World Bank Documentdocuments.worldbank.org/curated/en/770491468760146898/pdf/multi0... · Jean-Louis Sarbib is the managing Director, ... Supervision ... 4-4 Matrix of water sector

Document of

The World Bank

Report No. 14008-SE

STAFF APPRAISAL REPORT

REPUBLIC OF SENEGAL

WATER SECTOR PROJECT

JUNE 12, 1995

Infrastructure Operations DivisionWestern Africa DepartmentAfrica Region

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CURRENCY EQUIVALENTS

Currency unit = CFA Franc (CFAF)US$1.0 = CFAF 535 (April 8, 1995)CFAF 1 million US$ 1,869

WEIGHTS AND MEASURES

1 meter = 3.28 feetI hectare = 2.47 acres1 kilometer = 0.625 miles1 liter = 0.220 Imperial gallonsI cubic meter = 220 Ig

FISCAL YEAR

January 1 - December 31

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ABBREVIATIONS AND ACRONYMS

AfDB African Development BankAGCD/ABOS Agence Generale de Cooperation au Developpement / Algemeen Bestuur

voor Ontwikkelingssamenwerking (General Agency for Cooperation toDevelopment) -- Belgium

AGETIP Agence d'Execution de Travaux d'Interet Public contre le sous-emploi(Agency for the execution of works in the public interest)

BADEA Banque Arabe pour le Developpement Economique en Afrique (ArabBank for Economic Development in Africa)

BISEPSE Banque Informatique de Suivi et d'Evaluation des Projets du Secteur Eau(Database for the monitoring and the evaluation of projects in the watersector)

BEI Banque Europeenne d'Investissement (European Investment Bank)BOAD Banque Ouest Africaine de Developpement (West African Development

Bank)BRGM Bureau de Recherches Geologiques et Mines (Office Directorate of Mines

and Geological Research)CAB Cellule Apres Barrages (Dam Unit)CFD Caisse Francaise de Developpement (French Development Bank)CONSERE Conseil Superieur de l'Environnement et des Ressources Naturelles (High

Council or Environment and Natural Ressources)CSE Conseil Superieur de l'Eau (High Council on Water)CSS Compagnie Sucriere du Senegal (Sugar Company of Senegal)CTE Comite Technique de l'Eau (Technical Comittee on Water)DEM Direction de l'Exploitation et de la Maintenance des ouvrages

d'hydraulique rurale (Directorate for the Use and Maintenance of RuralWater Works)

DHA Direction de l'Hydraulique et de l'Assainissement (Directorate for WaterWorks and Sanitation)

EDI Economic Development Institute of the World BankGDP Gross Domestic ProductGNP Gross National ProductGREA Groupe Regional Eau et Assainissement (Regional Water and Sanitation

Group)IBRD International Bank for Reconstruction and DevelopmentICB Intemational Competitive BiddingJICA Japan Intemational Cooperation AgencyKfW Kreditanstalt fuir WiederaufbauLCB Local Competitive BiddingLRMC Long-Run Marginal CostMDR Ministere du Developpement Rural (Ministry of Rural Development)MEACC Mission d'Etude et d'Amenagement du Canal du Cayor (Survey and

Planning Mission for the Cayor Canal)MEAVF Mission d'Etude et d'Amenagement des Vallees Fossiles (Survey and

Planning for the Fossiles Valley)MEFP Ministere de l'Economie, des Finances, et du Plan (Ministry of the

Economy, Financing, and Planning)

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MIS Management Information SystemNDF Nordic Development FundNEAP National Environmental Action PlanOECF Organization for Economic Cooperation and FinanceOMVS Organisation pour la Mise en Valeur du Fleuve Senegal (Organlization for

the Development of the Senegal River)ONAS Office National d'Assainissement urbain (National Office of Urban

Sanitation)PDRE Plan Directeur du Developpement des Ressources en Eau (Master Plan of

water ressource development)PDRG Plan Directeur de la Rive Gauche (Master Plan for the left Bank)PPF Project Preparation FacilitySDAH Schema Directeur regional d'Amenagement Hydraulique (Regional

