0S% 1.37% 1.69% 3.06%Total ities %Total Capitalizaticn 117% 4S% 83% 113% 163% 223%

REPUBLIC OF GUINEATHIRD WATER SUPPLY AND SANITATION PROJECT

URBAN WATER SUPPLY SECTOR ACCOUNTSDNCOME STATEMIENTS

(ONF oo)

1989 1990 1991 1992 1993 1994

Opad RsmWa Sa lsFees 837,657 2,067,708 2,967,489 4,944,749 7,741,576 12,938,580Foreign MauapgtwFees 437,380 2,004,591 1,934,152 2,434,948 2,414,8S9 2,425,544Revams from Contetios 6,615 56,088 161,014 120,202 266,957 1,779,993Fincial Revemme - 177,821 156,136 87,037 36,567 53,774Micelaneim 1,799 250,279 903,634 1,852,085 1,854,821 2,297,215

Tol Opeating RFanes 1,283,451 4,556,487 6,122,425 9,439,021 12,314,780 19,495,106

Opwadag xzpaneSaires & Wages 342,662 975,654 1.459,251 1,941,315 2,210,226 2,729,717Opratig Expendture 505,951 1,295,517 1,782,755 2,874,809 3,153,586 5,402,625Taxtion 10,855 40,008 47,118 63,117 71,04 114,397Provisionfor Bad Det 288,313 1,308,361 1,201,218 2,064,006 2,354,267 3,131,919Provision for Deprcation 405,986 1,089,467 1,221,472 1,086,039 1,619,299 2,320,413Finania Exp. & Misoaela xo 11,330 120,534 102,697 124,308 132,401 92,754

Tota Opeting Expaue 1,S65,097 4,829,541 5,814,511 8,153,594 9,540,983 13,791,825

Opwating Income (281,646) (273,054) 307,914 1,285,427 2,773,797 5,703,281

Non Opeaing ome (296) 41,060 (321,070) (25,394) 935 35,800Non Oper. Exp. & Debt Sevice (18,491) (86,677) (164,481) (397,008) (372,688) (1,837,860)

Net Icome for the Year (300,433) (318,671) (177,637) 863,025 2,402,044 3,901,221

Rctained Profit Brought Forward (300,433) (300,433) (619,104) (796,741) 66,284 2,468,328Rebted Profit Carried Forward (300,433) (619,104) (796,741) 66,284 2,468,328 6,369,549 'Operating Ratio (oper. expfrevenues) 122% 106% 95% 86% 77% 71% I-wNet Income % Revenmes -23% -7% -3% 9%/ 20%/ 20'f%° 0Reum on Net Faod Ase im Oper. -2% -2% 1% 4% 4% 6%

REPUBLIC OF GUINEATHIRD WATER SUPPLY AND SANITATION PROJECT

URBAN WATER SUPPLY SECTOR ACCOUNTSCASH FLOW STATEMIENTS

(GNF '000)

1989 1990 1991 1992 1993 1994

Source of FAmmaNet Income (300,433) (318,671) (177,637) 863,025 2,402,044 3,901,221Depreciation Expenses 405,986 1,089,467 1,221,472 1,086,039 1,619,299 2,320,413Provision for Bad Debts 288,313 1,308,361 1,201,218 2,064,006 2,354,267 3,131,919Provision Write-off (322,513) (556,828) (1,768,775)Non-Cash Working Capital - 1,179,097 (1,228,655) (9,574,269) 6,616,191 4,669,664

Intenal Gcnemiom of Funds 393,866 900,060 3,473,708 13,264,826 (797,409) 2,915,114

Assb Sales - - - 406 - 21,048

Net Internal Cash Generation 393,866 900,060 3,473,708 13,265,232 (797,409) 2,936,162

Funds & Grnts 3,684,014 8,807,806 16,109,528 7,190,803 13,015,075 3,074,085Increas in L-T Debt (Sccg) - - - 40,961 18,434 419,780On-Lent Credits (Soneg) 13,839,537 286,202 5,146,486 26,863,671 25,704,577 16,987,321

Total Sources of Funds 17,917,417 9,994,068 24,729,722 47,360,667 37,940,677 23,417,348

AppMca&m of oF

Inavestents in Fixed Assets 14,727,785 4,885,287 17,485,838 10,449,768 50,518,467 5,131,473Work In Progress 108,647 866,326 910,970 26,686,494 (21,504,720) 8,907,297M agement Contract 1,451,315 3,173,121 2,610,659 4,045,702 1,378,517 3,864,682Exchange Translation Va. 940,458 677,865 2,756,634 2,153,313 1,481,182 2,180,049Invesments in Financil Assets 427 427 13,955 15,918 17,787 21,129Revaluation Resere 122,953 281,774 (817,496) 1,043,214 - -

VariaioninCash Balancc 811,238 502,804 (517,235) 4,269,992 5,159,064 354,784Changes in Net Working Capital 1,230,485 1,030,162 1,601,367 2,668,957 3,803,200 5,418,977 w

0.

Internl Csh contributio to invesL 3% 16% -19% 36% -3% 21%

REPBLIC OF OWiBATIIRD WATER SUPPLY AND SAMAThN PROIMCI

URBAN WATER SIRPLY SBCTOk ACCOUNTSBALANC SHET STATl1wNT

(CGNF OQO)

19S9 1990 1991 1992 1993 - 1994Amb

ywatoy 90,540 346,215 409,659 473,435 1,043,365 1,159,259S-T hbImmi.m 604,562 335,257 50,272 - -Accoumb Receivable 69S.765 964,105 3,192,552 6,441,561 11,494,578 14.972,474Cihand Blk 1,092,718 1,047,078 1.604.019 2,712,456 3.805,192 5,0116,720

CtutAmab 1,SS2.023 2,961,960 5,541,487 9.677,724 16,343,135 21,213.453

rOfFbledAsuI 14,727,785 19,613,072 37,096,910 47,536,019 96,036,967 103,102,378Dqrs,31ioni 402,965 2,046,702 5,334,386 6,655,448 8,911,853 12,710,313No Fjxed Aab 14,324,S00 17,566,370 31,764,024 40,S0,571 S9,125,134 90,392,065

Wok Pim nss 108,647 S76,S14 1,719,979 28,404,856 6,9M0,136 15,313,6609Paitto _4umut 1.451.815 4,624.936 7,235,595 11,28I,297 12,659S814 16.524,496

ExchImn Rat Trulgtoa Var. 940,458 1,618,323 4,374,957 6,528,270 8,009,452 10,189,501FinlASis 427 427 13,955 15,913 17,737 21,129SU9dby A _omt - 431,093 1,171,081 2,138,022 3,712,012 4,243,331

Totl Am_b 18,708,170 2S.099,923 51.821,078 9S.926,65S 136,767,470 158.4K,635

LhbIi a O0ar.s RquMyAcomPabyIbk 1,210,471 1,277,464 3,012577 13,708,964 9,665,417 7,192,571S-TMniutyofL-TDebt 72,400 13,400 135.538 511,248 1,263,542 414,169Vai-wo Qdkw (iYl. Saa) 141,729 226.076 1,2S1.233 2,432,231 4,670,781 6,780,683ShotTamDebt 5,930 17,837 336,670 715,594 724,S31 495,047

ShmtTom lbih_ 1.430,530 1,534,777 4,766,018 17.368,087 16,324,571 14,882470

Lc% Tom Debt 12,903,601 12,519,36S 14,925,093 39,647.241 63,139,070 73,749,895ExdhaU TruBgbion an LoA 940,455 1,618,323 4,374,957 6,528,270 8,009,452 10.189,501

Total Liabltes 15,274,519 15,672,963 24,066,06S 63,543,598 38,223,093 103,821,866

S9t.aiyAeoi.ia - 1,796 10,972 38594 19,664

Equity Sh- Capil 2,527,992 8,244,6S1 19,310,854 23.999,397 43,396f284 45.466.632Prvision &R _m. 1,206,022 4,799,582 9,219,158 11,264S63 2,648,679 2,733,116RPgin.d EKniO (300.433) (619,104) (785,974) 77,706 2,479,750 6,38971

Total L.buIsu& Ownod' Equiy 18,708,170 28,099,923 51,821,078 9S,926,658 136,767,470 158,402,635

Not W algCqiPI(NFIOVW) 451.493 1,447,183 775,469 (7,690,363) 13,564 6,335.963QzRutio (ti) 1.3 1.9 1.2 0.6 1.0 1.4 WC RAio(%) 76% 68% 34% 16% 23% 34.18% LmgTrm Dk%TotalCqaiibm 74.60% 47.13% 31.721% 43.61% 53.05% 54.87% H bTOW Lbi 1im % TOWal Cqaitalizaio 83% 53% 42% 70% 67% 65%

REPUBUIC OPOEMRD WA7R SUPPLrAD 4N1TAI7ONPROJECT

soCzET NATIoNALE D8S eUrDEGU NEPRaETD TOMJE TSrA T

1995 1996 1997 1995 1999 2000 2001 2002 2003 2004wow 5da RaoR 420 370 530 560 560 520 515 515 490 490WOW Sda Law 14,335 15,410 20,043 25.492 27.832 31.200 32,500 34,000 34.500 35.00

Watr Saks Pon 6,026,246 5,701,700 10.622,790 14,275,520 15,555,920 16,224,O 16.737,50 17,510,000 16,905.00 17,150,Z0op0rqSu &i- - -.

rTblOlperamRe_Ro 6,026,246 5.701,70 10.622,790 14,275,520 15,555,920 16,224,00 16,737,50 17,510,00 16,905,00 17.150,00

Sdw*a& WV" 272,660 279,497 264548 293,647 300,985 3J512 316,225 324,13) 332.234 340,540Opwath wEqu,m 444743 457,912 469,359 411,093 493,121 505,449 515.0,5 531,037 54,313 557,921r_m, 25,532 28,415 31,257 34,352 37,521 41,603 45,763 50,339 55.373 60,911P1m,oBforAdDubl/Cha_ 930,699 741,000 549,523 572,000 574,000 979,000 1,214,000 1,422.00 1,647,000 1,39,000Piu-*-fbr.D#p-6W 4,330,271 5,445,327 6,256,327 7,025,327 7,353,327 7,547,327 7,547,327 7.547,327 5.104327 S,106,327AifiwdA, 14,300 - - - - - - - -

Tad Op pate Expms 6,020,525 6,952,151 7.593.251 5,706,449 9,059,256 9,301,091 9,641,4W 9,874,534 7,655,247 7,904,698

Operatirqlrcau 5,721 (1.250.451) 2,729.539 5,569,071 6,526,664 6,542,109 7,096,100 7,635,166 9,219,753 9,245,302

Inc (kTsa) am,flnij fra. (3.717,505) (2,860.032) (4,667,844) (5,359,225) (5,415,141) (5,299,244) (5,524.896) (5,545.884) (5,097,189) (4,525,905)Odurz,.qwnml or 1 9.593,336 - - - - - - -- R=w Rrk' Fen*

d'IuvmhvmaE.wt/feMlC.uvw.* 9,333.528NAW lm,. or h Tera 5,581.552 (4,110.452) (1.938.304) 209,846 1,111,523 1,542,065 1,571,204 2,089.282 4,122.564 4,719,397