Scheme for hydraulics planning)SdE Societe d'Exploitation (Private Operating Company)SGPRE Service de Gestion et de Planification des Ressources en Eau

(Management and Planning Unit for Water Resources)SIGRES Systeme d'Information Geographique sur les Ressources en Eau du

Senegal (Geographic Information System of Water Resources in Senengal)SMIG Salaire Minimum Interprofessionnel Garanti (Minimum guaranteed salary)SONES Societe Nationale des Eaux du Senegal (Societe nationale de patrimoine)

(National Water Company of Senegal)SONEES Societe Nationale d'Exploitation des Eaux du Senegal (National Water

Supply Company of Senegal)1JNDP United Nations Development ProgramUPA Unite de politique agricole (Agricultural Policy Unit)WHO World Health Organization

REPUBLIC OF SENEGAL



TABLE OF CONTENTS

CREDIT AND PROJECT SUMMARY ............................................... iv1. BACKGROUND ............................................... .1

Economy ............................................... l.Population and Urbanization ................................................ 2

2. WATER RESOURCES ................................................. 2Renewable Resources ................................................ 2Demand and Resource Allocation ................................................ 5Institutions ................................................ 7Emerging Strategy ................................................. 9

3. THE SECTOR ................................................ 11Drinking Water and Sanitation ............................................... 1 IIrrigation in the Dakar and Thies Areas ................................................ 17Environment and Health ............................................... 18Emerging Policy ............................................... . 18IDA Involvement ................................................ . 19

4. THE PROPOSED PROJECT ............................................... 20Project Objectives ............................................... . 20Description ................................................ . 21Project Preparation ................................................. 26Cost Estimates ............................................... . 31Financing Plan ............................................... . 32Advance Contracting ............................................... 33

5. FINANCIAL ANALYSIS ................................................ 33Introduction ............................................... . 33Future Scenarios ............................................... . 34Financial Equilibrium ............................................... 34Future Tariffs ................................................. 35Cash Shortfall/Surplus, Rescheduling and Equity Capital ............................................... 36Financial Projection of SONES/Capital Structure of SdE ..................................................... 39Capital Structure of SdE ..................................................... 39

This report was prepared by a team including: Mr. Jan Janssens (Sanitary Engineer, Task Manager), Ms. YvonnePowers (Financial Analyst), Mr. Torbjorn Damhaug (Water Resource Management Specialist), Mr. Claude Sorel(Private Sector Development Specialist), Ms. Thelma Triche (Regulatory and Institutional Reforn Specialist),Messrs. Matar Fall and Michel Kerf (Consultants), Mr. Francois-Marie Patorni (Principal Water and ManagementSpecialist), Ms. Fanny Barrett, Ms. Isabelle Denervaud and Mr. David Schisler (Project Assistants). The LeadAdvisor is Mr. Richard Verspyck (Principal Water/Sanitation Specialist) and the Peer Reviewers are Messrs. AlainLocussol (Senior Sanitary Engineer), Klas Ringskog (Principal Water Supply Specialist), and Ms. Letitia Obeng(Senior Water/Sanitation Specialist). Mr. Jean-Louis Sarbib is the managing Director, and Mr. Alberto Harth is themanaging Division Chief for the operation. Technical support was provided by Ms. Caroline Moisson and Mrs. SongLi.

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6. PROJECT IMPLEMENTATION ............................................ 40Implementing Agencies and Responsibilities ............................................ 40Implementation Schedule ............................................ 40Monitoring and Reporting ............................................ 41Procurement ............................................ 41Disbursement ............................................ 43Special Account ............................................ 44Accounting, Auditing and Insurance ............................................ 45Supervision ............................................ 45

7. PROJECT JUSTIFICATION AND RISKS ............................................ 45Institutional Capacity Building ............................................ 46Poverty Alleviation and Health ............................................ 46Financial and Economic Justification ............................................ 47Environmental and Health Impact ............................................ 48Risks ............................................ 49International Implications ............................................ 49

8. AGREEMENTS REACHED AND RECOMMENDATION ............................................ 50

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Annex No.

1-1 Monthly Rainfall in Senegal and Water Allocation Distribution from The Senegal River2-1 Water Resource Management Strategy: Institutional Framework2-2 Water Demand Projections for the Dakar Region3-1 SONEES Balance Sheet (1990-1993)3-2 Grille Tarifaire de la SONEES4-1 Institutional Reform of the Urban Sanitation Subsector4-2 La consommation d'eau potable dans les quartiers urbains defavorises4-3 Institutional framework for urban water supply and wastewater sector4-4 Matrix of water sector actors and responsibilities and definition of basic terms4-5 Institutional Reform of the Urban Water Subsector: Remuneration Arrangements

Incentives to Reduce Water Losses, Tariff Increases and Indexation of Tariffs4-6 Detailed Cost Estimates4-7 Implementation Scheme and Financing plan5-1 Financial Projections Water Sector5-2 Assumptions Used in the Financial Projections5-3 Financing of the Temporary Cash Shortfall (table)5-4 Financing of the Temporary Cash Shortfall (explanatory note)6-1 Implementation Scheme6-2 Implementation Schedule6-3 Performance Indicators for Project Phases6-4 Monitoring Indicators6-5 Detailed Cost Estimates and Procurement Arrangements6-6 Procurement Arrangements and Phasing6-7 Estimated Disbursements of IDA Credit by Semester6-8 Supervision Plan7-1 Economic Evaluation7-2 Environmental Assessment and Mitigation Plan8 Letter of Sector Policy9 Project file

Maps IBRD 23121 SONEES CentersIBRD 23122 Water Supply System

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REPUBLIC OF SENEGAL


CREDIT AND PROJECT SUMMARY

Borrower: Republic of Senegal

Beneficiaries: The Government of Senegal (Ministry of Hydraulics, SONES and ONAS)

Poverty Category: Program of Targeted Interventions

Amount: SDR 63.5 million (US$100 million equivalent)

Terms: Standard IDA terms, with 40 years maturity

Onlending Terms: US$85 million equivalent of the IDA credit would be provided by theGovernment to SONES, of which 45 percent would be onlent to SONESat IBRD terms (20 years including 5 years of grace, at an annual interestrate of 7.1 percent), and the remaining 55 percent would be provided in theform of equity. SONES would bear the foreign exchange risk. Theremaining US$15 million equivalent of the IDA credit would be providedto the Ministry of Hydraulics through a budgetary allocation.

Financing Plan: See para. 4.46

Project Objectives: The proposed project supports the second of Senegal's three step strategyfor the long-term development of its water sector. The first, supported bythe Eleven Centers Water Supply Project (Cr. 1554-SE, closed in 1993),helped to establish SONEES, a competent parastatal. The second,supported by the proposed operation, deepens the institutional reform,makes critical investments to meet the demand for safe water for the year2000, and sets the stage for the third step. The third step would assure thelong-term sustainability of the sector and could be supported by a futureoperation. The overall development objectives of the proposed project areto address: (a) sustainability, by improving management, pricing, andcost recovery and reducing the Government subsidy for industrial,domestic, and irrigation water; (b) poverty alleviation and health, byincreasing access to safe potable water and adequate and more affordablesanitation for the urban poor; and, (c) private sector participation, byengaging a private company to manage urban water supply. The specificproject implementation objectives are: 1. In water resource management:to formulate an integrated, multisectoral strategy for the shared use ofwater by households, industry, and agriculture that will be coordinatedwith future development projects in these sectors. 2. In institutionalcapacity building: to strengthen the capacity of SGPRE to monitor aquifer

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exploitation, that of the newly established SONES to formulate andenforce policy and strategy, and that of the newly established ONAS todevelop a strategy for urban and peri-urban sanitation improvement. 3. Inurban water production and distribution: to reduce leakages in theGreater Dakar water distribution system (from the current estimated 27 to15 percent), and to increase the Dakar region's water production capacityfrom the current 202,000 cubic meters a day to 271,000 cubic meters, anincrease of 34 percent. 4. In urban sanitation: to increase theeffectiveness of the existing Dakar sewerage system, develop sanitation insecondary towns, and, promote the reuse of treated municipal wastewaterfor irrigation.