RetatradPmq*rBWkFoward 5,670,191 11,551,743 7,441,261 5,502,956 5,712,802 6,524.325 8,367,191 9,938,394 12,027,677 16,150.241REdJd PVq CD aFGVwEw 11,551,743 7,441.261 5,502.956 5,712,802 6,524.325 8.367,191 9,935.394 12,027,677 16,150,241 20,569,637Op0 1 %irl e Ravwe 0m -22% 26% 39% 42% 42% 42% 44% 55K 54%Net Inla. % Rmraes 98% -72% -15% 14 7% 10% 99% 12% 24% 28%9Avwne Cadlec PelodP (daw) 210 262 138 129 121 131 130 131 133 138a cRet., an NAt FiaudAwm in Opr.. 1.6% 1.7% 3.7% 5.0% 5.2% 5.4% 5.5% 5.5% 4.9% 5.1% *

0 11-h

REPUBLIC OF GUINEATI7RD WATER SUPPLYAND SANMTATIONPROJECT

SOCIETE NATIONALE DES EAUXDE GUINEEPROCTED CAHFLOWS$AUSWEVAN

(USS '000)

Prqected1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

S.ma efFuxhNet Inca. (3,451,976) (4,110,482) (1,938,304) 209,846 1,111,523 1,S42,865 1,571,204 2,089,282 4,122,564 4,719,397Deprecia nExpens-e 4,330,271 5,445,327 6,256,327 7,025,327 7,353,327 7,547,327 7,547,327 7,547,327 5,106,327 5,106,327Provisionfor Bad Debts 930,699 741,000 849,823 872,000 874,000 979,000 1,214,000 1,422,000 1,647,000 1,839,000

Internal Genration q'Fwrdr 1,8AM,994 2,075,845 5,167,846 8,107,173 9,338,850 10,069,192 10,332,531 1J,058,609 J0a875,891 11,664,724

PrincipalRepayment 1,857,375 3,155,563 5,727,313 7,653,035 7,757,097 7,864,097 7,972,847 8,550,347 8,663,597 8,778,597

Net Intrnal Cash Generation (48,381) (1,079,718) (559,467) 454,138 1,581,753 2,205,095 Z359,683 2,508,262 Z212,294 2,886,127

Other Fnds & Grants 3,606,370 8,277,692 9,080,182 8,268,644 Z578,417 1,985,638 4,804,763 7,743,788 4,016,401 (446,854)Disbursments on Borrowings 8,414,864 19,314,616 21,187,092 19,293,503 6,016,307 4,633,155 11.211,114 18,068,838 9,371,603 (1,042,660)

Total Sources frFunds 11,972,853 26,51Z590 29,707,808 28,016,285 10,176,477 8,823.888 18,375,560 28,320,888 15,600,298 1,396,613

Appl-d- efF-%z

FixcdAssets Additions 10,463,533 18,050,942 22,190,000 27,030,000 23,845,200 12,724,800 6,480,000 17,030,000 26,210,000 14,210,000Work in Progrs 386,961 5,999,302 4,840,000 (1,390,000) (14,710,000) (4,450,000) 10,550,000 9,180,000 (12.000.000) (12.890,000)Foreign Echange Variation (633,064) 2,550,117 2,761,191 2,455,498 1,116,530 620,578 1,413,476 2,175,408 1,451,591 134,842

oral applicabtons fF8 10,217,430 26,600,361 29,791,191 28,095,498 10,251,730 8,895,378 18,443,476 28,385,408 15,661,591 1,454,842

Variation in Cash Balanec 1,755,423 (87,771) (83,383) (79,213) (75,253) (71,490) (67,916) (64,520) (61,294) (58,229)Cash atEndofear 1,755,423 1,667,652 1,584,269 1,505,056 1,429,803 1,358,313 1,290,397 1.225,877 1,164,583 1,1064354

blornalCa,h rScw to ime t1,.O -4% -2% 2% 17% 27% 14% 10f 16% 20%

Debt Swwe Cowrage Rato 0.99 0.82 0.95 1.03 1.12 1.17 1.17 1.18 1.16 1.22 (b

0 I

I'

REPUBLIC OFGUMJATHIRD WATME SUPPLYAND SAN4TATIONPROJECT

SOCI=g%NA TOALEDESHAU XDR G(IvEEPROJECTED BALNCE SHEET STA Trs1VWS

(USS '000)

Proyected1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

AsszInventory 273,906 443,800 540,600 512,800 218,600 129,600 340,600 524,200 284,200 26,400AccountuReceivable 5,518,346 4,086,142 4.020.406 5,046,017 5,154,241 5,814,927 6,346,826 627Z958 6,139,296 6,484,752Cash and Bank 1,755,423 1,667,652 1,584.269 1,505,056 1,429,803 1.358,313 1,290.397 1,225,877 1,164,583 1,106,354

CurrentAssets Z7547,675 6.197,594 6,145.275 7,063,873 6.802.645 Z 302,840 7,977.824 8028,036 Z7584 080 7,617Z507

GrossFixedAssets 126,680.058 144,731,000 166,921,000 193,951.000 217Z 794200 230,521,000 237,001,000 254,031,000 280,241,000 294,451,000Depreciation 16,141,738 21,207,323 2Z049,558 32,868,088 38,401,974 43,317.604 47,986,634 53,166,564 59,132,794 65,525,324NetFixedAssets 110,538,320 123,523,677 139,871,442 161,082.912 179,394,226 187,203,396 189,014,366 200.864,436 221,108,206 22A925,676

Work inProgress 164190,698 22,190,000 27,030,000 25,640,000 10,93a00 6,480,000 17,030,000 24210,000 14,210.000 1,320,000Exchange Rate Translaton Var, 10,174208 12,726,325 15,487,516 17Z943,014 19,059.544 19,680,123 21,093,599 23,269.007 24,720,598 24,855,440FinancialAssets 1860,698 1,860,698 1.860,698 1,860,698 1,860.698 1,860,698 1,860,698 1,860,698 1,860,698 1,860,698

TotalAssets 1464313,599 166,49A295 190,394,931 213,590,497 218.04Z7113 222,52Z057 2364976,486 260,232.1 76 269,48Z582 264,579,320

Liai,des & Owsm' EquEtyAccountsPaabe 5,504.265 3.328500 4.054.500 3,844000 1,639,500 972,000 2,554.500 3.931,500 2,131,500 198.000Short TermMatnrityofL-TDebt 1,797.542 3,155,563 5,72Z7313 Z7653,035 7.757,097 z864.097 7,972,847 A55Q347 A663,597 477A597

MiscellanBos - - - - - - - - -

Short Term Liabihties Z301.807 4484,063 9,781,813 11,499,035 9,39,597 4834097 10,527.347 12481,847 10795,097 A976597

Long Term Debt 79,694,474 99,665,000 121,289,000 140,519,000 149,263,000 154,123,000 165,192500 182,229,000 187,597.000 179,653.000Exchange Translaton on Loans 10,176,208 12,724325 15,48Z516 17943,014 19.0559.44 19.680.123 21,093,599 23,269.007 24,720.598 24.855.,440

Long Trnm Liabilities 89,870Q682 112,391,325 1346774516 15A462,014 168.322,544 173,803,123 184286,099 205,498,007 212,317Z598 204.50A440

Equity Shar Capital 44660,355 46,660,355 46,660,355 44660,355 464660,355 46,660,355 44660,355 44660,355 46466a355 44660,355

Provsions &Rese,w - - - - - - - -Investwnt Subvention Z364,721 9,957,000 8109,000 Z7692,000 3,279,000 1,29,000 -

RetainedEarnings (4,883,966) (8A994.448) (10,932,753) (10.722,907) (9,611,384) (4A068,518) (46497,315) (4,408032) (285,468) 4,433,928

Total Liaoihhts &Owners'Equity 146,313,599 16449A295 190,394,931 213,590,497 21A047Z113 222,52Z7057 234976,486 260.232,176 269,487,582 264,579,320

Net Worting Capital (USS '000) 245,868 (284468) (3,636,538) (4,435,162) (2593,953) (1,533,257) (2,549,524) (4,453,811) (3,207.017) (1.359.091) g zCu,ventRato (tms) 1.0 1.0 aC6 a6 0.7 a8 0.8 a6 a7 a8

Cash % Short Term Liablites 24% 26% 16% 13% 15% 15% 12% 10% 11% 12% u>

Long Term Debt 9 Tota Capitalization 61% 68% 72% 74% 77% 78% 79% 79% 79% 77% 0TotalLiabihties otal Capitahioton 66% 71% 77% 80% 82% 82% 83% 84% 83% 81%

THIRD WATER SUPPLY AND SANITATION PROJECTSOCIETE D'EXPLOITATIONr DES EAUX DE GUINEE

PROJECT INCOME STATEMENTUSS 1000

1995 1996 1997 199* 1999 2000 2001 2002 2003 2004

Operalig ReveuesWater Saes Fees 7,481,440 7,859,100 8,217,630 9,686,960 10,576,160 12,480,000 13,162,500 13,770,000 14,145,000 14,350,000

Operating Subsidies - - - - - - - - - -Miscellaneous 6,424,907 6,667,915 6,859,722 7,055,723 6,829,162 6,888,068 6,949,330 7,013,043 7,106,513 7,250,000

Total OperatingRevenues 13,906,347 14,527,015 15,077,352 16,742,683 17,405,322 19,368,068 20,111,830 20,783,043 21,251,513 21,600,000

Qpeaxg EVpesesSalaries & Wages 2,185,420 2,578,796 Z542,665 2,682,334 2,816,450 2,957,273 3,105,136 3,105,136 3,105,136 3,105,136Operating Expenditures 7,980,693 8,180,210 8,490,107 9,427,860 9,663,557 10,146,735 10,400,403 10,400,403 10,400,403 10,400,403Taxation 122,477 102,041 105,907 106,634 111,432 116,447 121,687 127,163 132,885 138.865ProvisionforBadDebts /Change 2,351,127 2,300,423 2,387,572 2,580,603 2,772,912 2,968,695 3,197,094 3,609,686 3,609,686 3,609.686ProvisionforDepreciaion 527,264 485,565 503,960 592,991 711,590 853,908 1,024,689 1,229,627 1,475,552 1,770,663Miscellaneous 84,367 87,995 91,329 95,267 99,077 103,040 107,162 111,449 115,907 120,543

Total Operating Expenses 13,251,348 13,735,030 14,121,539 15,485,689 16,175,018 17,146,097 17,956,171 18,583,464 18,839,569 19,145,296

Operating Income 654,999 791,985 955,813 1,256,994 1,230,304 2,221,970 2,155,658 2,199,578 2,411,943 2,454,703

Income (lss) onfinancial trans. 156,964 - - - - - - - -

Other non-operating Income (429,154) - - - - - - - - -

Net Income for the Year 382,809 791,985 955,813 1,256,994 1,230,304 2,221,970 2,155,658 2,199,578 2,411,943 2,454,703

Operating ratio 75.7 75.4 74.5 73.5 72.9 68.8 68.3 66.1 64.7 63.7

p-dO z

0I I-tIN

77I'RD WATER SUPPLY AND SANITATION PROJECTSOCIETE D'PWLOITAYTON DES E4UX DE GUINEE

PRJECTED BALANCE SHEET STATJEINTSUS S 1000

1M95 1996 1997 199* 19" 2000 2101 2002 2003 2004

Iiwentoy 1,277,382 1,341,251 1,408,314 1,478,729 1,552,666 1,630,299 1,711,814 1,797,405 1,887,275 1,981,639AccountrReceivable 8,771,834 8,333,242 7,916,580 8.708,238 9,579,062 10,536,968 11,590,665 12,749,732 14,024,705 15,427,175Cash andBank 33,074 135,010 1,050,771 1,181,885 1,215,149 2,206,996 3,057,895 3,866,893 5,006,010 6,136,450

CurrentAssets 10,082,290 9,809,503 10,375,664 11,368,852 12,346,877 14,374,264 16,360,374 18,414,030 20,917,990 23,545,264

Gross FixedAssets 4,011,106 4,331,994 4,678,554 5,052,838 5.457,065 5,893,631 6,365,121 6,874,331 8,249,197 9,899,036Depreciation 2,253,312 2,433,577 2,628,263 2,838,524 3,065,606 3,310,855 3,575,723 3,861,781 4,634,137 5,560,964NetFixedAssets 1,757,794 1,898,418 2,050,291 2,214,314 2,391,459 2,582,776 2,789.398 3,012,550 3,615,060 4,338,072

Work in Progress 104,383 143,235 171,882 154,693 237,197 284,636 341,563 409,876 491,851 590,221Exchange Rate Translation Var. 23,076 - - - - - - -Financial Assets 154,034 - - - - - - - -

TotalAssets 12,121,577 11,851,156 12,597,837 13,737,859 14,975,533 17,241,676 19,491,335 21,836,456 25,024,901 28,473,557

Li&iA & Owum' EquityAccounts Payabl 673,591 707,271 742,634 779,766 818,754 859,692 902,676 947,810 995,201 1,044,961Short Term Matrity ofL-TDebt 8,769,357 8,330,889 7,914,345 7,518,627 7,142,696 6,785,561 6,446,283 6,123,969 5,817,771 5,526,882Miscellaneous 399,485 - - - - - - -

Short Term Liabilities 9,842,433 9,038,160 8,656,979 8,298,393 7,961,450 7,645,253 7,348,960 7,071,779 6,812,971 6,571,843

Long Term Debt 174,530 261,795 392,693 589,039 883,558 1,189.154 1,519,197 1,875,644 2,838,050 3,992,938Exchange Translation on Loans - - - - - - - -

Long Term Liabilities 174,530 261,795 392,693 589,039 883,558 1,189,154 1,519,197 1,875,644 2,838,050 3,992,938

Equity Share Capital 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1.300,000 1,300.000 1,300,000 1 Provisions &Rese,ves 374,110 411,521 452,673 497,940 547,734 602,508 662,759 729,035 801,938 882,132 QQ 2RetainedEarnings 430,504 839,680 1,795,493 3,052,487 4,282,791 6,504,761 8,660,420 10,859,998 13,271,941 15,726,645 (D t

Total Liabilities & Ownrs'Equzty 12,121,577 11,851,156 12,597,837 13,737,859 14,975,533 17,241,676 19,491,335 21,836,456 25,024,901 28,473,557 o

iMilD WA7t1 SUPPLY AND SANITATION PROJECT

URBAN WATER SUPPLr SEcroPROJECT INIOME STATMET

IM5 lf fIn Ifl MP 230 2U1 2U2 2U3 204O w hmn

Water Saluk Pe 13,507,686 13,560,800 18.840,420 23,962,480 26,162,080 28,704,000 29,900,000 31,280,000 31,050,000 31,500,000

Operaung Subai-ies - - - - - - - -mu,iliac 64424,907 6,667,915 6,859,722 7,055,723 6.829,162 6,888,068 6,949,330 7,013,043 7,106,513 7,250,000

rTaalOperagingRuvenues 19,932.593 20,228,715 25,700,142 31,018,203 32,991,242 35,592.068 34849,330 38,293,043 38,156,513 38,750.000

Sala,iu& Wqai 2,458,100 2,858,293 2,829,150 2,975,980 3,117,438 3,265,785 3,421,362 3,429,267 3,437,371 3,445,676

Op.a6tngEe-fdifurus 8,427,436 8,638,122 8,959,466 9,908,954 10,156,677 10,652,183 10,918,488 10,931,440 10,944.716 10.958,324

Taratm 148,309 130,456 137,163 141,016 149,253 158,050 167,450 177,502 188,258 199,776Provizia,for Bad Debts /Chawng 3,281,826 3,041,423 3,237,395 3,452,603 3.646,912 3,947,695 4,411,094 5,031,686 5,256,686 5,448,686

Phaviri-farDepu-iaUwr 4,857,535 5,930,892 6,760,287 7,618,318 8,064,917 8,401,235 8,572,016 8,776,954 6,581,879 6,874990

Miscodbeam 98,667 87,995 91,329 95,267 99,077 103,040 107,162 111,449 115,907 120,543

Tra Operating Expenses 19,271,873 20,687,181 22,014,790 24,192,138 25,234,274 26,527,988 27,597,571 28,458,299 26,524,817 27.049,995

Operating Inome 660,720 (458,466) 3,685,352 6,826,065 7,756,968 9,064,080 9,251.758 9,834,744 11,631,696 11,700,005

Income (I) onfinancad bans. (3,560.541) (2,860,032) (4,667.844) (5,359,225) (5.415,141) (5,299.244) (5,524,896) (5,545,884) (5,097,189) (4,525,905)

O°hr 1w.cerating inam 9,164,182 - - - - - -

Ne In0 e for th raw 6,264,361 (3,318,497) (982,492) 1,466,840 2,341,827 3,764,836 3,726,862 4,286,861 6,534,507 7,174,100

Opeang ratio 73.7 72.1 64.9 59.6 57.4 54.7 54.7 52.7 51.8 49.7

0It

N.

REPUBLIC OF GUINFATHIRD WATER SUPPLYAND SANITATIONPROJECT

URBAN WATER SUPPLY SECTORPROJECTED CASHFLOWSTATEUIEKS

(US$ '000)Sexrcu effFend 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Net income (3,069,167) (3,318,497) (982,492) 1,466,840 2,341,827 3,764,836 3,726,862 4,288,861 6,534,507 7,174,100Depreciation Expenses 4,857,535 5,930,892 6,760,287 7,618,318 8,064,917 8,401,235 8,572,016 8,776,954 6,581,879 6,876,990ProvisionforBadDebts 3,281,826 3,041,423 3,237,395 3,452,603 3,646,912 3,947,695 4,411,094 5,031,686 5,256,686 5,448,686

Interna Generation ofFw2ds 5,070,194 5,653,818 9,015,190 12,537,761 14,053,656 16,113,766 16,709,972 18,097,501 18,373,072 19,499,776

PrincipalRepayment 1,857,375 3,173,016 5,753.492 7,692,304 7,816,001 7,925,216 8,038,856 8,621,637 8,856,078 9,009,575

Net Internal Cash Generation 3,212,819 2,480,802 3,261,698 4,845,457 6,237,655 8,188,550 8,671,116 9,475,864 9,516,994 10,490,201

Other Funds & Grants 3,606,370 7,348,039 8,321,123 7,102,868 1,337,645 633,357 3,325,128 6,069,464 2,603,779 (1,864,482)Disburamens on Borrowings 8,414,864 17,145,425 19,415,954 16,573,359 3,121,173 1,477,833 7,758,632 14,162,082 6,075,483 (4,350,458)

Total Sorces ofFunds 15,234,053 26,974,267 30,998,775 28,521,683 10,696,473 10,299,740 19,754,876 29,707,410 18,196,256 4,275,262

App&iena qfFends

Fr edAssets Additions 11,135,218 18,371,830 22,536,560 27,404,284 24,249,427 13,161,365 6,951,490 17,539,210 27,584,866 15,859,839Work in Progress 386,961 6,038,154 4,868,647 (1,390,000) (14,627,496) (4,402,561) 10,606,927 9,248,313 (11,918,025) (12,791,630)Foreign Exchange Variation 1,923,377 2,550,117 2,761,191 2,455,498 1,116,530 620,578 1,413,476 2,175,408 1,451,591 134,842

Toal applications ofFunds 13,445,556 26,960,102 30,166,397 28,469,783 10,738,461 9,379,383 18,971,893 28,962,931 17,118,433 3,203,051

Variation in Cash Balance 1,788,497 14,165 832,378 51,901 (41,988) 920,357 782,983 744,479 1,077,823 1,072,211Cash atEnd ofrYear 1,788,497 1,802,662 2,635,040 2,686,940 2,644,952 3,565,309 4,348,292 5,092,771 6,170,594 7,242,805

Internal Cash contribution to invest. 23.9 9.2 10.8 16.2 24.6 59.4 45.7 32.7 32.8 65.6Debt Service Coverage Ratio 2.73 1.78 1.57 1.63 1.80 2.03 2.08 2.10 2.07 2.16 lb

Otl

IID WAIV SUPPLY AND SANWATION PrOJECT

URBAN WATER SUPPLY SEBC7R

PRanJEwD A4LUCE NIrSW SFAZESAE

yEJs Iwo

mrs a 280 2m1 202 203 204

1nvvy 1.551.288 1,785,051 1.948,914 1,991,529 1,771,266 1,759.899 2,052.414 2,321,605 2.171,475 2,00,039

AcccwEsRemihIi 7.992,120 4071,447 7,523.888 8.119,199 8,695,504 9,347,814 10,071.468 10,874,088 11.186,655 11,434,237

Ch .sdB.* 1,788,497 1,802,662 2,635,040 2.686,940 2,644,952 3.565.309 4,3)4,292 5,092,771 6,170,594 7,242.805

CnwiwAat 11,331,905 11.659,160 12.107.841 12,797.669 13.111.722 14,673.023 16,472,174 18,288.463 19.528,723 20,685,081

Grws PFiAsts 130,691,164 149,062,994 171,599,534 199.003,838 223,253,265 236,414,631 243,366,121 260,905,331 288,490,197 304,350,036

DePO- 18,395,050 23,640,900 29,677,821 35,706,612 41,467,580 46,628,459 51,562,357 57,028,345 63,766.931 71,086,288

NetF tdAets 112.296.114 125,422.095 141,921,733 163,297,226 181,785,685 189.786,172 191,803,767 203,876,986 224,723,266 233,263,748

Work ti Pvo 16,295,081 22,333,235 27,201,882 25,794,693 11.167.197 6,764,636 17,371,563 26,619,876 14.701.851 1,910,221

EwuageRae TmkIEon Va.. 10,176.208 12,726,325 15,487,516 17,943,014 19,059.344 19.680.123 21,093,599 23,269,007 24.720.Q98 24,855,440

FbwxAVktU 1,860.698 1,860,698 1,860,698 1,860,698 1,860,698 1,860,698 1,860,698 1.860.698 1,860,698 1,860,698

roAdAwb 151.960,006 174,001,513 198,379,670 221,693,301 226,984,847 232.764,652 248,601,798 273,915,030 283,535.136 282,575,187

lhks A O_uIN EEMIy

AcceowPayaNe 6,177,856 4,035,771 4,797,134 4,625.766 2,458.254 1)31,692 3,457,176 4,879,310 3,126,701 1,242,961