Project Description: 1. Institutional Capacity Building (base cost: US$8.1 million). Toachieve a better water resource management, the proposed project wouldsupport the Ministry of Hydraulics and SGPRE in the preparation of anational water resource management strategy. To make more potablewater available, it would support the newly created SONES in managingsector policy (including auditing and cost accounting). To improvesanitation services, it would support the newly created ONAS in theformulation of a national strategy for sanitation in urban and peri-urbanareas.2. Urban Water Supply (base cost: US$207.5 million). To increase theproduction of safe water drinking for Dakar, the proposed project wouldrehabilitate physical works and also expand water production andtransport through the use of boreholes, treatment works, pipelines, cleanwater storage, and the building of a remote control and managementsystem. It would improve and extend urban water distribution throughnetwork rehabilitation, renovation, and expansion (including new pipes,large water meters, and new connections to low-income households). Itwould provide such logistical support as consulting services (with regardto final studies, bid documents, and work supervision); and, a pilot plantand environmental impact studies of the long-term water needs in Dakar.It would also provide necessary laboratory equipment and rehabilitateoffice facilities.3. Urban Sanitation (base cost: US$32.0 million). The proposed projectwould increase connections to the existing sewer system in Dakar, treatand reuse pern-urban municipal sewage for irrigation, prepare seweragemasterplans for nineteen secondary cities and riparian centers, implement arainwater sanitation project in the St. Louis area, and, implement theRufisque sewerage and urban drainage subproject.

Benefits: The proposed project would help deepen the reforms of the water sector byimproving its management, financial accountability, and resourceallocation capacity. This would help the Government to keep watershortages in the Dakar region within manageable levels until a long-termsolution can be implemented. It is estimated that 1.8 million people wouldbenefit from the project, which would reduce the water deficit and makedistribution more equitable and reliable. By providing a steady supply ofpotable water, the project would relieve one of the major hardships bome

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by those living in poverty. In pen'-urban areas, women, who aretraditionally charged with the family water supply duties, would realizesubstantial savings in effort and time. Under the proposed project, theRufisque population (estimated at 150,000), would also benefit fromimproved sanitation. For nineteen other urban centers recently providedwith a safe piped-water supply, sewerage and sanitation master planswould be prepared to improve sanitation services to a total population of735,000. Construction activities under the project, moreover, wouldcreate about 15,000 person-years of temporary employment.

Risks: The proposed project poses four primary risks. (a) at the institutionallevel, it is uncertain that: SONES will assume responsibilities fromSONEES in an effective and timely manner. To address this risk, capacitybuilding for SONES would include: (i) water sector planning anddevelopment; (ii) project management and implementation; (iii) selectionof appropriate water supply and sanitation technologies; and (iv)performance monitoring, including maintenance audits; (b) at thefinancial level: whether the objective of sector equilibrium in 2003 will bemet within the established timeframe given the country's precariouseconomic and fiscal situation which remains difficult. To address thisrisk, (i) a politically and socially sustainable tariff policy would be appliedto achieve sector financial equilibrium by the year 2003, and keyperformance indicators would be used during project supervision, withclear targets; (c) at the private sector level: whether there will be asufficient interest from several private companies, given the complexity ofthe Dakar situation and the introduction of renewal of the distributionnetwork as part of the affermage contract. To address this risk, severalupfront actions were taken before negotiations, namely: the creation ofSONES, and, the information workshop for prequalified firms. Inaddition, as a condition of effectiveness, Government would enter into anaffernage contract satisfactory to IDA, with the private operator; and (d)at the private operator level: whether the lowest bid will be sufficientlylow to allow for financial viability of the water sector at a tariff levelacceptable to the Senegalese authorities. This issue has been addressedthrough measures including (i) the capacity building program devised forSONES (see (a) above), (ii) the actions adopted in order to ensuresufficient interest from different candidates private companies (see (b)above) and (iii) the specific measures aimed at minimizing the risks ofnon-payment or late payment of water bills by Government.