Shan rem Mutwlay opL-r Debt 1.797,542 3,155,563 5.727,313 7,653.035 7,757,097 7,864.097 7,972,847 83550,347 8,663,597 8.778,597

AdigoIow 3,251,011 4,244,747 3,893,939 2,472,611 1,988,455 970,634 99,457 (153,989) (321,526) (957,870)

Shr Tem. Liabitis 11.226,409 11,436,080 14,418,386 14,751,411 12.203,806 10,666,423 11,529,480 13,275,668 11,468,772 9,063,688

tog Fern Debt 79.694,474 99,665,000 121,289,000 140,519,000 149,263.000 154,123,000 165,192.500 182.229,000 187.597,000 179.633,000

KIr s ng miadonanLo. 10,176,208 12,726,325 15,487,516 17,943,014 19,059.544 19,680,123 21,093,599 23,269.007 24,720,598 24,855,440

Longl'e kLlabllidks 89,870,682 112,391,325 136,776,516 158,462,014 168,322.544 173.803.123 186,286,099 205,498.007 212.317,598 204.508.440

hqulySh#wCaptd 47,960,355 47,960,355 47,960,355 47,960,355 47,960,355 47.960.353 47,960,355 47,960,355 47,960,355 47,960.355

Pre'.*Ia.a&bervne 374,110 411,521 452.673 497,940 547,734 602.508 662,759 729.035 801,938 882.132

Inva"rm Subfw7n 7,364,721 9,957,000 8,109.000 7,692,000 3.279,000 1,296,000 - - -

Retdd5 n (4,836,271) (8.154,768) (9,137,260) (7,670.420) (5,328,593) (1I563,757) 2,163.105 6.451,963 12.986,473 20,160,573

rTod LidbilIItl& Ouqrs' E"iy 151,960,006 174.001,513 198,579,670 221,693,301 226.984,847 232,764,652 24,601,798 273,915,030 285,535,136 282.575.187

Rwan Nt FixwdAmOku Oper 1.0 1.5 28 4.5 4.5 5 5 5.0 5.4 5.1

P4

Annex 4-4page 1 of 3

REPUBLIC OF GUINEATHIRD WATER PROJECT

URBAN WATER SUPPLY SECTORASSUMPTIONS FOR FINANCIAL PROJECTIONS

A. GENERAL

1. Financial projections have been carried out for the urban water supply sector with SONEGand SEEG for its operations. They have been prepared in current GNF and domestic inflationrates from the World Bank are as follows:

Estimated AnnualFiscal Year Inflation rate

1995 4.51996 4.31997 4.11998 4.01999 4.02000 4.02004 4.0

2. As a result of the IMF assistance to monetary policy, the exchange rate has been fairlystable for the last two years. The following average exchange rates are used in the financialprojections.

Fiscal Year GNF/US$ 1

1995 9941996 1,0001997 1,0301998 1,0601999 1,0902000 1,1102004 1,180

B. INCOME STATEMENTS

Redevance. The Government is committed to review after negotiations SEEG andSONEG's tariff level. The consumer rate will remains flat: 880 GNF in 19994-1996, 940 GNF/m3 in 1997-1999, 920 GNFlm3 in 2000-2002 and 900 GNF/m3 in 2003-2004. The Redevancecollected by SEEG on behalf of SONEG as part of the consumer rate is expected to increase fromthe present rate of 370 GNF/m3 in 1996 to about 530 GNF/m3 in 1997. Thereafter, the proposedredevance rate will be as follows: 560 GNF/m3 in 1998-1999; 520 GNF/m3 in 2000; and 515GNF/m3 in the following years.

Tarif Exploitant. Tarif Exploitant collected by SEEG as a consumer rate to cover itsoperations is expected to be decreased from the current 510 GNF/m3 in 1996 to about 410 GNF/m3

from 1997 and thereafter.

Annex 4-4page 2 of 3

Tarif Exploitant Etranger. In conformity with the terms of the Second Water SupplyProject, the TEE ended on July31, 1995. However, because the water sales were low compared tothe projections, only FF69 million have been paid to SEEG out of the 100 million initially allocatedto the TEE.

Revenues from Connections. Price per connection is assumed to stay at US$ 240 for thenext three years and increase by the inflation rate thereafter. Number of connections executed peryear is assumed to be as follows: 6000 connections from 1996 to 1998; 5000 connections from1999 to 2002; and 4000 connections thereafter.

Miscellaneous Revenues. Miscellaneous revenues mainly include water sales revenuesthat were due in previous years but not incurred and they also include provisions that were setaside. Those revenues are finally collected in the very year when they appear.

Expenses. Operating costs (mainly salaries, maintenance equipment and chemicals) andservices (mainly subcontracting works, French Partenaire fees and missions and maintenanceactivities) are assumed to increase in proportion with the inflation rate. However, the re-negociation of the management contract is expected to lead to reduction of expatriate personnel andthe hiring of nationals and also to the reduction of investments costs in equipments and othermaterials. The international inflation has been assumed for the imported elements of the aboveexpenses at 3% annually.

Provisions. SONEG. Provisions for bad debts include redevance which is not yettransfered from SEEG. The rate used in the projections has been assumed to be 8% of salesrevenues from 1995 to 1999 and 5% of sales revenues from 2000 and thereafter. SEEG.Provisions for bad debts include uncollectables and renewal of equipment. Their projections havebeen averaged at about 26% of actual water sales revenues in 1995, 25% in 1996, 24% in 1997,23% in 1998, 22% in 1999, 21% in 2000 and 20% in 2001 and therafter. Starting in 1996, themanagement company shall have new incentive and penalty measures ammended to itsmanagement contract and this new arrangements should progressively improve the ratio.

Depreciation. SONEG. Depreciation has been calculated on a straight-line basis at anaverage annual rate of about 3.7% over the projected period. This rate reflects the currentweighted average depreciation rate. SEEG. Depreciation has been calculated on a straight-linebasis at an average annual rate of about 11% over the projected period. This rate reflects thecurrent weighted average depreciation rate.

C. BALANCE SHEET AND FUNDS FLOW STATEMENT

Accounts Receivable

3. SONEG. The receivables are expected to decrease from the present 210 days of revenuesin 1995, to 138 days in 1997, 121 days in 1999, 90 days in 2000 and therafter. Redevance werenot always transferred to SONEG by SEEG as soon as collected. Thus the number of days ofreceivables has always experienced a difference between SEEG and SONEG. SEEG. Thereceivables are expected to decrease from the present 180 days of revenues in 1995, to 140 days in1996, 110 days in 1997, 85 days in 1998, 75 days in 1999, 65 days in 2000 and 55 days in 2001and therafter. The prospect of 1999 as the date to negotiate the second generation affermage

Annex 4-4page 3 of 3

contract, based on a competitive bidding is expected to lead SEEG to implement clauses of thecurrent contract and transferred redevance as soon as collected.

Accounts Payable

4. SONEG. Payables represent approximately 15% of the total amount of investmnents infixed assets in any given year. SEEG. Payables represent approximately 25% of the total amountof investments in fixed assets in any given year.

DEMANDE EN EAU POTABLE --CUMUL GENERAL

| CUMUL GENERAL I-.S %Tve ... t fl e *'*TT:'u

honde la toe uaWine desservie % 1561634 162 413 1690 951 1 759 876 1 831 818 1 906 919 1 984 682 2 06 423 2 16180 2 241121 2 334 322 2 432 56pesser banewienp! peutler % 13% 14% 15% 17% 18% 19% 21% 23% 25% 27% 29% 31%pep adha atuxvoimm % 26% 26% 27% 28% 28% 29% 29% 30% 31% 31% 32% 33%dessn apar bornes ftontasn % 7% 9% 10% 11% 13% 14% 15% 17% 18% 19% 21% 22%Taux de desstt pat b ease.u 46% 49% 52% 56% 59% 62% 65% 69% 73% 77% 82% 86%ll = ~~~~~~~~~~~~~~~~~~~~~~~~~.9_O.&>::i:*:::S,.E consormation sp6ckq par habitantavec branchemenl palitulier UliJh 45 45 45 45 45 45 45 45 44 44 44 44&chat amx vohs UVLh 27 27 2? 27 27 26 26 26 26 27 27 27aux bornes tortaines UJlh 20 20 20 21 21 21 21 21 21 21 21 21

m~~~~~~~~~~~~~~~~~~.:.{.:%7 *. 'i.A :::. *x' :~ x.. $Žk'Emconsommdon domestkps

branchements pafliculierS m31J 20 O4 ?1 928 23 978 26161 28 484 30 957 33 580 37 247 41 179 45 392 49 9D4 54 74b orr akn m31J 2 239 2 805 3 418 4 081 4 796 5568 6 398 7 208 8078 9 001 9991 11 Total m31J 22 243 24 734 27 396 30 242 33 260 36 524 39 977 44 455 49 2S4 54 393 59 894 65 795instilulorlteTotal m31J 16 616 17 552 18 519 19 519 20 553 21 624 22 732 23 729 24 767 25 850 26 979 28 156

canaaune_ton total aactur6a m3/J 3 8859 42 280 45 916 49 761 53 134 60 148 62 710 68 184 74 021 80 243 88 873 93 951m3Ymes 1 181 953 1 286 190 1 396 599 1 513 551 1 637 436 1 768 669 1 907 415 2 073 940 2 251 480 2 440 720 2 642 385 2 857 676m31an 14 183 440 15 434 280 16 759 193 18 162 614 19 649 237 21 224026 22 888 974 24 887 284 27 017 764 29 288 639 31 708 624 34 292 107Consommation rnoyanne de Ia pop. desssrvie V 54,1 52.8 51.7 60.8 49,9 49,1 48.4 47.6 46.9 46.2 46,6 45,1Consomm non lnfaduree (fraude) m31J 3 537 4 302 3 885 3 505 3154 2 826 2 518 2 415 2 318 2 226 2 138 2 053

Rlenant du meseau 46% 52% 58% 64% 70% 75% 80% 80% 80% 80% 80% 80%Producton nkeairk m31J 84 595 81 001 78 838 77 732 77 399 77 862 78 387 86 230 92 27 100 304 105 S91 117 439m3/mois 2 573 094 2 463 787 2 398 000 2 364 335 2 354 235 2 362 212 2 384 268 2 592 425 2 814 350 3050900 3 302 982 3 57209m3Jan 30 877 122 29 565 443 28 776 006 28 372 024 28 250 815 28 346 547 28611 218 31 1)9 105 33 772 205 36610 799 39 635 780 42 865 134Production moyerne par habitant tyh S4.2 49.8 46.6 44,2 42.3 40.7 39.5 41,2 43 44.6 46.6 48.Petoeme pw bncnehnt

de vprbsins p ranch er pafrcluer 22 20 19 18 17 18 16 14 14 13 12 12de bdr b r ar 418 418 418 419 419 420 421 419 417 418 418 41done dobmandhwmnta

mrnchemewpa.tecuhe adis 18 357 20989 23 816 26 851 30 107 33 S0 37 331 42 730 48 516 54 714 61 348 68 46fome g Fr4ahes 398 480 568 663 763 870 984 1 116 1 257 1 405 1 562 1 7ranhemm4s parctuers ca (winaclis 11 862 11 12 10 397 9 664 8 931 8 199 7 461 7 342 7 218 7 094 68970 6 8

man spil des branwchmers_um.nhen peticslabr U Ibrclt 1 090 1045 1 007 974 946 921 900 872 849 830 813 80 t4borne bnaine 1SF 5626 5 84 6013 6 159 6 285 6 397 6501 6 456 6426 6 406 6 398 6 G ,

p2.;xA...At~*x: o inz S, >.7S.j8 _ .9 .S : '" ''i ~ M

.4~~~~~~~~~~~~~~~~~~~~~~~

/

DEMANDE EN EAU POTABLE -CONAKRY

i- -- -- - -- a nGENERAL 1994 1995 1996 11997 1998 1999 2000 2001 -12002 2003 2004 2005

dslzonuutaNeim desservi % 902 051 947 153 994 511 1 044 237 1 096 449 11 5271 1 208 834 1 269 276 1 332 740 1 399 377 1 469 34 1 542 813de#eparbranchentewtputacu % 16% 18% 19% 21% 22% 24% 25% 27% 29% 31% 33% 35%a!s# par achd au Vsms % 33% 32% 32% 31% 31% 30% 30% 31% 32% 33% 34% 35%de p fon,tam % 6% 8% 9% 11% 12% 14% 15% 16% 17% 18% 19% 20%

Tiux td dosate palsa basim 57% 60% 62% 65% 67% 10% 74% 76% 82% 86% 90%C. C -OIC: :XC'.C.X.CC.X _lA: -i :j*E: hT_

avec brancemerd partculle UJ/h 50 50 50 50 50 50 50 50 50 50 50 Sachat aux voimsins UVh 30 30 30 30 30 30 30 30 30 30 30 3aux bornes fontfm UJlh 25 25 25 25 25 25 25 25 25 25 25 2

codo_>siqsparticulera m3IJ 16 139 17 516 18 989 20 567 22 255 24 060 25 990 28 939 32 119 35 544 39 232 43 199bomes fonianes m3/J 1 375 1 795 2 254 2 754 3 298 3 890 4 533 5 077 5 664 6 297 7 714

Total m3/J 17 514 19 311 21 243 23 321 25 553 27 90 30 523 34 017 37 783 41 841 46 211 50 91consounai kmnhsatdubonnhlle

Tota m3/J 12 484 13 108 13 763 14 462 15 174 15 933 16 729 17 566 18 444 19 366 20 335 21 351

consamnatan total factunde m3/J 29 998 32 419 36 007 37 772 40 727 43 883 47 253 61 583 56 227 61 208 66 546 72 264m3/moms 912 432 986 067 1064 784 1148 908 1 238 783 1 334 772 1 437 264 1 568 968 1 710 250 1 861737 2 024 097 2 19803

m31an 10 949 179 11 832 799 12 777 13 786 897 14 865 391 16017 267 17 247 167 18 827 618 20 522997 22 340 844 24 289 169 26 376 473Consommation moysnne de Ia pop. desservie I/jlh 60.6 59.6 58,7 67.9 67.2 56,5 55.8 54.9 54.1 53.3 52,7 62

Consommtion non factwrde (fraude) m31J 2 455 3 306 2 975 2 680 2 414 2 172 1 949 1873 1803 1 738 1 677 16

RPnrduntt du rsoa_ 41% 48% 54% 61% 67% 74% 80% 80% 80% 80% 80% 80%

Production nWkAssl m3/J 73 165 68 250 64 827 62 434 60 787 59 705 59 08 64 478 70 284 76 284 83 182 90 330m31moms 2 225 443 2 075 930 1 971822 1 899 022 1 848 929 1 816017 1 796 580 1 961 210 2 137 812 2 327 171 2 530122 2 747 549m3Yan 26 705 314 24 911 156 23 661 868 22 788 260 22 187 151 21 792 200 21 558 959 23 534 523 25 653 746 27 926 055 30 361 461 32 970 592

Production moyerne par ubitant I/hIt 81.1 72,1 65,2 59.8 65.4 51.9 48.9 50.6 52.7 54,7 66.6 58.5

psaem pm branchowde personres par branchefetpa iCier 11 11 1 1 1 1 1 1 1 11 1 1 1 1 1 II 11 1 1deviamnpar branchenwpadiulier 22 20 18 17 15 14 1 3 13 12 12 11 11

* de persore near b orns aine |50 50 500 500 500t 500 sa so Stt_ 500 500 500___________par_bor ___ &Ma . 90 r$1r. 500 5004&~a e do buuwhmnta

Branchemient pawtiulie sactifs 13 338 15 258 17 338 19 587 22 017 24 642 27 474 31 155 35 136 395437 44 080 49 09eontaines 110 144 180 220 264 311 363 406 453 504 558 617Ispancul cos s (isnactifs) 8 116 7 679 7 242 6 805 6 368 5 932 5 495 5 378 5 5 143 5 026 4

pspclquse des branchemerts >sanchernenipautulmer |fWucht 1210 1 148 1095 1050 1Ol 976 946 929 914 901 890hore fonlah |, ~* V/BF 12 500 12 500 12 500 12500 12 50 12 50 12 50 12 500 12 500 1250 120 0 12 50 Z

o>i__k

.4~~~~~~~~~~~~~~~~~~~~~~~ 1~

ANNEX 6-1page 1 of 3

GUINEA

THIRD WATER SUPPLY AND SANITATION PROJECT

NOTES AND ASSUMPTIONS ON ECONOMIC ANALYSIS

1. This calculation is based on the proposed Water III Project, for which 40-year projectlife is assumed, in addition to the on-going Water II Project and other proposedprojects. All cost and benefit figures are expressed in January 1994 prices. The pricesused in the analysis are net of duties and taxes.

2. The beneficiaries of the project are estimated to be about two million. Demand forwater was projected taking into account an annual population growth of 4.1%, and animproved water service ratio from the current 55% in 1994 to 90% in 2005. Given theestimated total capacity of 52,165,000 m3/year (36,500,000 m3/year for Conakry and15,665,000 m3/year for all other cities), of which 20% is assumed to be unaccountedfor due mainly to leakage from bulk transmission pipelines, water production isassumed to grow to supply demand, until capacity of most systems is reached in theyear 2008. All analysis is based on nationwide economic effects which include bothConakry and other cities.

3. The long-run marginal cost (LRMC) of water supply system, as expressed in theaverage incremental cost (AIC), is estimated as 1,027 GF/m3, using a 10% discountrate reflecting the opportunity cost of capital. Detailed calculations are given in thefollowing table. In 1995 average, the consumer rate is 880 GF/m3, which is alreadymuch higher than the average tariff in the neighboring countries. It is expected that thereal LRMC decreases substantially as the institutional reforms take into effect, and thatthe consumer rate converges to the real LRMC in the long run.

4. For sanitation component, 150 GF/m3 is assumed to be the average conusmer rate ofwaste water treatment, in addition to 15 GF/m3 for surcharge on water.

5. The economic rate of return (ERR) has been calculated for the stream of netincremental benefits resulting from the project.

6. Costs Capital Costs include the all physical components of the expansion of thewater supply system up to the year 2001. Using standard conversion factor (=0.87),foreign exchange portion has been adjusted upward.

7. Incremental operating costs, derived from the financial projections, have been adjusteddownward to eliminate indirect operating expenses including depreciation andtaxation. A 5% constant annual increase is assumed up to the year 2008 when thewater consumption is expected to reach to a full capacity. Also, foreign exchangeportion has been shadow priced.

ANNEX 6-1page 2 of 3

water consumption is expected to reach to a full capacity. Also, foreign exchangeportion has been shadow priced.

8. Benefits Incremental revenues from the sale of water and the amount of waste watertreated have been taken as a proxy for direct use benefits. In addition, consumer'ssurplus is estimated assuming a linear demand curve with constant price elasticity of -0.2.

9. Results Detailed calculations are given in the following tables. Taking into accountall investments for the expansion of water system in Conakry and other cities up to theyear 2001, the project's ERR is 13.5%, while the ERR for sanitation component yieldsonly 5.3%, and total ERR 13.3%. We have also conducted he sensitivity analysiswhich measures the risks against the cost-overrrun, lower demand, and delay inimplementation is summarized in the table below.

9. This rate is expected to become higher if the analysis captures the project's fullbenefits, including such posititive externalities, as improved sanitary conditions andhealth and productivity as the result of the better availability and quality of waterwhich cannot be quantified.

Estimated rates of return for various project scenarios

1'medi scehafilh lsfirmwd A. RR

Base Case "most likely" scenario 13.3%

10% increase in water investment costs 12.8%

10% increase in water operating costs 13.2%

10% increase in total water costs 12.8%

20% increase in water investment costs 12.3%

20% increase in water operating costs 13.2%

20% increase in total costs 12.3%

50% lower projection water demand 10.0%

2 year delay in implementation 10.2%

ANNEX 6-1page 3 of 3

Year Incr Revenue from Estimate of Consumer Net Beneft from Urban Net Beneft from Total with AllUrban Water Surplus Water Sewer Benefits

1989 0 0 0 0 01990 274,920 46,461 -634,228 0 -634,2281991 530,271 131,046 -5,490,269 0 -5,490,2691992 1,281,430 346,137 -32,174,810 0 -32,174,8101993 2,560,390 807,786 -31,770,895 0 -31,770,8951994 3,909,299 1,462,409 590,973 0 590,9731995 4,976,402 2,177,667 -25,275,170 -108,000 -25,383,1701996 6,106,627 3,019,908 -27,000,708 -108,000 -27,108,7081997 7,304,239 3,986,588 -14,814,729 -2,723,000 -17,537,7291998 8,571,797 5,075,074 -2,256,159 -5,338,000 -7,594,1591999 9,915,272 6,286,676 -1,278,320 -2,723,000 -4,001,3202000 11,335,517 7,618,946 14,366,152 517,335 14,883,4872001 13,039,811 9,272,761 19,671,717 547,305 20,219,0222002 14,857,554 11,088,696 25,140,582 579,270 25,719,8522003 16,794,717 13,070,129 29,016,612 613,335 29,629,9472004 18,858,977 15,222,737 33,188,787 649,635 33,838,4222005 21,062,276 17,557,263 37,679,684 688,380 38,368,0642006 23,402,362 20,069,745 42,482,977 729,530 43,212,5072007 25,929,655 22,813,514 47,702,301 773,973 48,476,2742008 27,408,596 24,431,123 50,744,524 799,980 51,544,5042009 27,408,596 24,431,123 50,744,524 799,980 51,544,5042010 27,408,596 24,431,123 50,744,524 799,980 51,544,5042011 27,408,596 24,431,123 50,744,524 799,980 51,544,5042012 27,408,596 24,431,123 50,744,524 799,980 51,544,5042013 27,408,596 24,431,123 50,744,524 799,980 51,544,5042014 27,408,596 24,431,123 50,744,524 799,980 51,544,5042015 27,408,596 24,431,123 50,744,524 799,980 51,544,5042016 27,408,596 24,431,123 50,744,524 799,980 51,544,5042017 27,408,596 24,431,123 50,744,524 799,980 51,544,5042018 27,408,596 24,431,123 50,744,524 799,980 51,544,5042019 27,408,596 24,431,123 50,744,524 799,980 51,544,5042020 27,408,596 24,431,123 50,744,524 799,980 51,544,5042021 27,408,596 24,431,123 50,744,524 799,980 51,544,5042022 27,408,596 24,431,123 50,744,524 799,980 51,544,5042023 27,408,596 24,431,123 50,744,524 799,980 51,544,5042024 27,408,596 24,431,123 50,744,524 799,980 51,544,5042025 27,408,596 24,431,123 50,744,524 799,980 51,544,5042026 27,408,596 24,431,123 50,744,524 799,980 51,544,5042027 27,408,596 24,431,123 50,744,524 799,980 51,544,5042028 27,408,596 24,431,123 50,744,524 799,980 51,544,5042029 27,408,596 24,431,123 50,744,524 799,980 51,544,5042030 27,408,596 24,431,123 50,744,524 799,980 51,544,5042031 27,408,596 24,431,123 50,744,524 799,980 51,544,5042032 27,408,596 24,431,123 50,744,524 799,980 51,544,5042033 27,408,596 24,431,123 50,744,524 799,980 51,544,5042034 27,408,596 24,431,123 50,744,524 799,980 51,544,5042035 27,408,596 24,431,123 50,744,524 799,980 51,544,504ERR 13.5% 5.3% 13.3%NPV 51,992,887 -1,897,643 50,095,245@10