Maps: IBRD 23121 SONES CentersIBRD 23122 Water Supply System

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Table i.l. Estimated Project CostsCin US$ million)

% Foreign % Total BaseProject Component Local Foreign Total Exchange Costs

percentage of total

Phase 1Institutional Capacity Building 1.2 6.6 7.11 84 3Urban Water Supply

Drinking WaterProduction 40.6 109.1 149.8 73 60Water Supply and Distribution 3.6 10.1 13.7 74 6Engineering, Studies, Supervision 2.2 4.6 6.7 68 3Subtotal Urban WaterSupply 46.4 123.8 170.2 73 69

Urban SanitationSewerage/Urban Drainage 1.6 10.0 11.6 86 5

Subtotal Phase 1 49.3 140.4 189.7 74 77

Phase 2Institutional Capacity Building 0.1 0.4 0.5 73Urban Water Supply

Drinking Water Production 3.1 9.3 12.4 75 5Water Supply and Distribution 2.9 8.4 11.2 75 5Engineering, Studies & Supervision 0.1 0.9 1.0 91

Subtotal Urban Water Supply 6.0 18.6 24.7 76 10Urban Sanitation

Sewerage, Urban Drainage 2.1 13.6 15.7 87 6Subtotal Phase 2 8.3 32.6 40.9 80 16

Phase 3Institutional Capacity Building 0.1 0.3 0.4 77Urban Water Supply

WaterSupplyandDistribution 2.1 6.7 8.7 76 4Engineering, Studies, Supervision 0.5 1.0 1.6 66 1



PPF Refinancing - 2.0 2.0 100 1Total Baseline Costs 61.3 186.3 247.8 75 100

Physical Contingencies 6.1 18.4 24.6 75 10Price Contingencies 8.1 9.9 17.11 55 7

Total Project Costs 75.4 214.6 290.1 74 117

*Costs are net of duties and direct and indirect taxes.

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Table i. 2. Proposed Project Financing(in US$ million)

Source of Funds Total % Total

IDA 100 34.5SONES 23.1 8.0CFD 65.7 22.7Cermany 25.5 8.8AGCD 4.1 1.4EIB 18.0 6.2NDF 10.3 3.6BOAD 11.9 4.1BADEA 10.9 3.7

Other Financiers 20.5 7.1

Total 290.1 100.0

*Costs are net of duties, direct and indirect taxes.

Table i.3. Estimated IDA Disbursements by Semester(in USS million)

Bank FY nd Dsburedper semester Cumuli %ve

| Senster Phse 1 Phase 2 Phae 3 D

1996Is santer 2.0 2.0 22nd saneer 15.5 17.7 17

1997istansi 15.5 33.0 332ndsanesa 16 49.0 49

lstsanter 16 - 65.0 652ndsemes- 8.0 73.0 73

1999ist isema _ 8.0 - 81.0 812nd ecte 4.1 1.7 86.8 36

2000ist snaster 4.1** 1.7 92.6 922nd smuia 3.8 96.4 96

2001lstern- - 3.6 100 100

*Costs are net of duties, direct and indirect taxes.**Payment for works completed during Phase II.

REPUBLIC OF SENEGAL



1. BACKGROUND

1.1 Senegal is a medium-sized country (196,722 kIn2) with 550 kilometers of Atlanticcoastline. It is located at the westermnost point of the African Continent. Senegal is generally flatand lies in the Senegal-Mauritanian Depression. Elevations above 100 meters are found only on itseastern and southeastern borders with Mali and Guinea and near Dakar at the tip of the Cap Vertpeninsula. Three-fourths of the country lies in the Sahel, which has suffered from a lower-than-normal average rainfall for the last forty years. The country itself has a tropical subdesert climate,with wet summers and dry winters. Senegal's development options are severely constrained by itsarid climate. The rainy season is limited to a seasonal monsoon, wetter in the south (less than 1000milimeters from May to October) than in the north (greater than 300 milimeters from June toSeptember). Rainfall is about 500 milimeters a year in Dakar (Annex 1-1). The duration,intensity, and seasonal distribution of the rains at any one location varies considerably from year toyear, particularly in areas of lowest rainfall. It is now accepted that Sahelian rainfall depends onfeatures outside of its range, primarily ocean temperatures off the coast of South America.