ANNEX 6-2Page 1 ot 10

4 PLANDE GESTION ENVIRONNEMENTALE _/

4.1 OBJECTIFS DU PLAN

Le Plan de Gestion Environnementale (PGE) vise l'attenuation correcte etle suivi des impacts les plus significatifs Mies au projet. Le PGE integredgalement des mesures destinees au renforcement des capacitesinstitutionnelles du secteur de l'eau et la prise en compte de l'environnement

Le PGE a pour objectifs:

-La description des mesures d'attenuation proposees;

-La determination des etapes d'application des mesures;

-L'identification des indicateurs des changements de l'environnement et desconditions socio-economiques

-La designation des responsabilites institutionnelles pour la gestionenvironnernentale;

- L'6laboration de recommandations en vue du reforcement des capacitesinstitutionnelles et de la formation des cadres en gestion de l'environnementet des ressources en eau.

L'estimation sommaire des coOts des mesures d'attenuation proposees.

4.2 RAPPEL DES IMPACTS

Dans le contexte de ce projet, aucun deplacement n interviendra car lessites prevus pour l'implantation des reservoirs de la Cimenterie et de K36(Kag Belen) sont a la limite de la zone urbaine et sont actuellementinoccupes. Par ailleurs, les travaux du reservoir de Simbaya consistent enla realisation d'un ouvrage a cot6 de celui de 2500 m3 deja existant.

Les impacts potentiellement significatifs resulteront de:

.L'augmentation de la capacite de stockage et F'amnlioration deI'approvisionnement en eau potable de la population urbaine de Conakry.Cet effet peut etre benefique comme il peut aussi generer unedeterioration de la situation sanitaire en fonction de l1'tat de l'hygiene etde l'assainissement en milieu urbain

*L'augmentation du traffic d'engins lourds des chantiers (pelles, grosporteurs, excavateurs etc) et des risques d'accident avec les vehicules etpietons, usagers habituels des routes d'acces

*L'excavation et le derangement de quantites importantes de materiauxrocheux et graveleux qui peuvent etre entraines par le ruissellement etcolmater les lits des rivieres et les depressions a vocation maralich&re

1/ Source: Evaluation des Impacts sur l'Environnement du TroisiemeProjet Eau de Guinee, Juillet 1995; Tropica SARLEnvironmental Consultants

TIALEAU 7: ATTENUlATION DES IMPACTS SIGNIFICATIFS LIES AU PROJET

IMPACT MESURES RESPONSABiLITE PERIODE COUT ESTiMt INDICATEUR DED'A1TENUATION INSTITITIONNELLE D'INTERVENTION SUM (AUDrl)PROPOSEES POUR L'APPLICATION

Accidents entre usagers et ContrOles contractuels du Conctant supervis6 par Construction des Nul R6duction des accientsengins et vehicules de comprtenent des l'Ingenieur de construction reservoirs et pose de du traficprojet condudeus des rwtes et conduile

des beums de ciwulation _

Dechage de maniaux Minimiser les quantites de Contractant supervise par Construction des Fait partie des operations Evidence d'uned'excavation et transport dechets d'excavation en Ies I'ingenieur; Audit par la r,servoirs et pose de d'Ingenieurie; pas augmentation de lavers les rivibes reutilisant pour l'entretien SONEG et Directeur des conduites d'increment financier charge solide des rivieresdes routes d'acces, Travaux Publicsutilisation efficiente desande n caries

Fetrnetute de voies Recrutement de vigiles Contractant supervise par Construction et CoOt bas: Controle de chantierspubliques rtglementant le tric aux la SONEG maintenance des conduites salaires des vigiles Presence effective deabords des chantiers; vigiles;infonmation du public minutes desavant fermeture communiqu6s de presseOuvertre aux pietons,ouvetture au trafic autxheures de Pointe

Traversee des iones Mise en place de structure SONEG Conception du Projet Coat moyen; Calcul des distanceshurnides port6es Ministere Environnement Ancrage a la roche des concenes et integrationpylones aux coOts estirnes du._____________________ ______________________ ______________________ P ro iet.

Reduite la largeur de SONEG Pose de conduites CoOt faible ContrOle post-chantier et1'emprise; Min.Environnement P.V. de compensation

_des Collectivit6s lcalesIdetc m iauxditis Q

0 Im

.~~~~~~~~~~~~~~~~~~~",1* . . .~~~~~~~~~~~~~~~~~~~~~~~~-

.~~~~~~~~~~~~~~~~~9

IMPACTMESURES RESPONSABILITE PERIODE COUT ESTIME INDICATEUR DEDATlENUATION INSTInUlMONNELLE D'INIERVENlON SUPVI (AUDnT)PROPOSEES POUR L'APPLICATION

Ouverture de tranchees au Execution rapide des Contractant supervis6 par Pose des conduites Nul Controle de chantiers ettravers de la route travaux, rebouchage la SONEG et Directeur des signaux de deviation

provisoire; des Travaux Publicsprogrammation desdeviation de la circulation

Crevasses Colmatage et rebitumage Contractant SONEG Pose de conduties CoOt faible Reduction des accidents;post-chantiers Travaux Publics Etat des routes

Occupation illegale de la Materialisation de la zone SONEG Apres travaux CoGt faible Evidence d'empietementzone d'emprise par bornage et information Direction de sur la zone bornEe

des coUectivites locales I'Amenagement Urbain

Exhumation des tuyaux Cimenter les zones de SONEG Pose de conduites Cout faible Visibilite des tuyaux;traversees des routes non- profondeurbitumees d'enfouissement et

cimentationEvolution du prix de

Augmentation du prix de Baisse ou Gcl de la SEEG Apres-Projet Nul 1'eau1'eau .trancbe Wdiak controle par Min.

compensation par Hydauwiqueaugmentation du nombre

.___________________ d'abonnes

Augmentation du volune Amelioradion de SONEG Pendant et apres le projet CoOt Eleve Prevalences des maladiesdes eaux usees I'assainissement collectif Min.Environnement bydriques

et individuel collectivites locales(concepion de projets)

* ;- -0 .

IMPACT MESURES RESPONSABILITE PERIODE COUT ESTMIA INDICAIEUR DED'ATIINUA11ON INSnTI1JONNELLE D'INTERVENTION SUIVI (AUDMl)PROPOSEE POUR L'APPLICATION

Dpgradation, d6grioraton Esimation des besoins a SONEG Dfsign, Coit faible Bilam entrc-sortie dansdes infrastuclures de la perodicid de la consirucion les secions hyderauliqucsnmanienance amElioration et aprts-projetdes moyens logisdiques etde la surveillance _

Dfgralaiion die la qtalitl Suivi du traitement au SONE-G Aprts-projet CoOt moyeco (Produils de Qualit6 bacitriologiquede 1'eau potable suite a niveau des stations; Min.Santc trailemeni Analyse de'eau ct physique de l1eauI'augmentation de la conirBle de la qualitl de SEEG ap4ts prilvemeiht) distribuee; Baisse desconsommation 1'eau distribu6c damns le rvaleurs des maladiesconcessions i hydrique et de la.__________________ ___________________ ___________________ __________________ fr6quencc des epiJdemicsRajout d'uinc Laue Subvention die SONULG Coiisiruclaon; coot 6)CV6 FrEuenc des t!piddmiesd'enteticMAssainissemcnt I'assainissement collectif collectivilts locales Apats-projet collectif nombreau prix de l'eau par I'EtattPromotion de

d'ouwvel'asanlnssmeint d'Assainissementindividuel r_acturation au client

OQlf.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(

p0I1

ANNEX 6-2Page5 of 10

pour degats aux cultures pourrait etre elabore, de preference sur la basede- Irestimation du manque a gagner en recoltes et non pas en piedsd'arbres fruitiers ou en superficie maralch6re

*La Direction Nationale de la Securite Publique pour l'escorte des convoisd'engins lourds, la securite et le reglement de la circulation aux abordsdes chantiers

*La Direction des Travaux Publics pour l'identification des zones propicesau dumping de materiaux d'excavation (anciennes carrieres) et larefection des chaussees deformees

*La Direction de l'Urbanisme pour la conformite des composantes du projetaux plans directeurs d'urbanisme et d'assainissement et la surveillance del'6volution de l'habitat spontan6 dans les zones du projet.

*La cellule de cartographie (automatique) de la SEEG pour le suivi dureseau d'AEP (entretien et contr6le des branchements et des volumes-d'eau)

*Le Laboratoire National de Sante Publique pour l1'chantilonlnage etl'analyse a la sortie de la qualite bacteriologique des eaux

La procedure la plus indiquee est la convocation d'une reuniond'information et de coordination des l'acquisition du financement ou lorsdes passations de marches (pour permettre aux entrepreneurs d'en fairepartie) et la constitution d'un comite de suivi pilote par la SONEG.

L'organisation de reunions periodiques de mise a niveau de l'information.Ces reunions peuvent etre calees sur la p6riodicite des rapports sur 1'etat destravaux.

4.4 Audit environnemental

Etant donne l'envergure des travaux projetes et l'importance des impactspotentiels surtout en matiere sociale, il est indique qu'un specialisteenvironnemental independant fasse partie des equipes d'evaluationp6riodique organisee par la SONEG et les bailleurs de fonds dans le 2adredu suivi de 1'ex6cution des travaux.

L'audit environnemental externe fait partie de la politique de nouveau cyclede projet et de prise en compte de l'environnement pour la gestion durabledes ressources naturelles a la Banque Mondiale.

L'audit peut etre simplifie s'il part des rapports sur ltat d'ex6cution destravaux et se resume en un contr6le des taches confiees aux experts de laSONEG.

Les taches de l'auditeur environnemental externe seront:

*Consultation de la SONEG, du comite de pilotage et des communaut6s

ANNEX 6-2Page 6 of 10

locals aoncernees par l'attenuation des effets contenus dans le rapport

*Visite.-de-sites de reservoirs et des r6seaux d'AEP et discussion avec lesingenieurs charges de l'execution des travaux (des lots specifiques)

* Elaboration d'un rapport de restitution a la SONEG et, si necessaire, auxbailleurs de fonds (dans le contexte d'un financement phase).

Le tableau 8 presente les indicateurs de suivi pour les impacts potentiels lesplus significatifs de la construction et de l'operation des reservoirs et desreseaux de distribution d'eau potable. Dans le contexte de litiges pouvantfreiner l1ex6cution des travaux et dont le denouement suppose un arbitragejuridique, l'auditeur peut aider a une mediation environnementale selon lesprocedures strategiques consacrees en matiere de planificationenvironnementale (facilitation de r6unions, procedures de compensation,mediation et arbitrage par consultation croisee).

L'audit peut aussi aider la SONEG a mieux preparer les dossiersenvironnementaux dans le cadre de projets futurs et a doter ses agents de-connaissances valables quant a I'application des principes acquis lors dess6minaires de formation dans les domaines pour lesquels des besoins deformation ont et identifies en collaboration avec les services concernes(voir plan de formation)

ANNEX 6-2Page 7 of 10

Tableau 8: R6capitulation et classement des mesures limitatives des impacts negatifs du projet

Impact ndgatif Mesures Coat Detail des actions Periode Acteurs1. Contamination de la (i) respect des normes de Compris dans le (i) Cahier des T-12 a (i) DATU,nappe phreatique par le conception des reseaux et coOt des clauses techniques, T+36 entreprisessysteme de collecte utilisation de conduites en PVC, travaux? surveillance des (ii) DATU,

(ii) rdhabilitation des ouvrages travaux et tests Operateur,degages et des branchements, (iii) d'tanch6ite, (iii) DATUentretien pr6ventif des (ii) et (iii) cahiercanalisations des charges (iv) DATU,

d'exploitation et Operateurcriteres deperformance

Contamination de la (i) Impermeabilisation des fonds (i) Compris (i) Cahier des (i) T-12 (i) DATU,nappe phreatique par de bassin et des parois, dans le cott des clauses techniques, A T+36 entreprisesinfiltration des eaux (ii) surveillance de la qualite de travaux? surveillance desusees-lagune I'eau traitee et de Ir nappe (ii) 2 MFG/an travaux et tests de

permeabilit6,(ii) 2 seriesd'analyses tous les15 jours (ii) A (ii) DATU,

partir de Op$rateur,T36 Ministere

Environnement

Risques de noyade et de Mise en defens du site de Compris dans le Plans, devis (i) T-12 DATU,prelevement de 1eau lagunage coait des quantitatif, A T+36 Entreprise

travaux? bordereau des prix

Degagement de (i) Entretien des bassins (i) Convention (i) Convention et (i) A (i) DATU,mauvaises odeurs A de l'opdrateur, manuel partir de Opdrateurproximit6 du site d'exploitation T36

(ii) Coatt des (ii) Cahier des(ii) implantation d'une haie coupe travaux clauses techniques, (ii) T-12 (ii) DATU,vent plans, devis des A T+36 Entreprise

travaux

Developpement de Entretien des bassins Convention de Convention et a partir DATU,moustiques l'operateur manuel de T36 Operateur

d'exploitation

Epandage des boues de Sechage des boues et mise en Convention de Convention de a partir DATU,vidange des bassins decharge ou cocompostage avec l'operateur ou l'operateur de T36 Operateur

ordures mdnageres financement parutilisateur final

Accidents sur les sites Information et sensibilisation des Compris dans le Cahier des clauses T-12 A DATU,des travaux chauffeurs et travailleurs, cott des techniques T36 Entreprise

reducteurs physiques de vitesse travaux?(dos d'ane), signalisation

Bruits et poussieres Travaux execut6s pendant le jour Compris dans le Cahier des clauses T-12 A DATU,et humidification des zones de coat des travaux techniques T36 Entreprisecirculation des engins

ANNEX 6-2Page 8 of 10

4.5 FORMiTION ET APPUI INSTITUTIONNEL

Lors des discussions avec les cadres des services concemrs par le TroisiemeProjet Eau, nous avons pu identifier des domaines pour lesquels un besoinde formation existe reellement en relation avec la gestion de1'environnernent et des ressources en eau.

Les 5 domaines prioritaires ci-apres ont et identifies:

*Planification et gestion des ressources hydrauliques;

*Strategies de gestion et politiques de l'environnement;

*Cartographie automatique et SIG pour la surveillance de r6seaux et debassins fluviaux

*Planification et environnement urbains; int6gration environnementam6nagement et gestion des risques

-Approvisionnement . en eau .eE sant6 publique;. approche santeenvironnementale, anthropologie de lMhygiŽne et du comportement;

*Analyse quantitative des ressources hydrologiques; t6lem6trie, gestion dereseaux de postes; collecte et analyse de donnees, informatique de gestion

Ces th6mes peuvent etre trait6s sous forme de s6minaires nationaux par descadres expatries ou nationaux avec l'appui de l'Institut de DeveloppementEconomique. En effet, l'IDE a une formule de seminaires de formation decadres nationaux qui beneficient de l'appui financier de la cooperation bi-laterale (France, Pays-Bas, Belgique, etc.)

La formation theorique et les seances on-the-job trainning peuvent aussietre confiees a des institutions ou a des firmes specialisees telles que:

*Sir Alexander GIBB and Partners (Grande Bretagne) pour I'automatisationdes postes d'observation, la cartographie automatique; planification etgestion des ressources hydrologiques;

*Blue Nile Associates aux Etats-Unis avec l'appui de Tenessee ValleyAuthority pour les bassins fluviaux, strategies de gestion et politiques de1 environnement, approvisionnement en eau et sante publique,planification et environnement urbain;

Lors des seminaires et on-the job-trainning, il sera possible d'identifier lesformes d'appui institutionnel necessaires 'a l'utilisation des connaissancesacquises; outillage informatique, logistique, financier, etc.

En terme d' appui institutionnel, il sera necessaire de doter principalement laDNH et la SONEG de moyens logistiques, materiels et hurnains necessairespour une gestion plus rationnelle des reseaux et de la qualitE de l'eaupotable.

ANNEX 6-2Page 9 of 10

Cet appui s'impose si on veut que le modele de gestion de l'AEP parvierneA diminuer les entrayes A son bon fonctionnement car ces services ont unevocation publique et ne devraient pas souffrir de problemes qui, a longterme, peuvent avoir des repercussions sur les actions de reglementation de1'exploitation des ressources en eau.

Nous proposons ci-apres un calendrier indicatif des activites a entreprendrepour la formation et l'appui institutionnel ainsi qu'une evaluation des codtset mecanismes de financement.

1/ REUNION DE DESIGN ET DE PLANIFICATION DE LAFORMATION ET DE L'APPUI INSTITUTIONNEL

Duree: 1 jour

Organisateur: Direction Technique de la SONEG

ParticiDants: Partenaires du Proiet Eau III: Direction de l'Hydraulique,SEEG et SNAPE

Ordre du Jour: Choix des institutions qui pourront beneficier de laformation et de l'appui, choix d'un comite de suivi dirige par uncoordonnateur des activites et discussion sur la mise en oeuvre desrecommandations et sur l'organisation du Seminaire de GestionEnvironnementale.

Cout estime 25000 US Dollars: Frais de restauration, salle de reunion, fraisde consultation pour le consultant responsable de 1'evaluationenvironnementale.

2/ SEMINAIRE DE FORMATION EN GESTIONENVIRONNEMENTALE

Duree: 10jours

Organisateur: Comite de Suivi

Participants (30): Partenaires du Projet Eau III: Cadres de la SONEG, de laDirection de l'Hydraulique, de la SEEG, du SNAPE, Ministere del'Environnement,

Co6t estime 100 000 US Dollars: Location d'une salle de conf6rence ct dela restauration, contrat de consultation avec les bureaux d'etudesspecialisees, frais de supervision par la Banque Mondiale.

Themes du seminaire:

*Planification et gestion des ressources hydrauliques

*Strategies de gestion et politiques de l'environnement

ANNEX 6-2Page 10 of 10

*Cartographie automatique et SIG pour la surveillance de reseaux et debassins fluviawux.

*Planification et environnement urbains; integration environnementam6nagement et gestion des risques

*Approvisionnement en eau et sante publique; approche santeenvironnementale, anthropologie de l'hygiene et du comportement

*Analyse quantitative des ressources hydrologiques; telemetrie, gestion der6seaux de postes; collecte et analyse de donnees, informatique de gestion,

Amnex 6-3page I of 4

EXECUTIVE SUMMARY (English)

The environmental assessment of the sanitation of Conakry urban sewages by means of lagoons,enters within the framework of the Third Urban Project, which financing is mainly given by the IDA.

One part of the Third Urban Project concems the rehabilitation and the extension of the sanitationnetwork. An orientation and strategy report titled "Programme de l'Amelioration de I'EnvironnementUrbain et de I'Assainissement de Conakry", has been presented by the GREA in June 1993. Thisreport is named PADEULAC report. There are two versions of the report, one dated 1993, theother dated 1994. The two versions have been examinated.

The PADEULAC report studies globally the sanitation system in Conakry: urban runoff and wastewater sanitation, collection, transportation, storage of household refuse.

The environmental assessment proposed in the terms of reference concems the sanitation ofwastes from Conakry by means of the lagoons technique. This is to be done in two places:

Petit-Bateau, where the lagoons are to be built offshore,Matoto-OBK, for the sanitation of another quarter of Conakry.

The expertise has been conducted in Conakry from May 28 to June 7 1995, followed by a periodof writing the report in France, from June 8 to 20. Thirteen organisms have been consulted locally,some of these several times, and more than 30 persons have been interviewed.

A synthetic description of the characteristics of the lagoons and of the environment of the studiedzones is given, including land, sea, population, health conditions, without forgeting the currentregulation procedures and traditional and institutional structures implicated.

An analysis of the project proposed in the two PADEULAC reports has been made. Thus, theenvironment of the project of lagoons has been studied as precisely as possible and we havejudged useful to establish a layout and design of the basins, including the sizing and the choice ofa geometry for the lagoons, the performances being calculated within the limits of the climaticconditions, say:

dry season : rainfall = 0 mm, evaporation 5 mm/jwet season July rainfall = 1500 mm, 0 mm for evaporation

Evacuations have been calculated for a shower of a periodicity of 10 years totalizing 43 mm within15 minutes. Flood discharge may be more than 11 m3/s flowing over the dike.

HORIZONS S.A. World Bank/Lagunage Conakryl/5501 10/01196.i

We proposed the following organization and dimensions for the two systems of lagoons page 2 of 4

PETIT-BATEAU units Lagoon 1 Lagoon 2 Lagoon 3Dimensions m 450 x 300 250 x 200 250 x 200Depht of the water m 3.5 1.2 1.2Area at the top m2 135 000 50 00g. 50 000Aerobic volume m3 159 849 58 713 58 713Anaerobic volume m3 220 532 1 1Duration of treatment days 38.7 5.6 5.4

MATOTO-OBK units Lagoon 1 Lagoon 2Dimensions m 110 x 70 110x70Depht of the water m 3.5 1.5Area at the top m2 7 700 7 700Volume _ m3 24800 11 150Duration of treatment days 35.5 16.1

The average performance of the treatment has been calculated as a target, taking in accountpollution inputs and the season effect (hydrologic balance of the lagoons).