1.2 The large sand dunes that give northeastern Senegal its undulating and ribbed surface are areminder that Senegal borders the Sahara Desert and that, in the recent past, Senegal was muchdrier than it is today. Evaporation rates are extremely high, and everywhere in the country,potential annual evaporation rates exceed potential rainfall. The harmattan, a hot wind that blowsout of the Sahara for part of the year and exacerbates this problem, carries dust as far south asCasamance in southern Senegal (see map IBRD 23122).

Economy

1.3 At the time of Senegal's independence, it had one of the most developed economies in WestAfrica. But its economy declined with the loss of markets in newly independent sister states andbecause of long periods of bad weather and weak management. According to World Bank andIMF estimates, the gross national product (GNP) of the Republic of Senegal in 1994 was CFAF2,060,300 million. Based on the estimated population, the per capita GNP was US$611.2 in 1994,at an exchange rate of 555.2 CFAF to the US dollar, using the Atlas method.

1.4 The primary, secondary, and tertiary (including nonmercantile services ) sectors accountfor 20.9 percent, 19.3 percent and 59.8 percent of the 1994 GDP, respectively. In the past decade,the primary sector has been shrinking and the secondary sector expanding, while the tertiary sectorhas maintained its level. The agriculture sector employs about 70 percent of the labor force, andhalf the cultivated land is in groundnut production. Government policy is to diversify agricultureand reduce dependence on groundnuts. With that end in mind, cotton, rice, sugar, and vegetablesare now being planted in increased quantities. Senegal also has a relatively developed, butsomewhat inefficient manufacturing sector, primarily located around Dakar. Much of theindustrial output is in food, beverages, and tobacco products. Tourism also grew substantially

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substantially in the 1970s, and again after the January 1994 devaluation. But Senegal still dependson foreign assistance to offset a chronic balance-of-trade deficit.

Population and Urbanization

1.5 While the economy of Senegal grew at an average annual rate of 2.2 percent from 1982 to1992, the population also grew at a relatively high rate of 2.5 percent per year. The populationwas 3.5 million at independence in 1960, 6.9 million in 1988, and 8.5 million in 1992. Thepopulation growth rate is not expected to slow in the near future and by the year 2006, it isestimated that Senegal will have nearly 12.4 million inhabitants - a figure that will be more than 18million by the year 2021. In the urban areas (defined here as agglomerations of more than 10,000inhabitants), the average population growth is about 3.7 percent per year, and in the Cap VertPeninsula (including the capital city of Dakar), it reaches a rate between 5 and 6 percent. InSenegal there is sustained migration from rural to urban areas, particularly to Dakar and itssurroundings. In 1902 the Government was transferred from Saint Louis to Dakar. Thepopulation of the city has since grown from 18,000 in 1902 to 350,000 in 1960, and then to 1.8million in 1992 (48.2 percent of urban population and 22 percent of total population). It isexpected to reach 2.3 million by the year 2000. Whereas in the 1960s 73 percent of the populationlived in rural areas and 27 percent in urban areas, in 1992 only 45.6 percent lived in rural areaswith 54.4 percent in urban areas.

1.6 Today approximately 54 percent of Senegal's urban population has access to a safe supplyof piped water. Another 42 percent has access only to public fountains, and the remainder obtainswater from conventional sources or from water vendors. In rural areas only about 65 percent ofthe population has access to a safe and reliable water supply, and service levels for waste-waterand sewage disposal are considerably lower. Only about 20 percent of the urban population isconnected to a water-bome sewerage system, and only about 12 percent of urban dwellers areconnected to a sewerage system. The remainder relies on seepage pits or has no disposal system atall. Because of the serious backlog and the tremendous financial backing required to upgradeservice levels, the system is likely to deteriorate further before improvements can be achieved.