PETIT-BATEAU

BODS at the input: 710 mg/IBOD5 at the ouput: 142 mg/l (expected 80 % pollution abatment)

Input 710 mg/l Duration BODS BOD5 Performance Performance6,600 kg BOO5/day days effluent diluted (Qs=Qe) after diluting9,300 m3/d = Qe mg/l mg/l % or concentrating

Dry season 56.5 113 129 84 82Average T 49.71 142 117 80- 84July (the wet) 36.81 215 129 701 97

MATOTO-OBK

BOD5 at the input: 1,286 mg/IBOO5 at the ouput: 257 mg/I (expected 80 % pollution abatment)

Input 1,286 mg/l 1 Duration BOD5 BOD5 Performance Performance900 kg BOO/5day days effluent diluted (Qs=Qe) after diluting700 m3/d = Qe mg/I mg/ I or concentrating

Dry season 59.0 195 281 85 78Average 51.61 257 262 80 80July (the wet) 37.21 391 192 70 85

These pollution abatments are sufficient; they complies with norms used in Europe, as far as thenorms for Guinea have not yet been defined.

Expertises and complementary studies, prior to the realization of the design project, the redactionof tender documents and dependent tasks, have been defined. These studies concem essentially,for Petit-Bateau the definition of the height of dikes which will flood ,they will have to resist to theattack -of swells and, especially, to allow the direct and passive evacuation of flood dischargesgenerated by the basins under the heavy showers occuring during the wet.

HORIZONS S.A. World Bank/Lagunage Conakry/05501 10/01/96, ii

pape 3 of 4

Furthermore, our first estimates of dike dimensions, by admitting that the non alterated rock is atthe zero of marine maps, are:

height around 7 m at the head of the lagoonwidth in crest 5 mwidth at the base > 33 m for a bank slope 2/1 (base/height)

These dimensions are different of those proposed in the PADEULAC report dated 1993.

In addition, we recommend the installation of an automatic control device to detect toxics eitherchemical or antibiotics, upstream the intake basin of the last pumping station, before flowing to thelagoon:; this control system must switch-off the pumps and open a by-pass to divert wastes to astorage reservoir, or, at the worse, direct to the sea.

Programs and schedules have been calculated. To fill-up de lagoons with water, they must beachieved, at thb standpoint of civil works, before the wet, say june at the latest time.

The institutional setting has been eimmined with the SONEG-SEEG model. DATU should bedesigned as the Delegated Implementing Agency.

An indispensable set of accompanying actions has been explained. One can summarize it underthe following topics: Information-Training-Evaluation.

The cost of the project and dependent actions can be calculated only at the level of layout ordesign project. The dimensions of the basins and equipments have been largely modified ascompared to available data. The expected cost of 3,900 millions guinea francs given in the 1994PADEULAC report must be calculated again.

CONAKRY, counts 1 300 000 residents today, will totalize 2 800 000 citizens in 2010. With aninfantile mortality rate of 148 for a thousand, a cholera epidemic every year, more than 50 % of theactive population not employed, there is some necessity to solve rapidly sanitation problemns andurban hygiene. Furthermore, waste sewerage cannot be effective unless urban runoff sewerageand collection of household refuse are not functionning.

An analysis of the impacts of the project on the environment is presented ; p5sitive and negativeimpacts, cf the lagoons during the works and when the lagoons are functional are separated. Thetransportation of materials seems to be worrying during the works. Mitigation and compensatorymeasures of negative impacts have been studied with Guinean authorities. Reducing the negativeimpacts concern especially the civil works phase; after works, negative impacts will come from abad supervision, a bad maintenance of lagoons, or a breakdown of the system of supplying thelagoons with waste water (stopping of the pumps, irruption of a toxic in the system).

They are two expected compensatory measures

- organization of the circulation of pedestrians on the Petit-Bateau dike during the yard,- construction of a football stadium to replace that established on the site of Matoto-O8lK

Impacts of the "lagunage" will be largely positive in land, on the shore and off shore. Benefits forthe population will be excellent at the point of view of health, environment, conditions of goodliving ; at the moment, all wastes (domestic and industrial) go direct to the sea. Even fishingactivities are under the menace.

The only serious negative impacts (bad smells, destabilization of lagoons) c-an result of a badmonitoring of the treatment as seen above.

Follow-up and evaluation of the functioning of lagoons, and more generally of all sanitationidevices, should be carried-out by means of conventions with scholastic and universityestablishments, under the supervision of a specialized independent organism that would act asdelegated project manager

HORIZONS S.A. World Bank/Lagunage ConakryI05501 10101i96. iii

TABLEAU RECAPITULATIF DU PLAN DATTENUATION DES IMPACTSACTIVITES, IMPACTS, MESURES REDUCTRICES ET MESURES COMPENSATOIRES

MESURES REDUCTRICES MESURES COMPENSATOIRES RESPONSABiLITESETUDES PREALABLES A L'APDReconnaissance roche saine A Petit-Bateau DATU, consullanceNature-epaisseur s6diments A Petit-Beleau DATU, consultanceElude geolechnique malerieux pour digues DATU, BGGAElude geolechnique parois a Matoto DATU, BGGADirection-force courants cole Nord DATU, consultanceRecherche systeme automatique delection loxiques DATU, SEEGLeves topographiques . DATU, enlrepriseETUDES D'AVANT-PROJET DETAILLE (APD)Elat initial environnemenlal DATU, consullance

APD Lagunage, DCE, AMT, PEO DATU, consultance

Etude d'impact complele DATU, consultanceChoix el conlrals entreprises Etal, DATVACTIONS PREALABLES AU CHANTIER

Digue de Pelit-Baleau, acces au restaurant Organisalion circulalion populalion Maitre d'Ouvrage

Site de Matolo-OBK Cr6alion nouveau slade foolbbll Maitre d'OuvrageMobilisation des medias, information, sensibilisalion Elat, RTG, radiosMobilisation dans les Acoles, education sanitaire Ministere Education Nationale +

Maitre d'oeuvre delegueACTIONS PENDANT ET APRES LE CHANTIERMobilisalion des m6dias. informalion, sensibitisation Etal, RTG, radiosMobilisation dans les 6coles, educalion sanitaire Ministlres Education. SanteCreation des structures d'exploilation-gestion Etal-GouvernoratFormalion du personnel d'entretien Parlicipation chantier SEEGRecrulements speciaux Recyclage hommes-vidangeurs SEEGSuivi-evalualion du fonctionnement Sujels de Iravaux pour 6collers, etudianis SEEG, MEE, MEN, MSPIMPACTS NEGATIFS PENDANT CHANTIERCirculation camions et engins Am6nagement horaires, circuits Enlrelien routes-pistes Mailre d'oeuvre, entreprisesApporl maleriaux Utilisation voie lerree bauxite Mailre d'oeuire. entreprisesApport maleriels Arrivee par mer Mailre d'oeuvre, enlreprisesAccidents du travail Respect reglementation Poste de secours sur chantier Mailre d'oeuvre, entreprisesIMPACTS NEGATIFS LAGUNAGE FONCTIONNELOdeurs f6lides Empecher entr6e de toxiques By-pass A ia demiere bache de reprise SEEGDeveloppement veg6lalion Surveillance, faucardage, ramassage SEEGNoyade Cl6ture, panneaux interdiction d'entrer SEEGDestruction des digues Surveillance pendant el aprbs chantlier DATU-SEEGChute d'aeronef Interdiction survol Definition couloics aeriens Etat-MEEBoues de decanlalion Curages periodiques Composiage des boues SEEG-Agricullure

o

o0.

Annex 7-1page 1 of 2

THIRD WATER SUPPLY AND SANITATION PROJECT

LIST OF DOCUMENTS IN PROJECT FILES

1. Programme d'Amelioration de l'Environnement Urbain et de l'Assainissement deConakry, PADEULAC (Program to improve Conakry environment) (GREA, decembre1994).

2. Rapport final sur l'epidemie de cholera 1994 (Final Report on cholera epidemic)(Ministere de la Sante).

3. Etude des couts et des tarifs de l'eau potable: Analyse de la population, de laproduction de la demande et des cofits actuels (Castalia. fevrier 1995). (Water Cost,Water production and Water demand study)

4. Etude des cofits et des tarifs de l'eau potable: Synthese sur les resultats de l'Enquetedes Menages (Castalia Juillet 1995). (Household Survey)

5. Etude des couts et des tarifs de l'eau potable: Niveau moyen des Tarifs etRecommandations sur la Politique d'Investissement (Castalia novembre 1995).(Recommendations concerning Investment policy)

6. Troisieme Projet eau - Programme des travaux d'urgence dossiers APS Conakry,Dalaba Kankan, Nzerekore, Kissidougou, Gueckedou, Faranah, Forecariah (juin 1995).(feasibility study)

7. Troisieme Projet eau et assainissement- presentation et description du Projet (SONEG,aofit 1995). (Third Water supply and Sanitation project description)

8. Evaluation des Impacts sur l'environnement du Troisieme projet eau de Guinde(Tropical SARL, septembre 1995). (Environmental Assessment, water supply).

9. Plan directeur pour l'Alimentation en eau de la Ville de Conakry Rapport provisoireNo. 1 Donnees de base et diagnostic (Safege/Thorburn Colquhoun, avril 1996).(Conakry Water Distribution Master Plan, data and diagnostic interim report).

10. Plan Directeur pour l'Alimentation en eau de Conakry Rapport N.2 Orientations etstrategies (Safege/Thorburn Colquhoun, novembre 1996). (Conakry Water DistributionMaster Plan strategies).

Annex 7-1page 2 of 2

11. Dossier de consultation: Etude du cadre institutionnel et tarifaire en assainissement(DATU, fevrier 1996). (Sanitation Institutional arrangements and cost-recovery study,tender documents).

12. Assainissement collectif de la Ville de Conakry- Epuration par Lagunage deseffluents urbains: Analyse Environnementale (Horizons S.A., janvier 1996).(Environmental Assessment, sanitation component).

13. Composante Hydraulique urbaine - Manuel d'execution du projet (SONEG, octobre,1996). (Urban water component, Project Implementation procedures).

14. Lettre de Politique sectorielle de 1'eau et de l'assainissement (Gouvemement deGuinee, aouit, 1996). (Government Water and Sanitation policy Letter).

15. Plan d'action pour l'amelioration du rendement du reseau de distribution d'eau deConakry (SEEG/ SONEG, mai 1996). (Action plan to improve Conakry water networkefficiency).

16. Composante Gestion des Ressources en eau: Manuel d'execution du projet (DNH,fevrier 1997). (Water Resource Management component, Project Implementationprocedures)

17. Programme des 100.000 branchements (SEEG). (100,000 water connectionsProgram).

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Report No.: 14831 GUIType: SAR