2. WATER RESOURCES

Renewable Resources

2.1 Surface water. Senegal is served by four major rivers: the Senegal, Saloum, Gambia, andCasamance, all of which are wide and meandering for most of their length. The Senegal River isby far the major source of surface water in Senegal (Figure 2.1). Since the completion of theManantali dam in 1988, the minimum regulated flow of the Senegal River at Richard Toll is 26million cubic meters per day. With the decrease in rainfall over the last forty years, river flows inthe lower Senegal River have decreased from average levels of more than 30 billion cubic metersper year to averages of less than 20 billion, reaching a new low in 1984 of less than 10 billioncubic meters per year. Because of high evaporation rates, Senegal has practically no permanent,significant, surface-water bodies-with the exception of the Lac de Guiers, which is replenishedyearly by the floods of the Senegal River. But since the completion of the dams at Manantali andDiama, ponds that used to dry out periodically are now more or less perennial.

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2.2 Groundwater. Except in the southeastern region, Senegal sits on a sedimentary basin thatcontains large quantities of groundwater.

Figure 2.1. RelatiDistribution ofSurface Groundwater resources often have more bufferWater Resources in Senegal capacity for variations in rainfall than do rivers,

since the latter respond more directly to seasonalOther surface variations. Groundwater resources are therefore

water resources relied upon extensively in many rural and urban1% areas in Senegal and are a viable alternative to

Gambia river expensive and environmentally sensitive water-17% F S | | | l transmission schemes. But, if groundwater

abstraction exceeds replenishments over the longrun, the source will be depleted.

2.3 Western wells typically reach down 30meters to aquifers, but in the Ferlo, they can be as

Senegal river deep as 100 meters. Renewable groundwater83° resources are dependent on recharge from the annual

rainfall to retain long-term sustainibility. Thedeepest aquifers, in the sandstone and sand are located at the bottom of the Maestrichtiansedimentary basin. Boreholes to these aquifers reach down 100 meters in the eastern part of thebasin and nearly 300 meters elsewhere. The water there is under pressure and rises naturally closeto the ground surface. These aquifers are partly replenished by river floods but in large part areinherited from earlier times.

2.4 Exploitation of groundwater from old sources, or sources with negligible recharge, isregarded as mining of a finite resource and violates the principle of sustainable development wherethe abstraction volume is larger than the capacity of the aquifer. Other sub-regionally importantaquifers include the infrabasaltic aquifer of the Dakar Region, the Miocene aquifer in Casamance,the alluvial aquifers of the Senegal River, and the aquifers of the coastal sand dunes in the north.Groundwater is also found in the old formations of the geological platform in South EasternSenegal (south-southeast of Bakel and southeast of Simenti, in the foothills of the Fouta Djalon).The volume of total groundwater resources is about 410 to 585 billion cubic meters, with arecharge capacity of approximately 3 to 4 billion cubic meters per year distributed among thevarious aquifer systems.

2.5 Groundwater represents an important source of water for urban, semi-urban, and ruralareas throughout the country, and the number of new boreholes and wells is rapidly increasing.Forty-one urban centers are served mainly by groundwater resources, as are the majority ofindustrial companies, mining companies, and tourist resorts. For irrigated agriculture,groundwater accounts only for a small share as compared to surface water. Of 50,000 hectares ofirrigated land in Senegal, only 2,000 hectares use water from groundwater resources.Groundwater-fed agriculture is predominantly horticulture (market gardening) located near Dakar,which consumed 24,000 cubic meters per day on average in 1994 (para. 3.19, Annex 8).

2.6 Water Quality. Along the coast and near estuaries, over-exploitation of groundwaterresources has led to saline intrusions and a dramatic decline in water quality. In the Dakar region,groundwater resources are overexploited, resulting in an excessive draw-down of the water tableand the increasing danger of salt-water intrusion from the ocean. In certain well-field areas near

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Pout and Sebikhotane, the groundwater level is being depleted by up to 1.5 meters per year, whichhas had an impact on the vegetation.

2.7 Senegal's urban areas have met part of their water needs by drawing from shallow wells,which are often polluted by the latrines and septic tanks that filter directly into the water table.Most of the wells in Thiaroye, for instance, contain traces of ammonium and nitrite, suggestingfecal contamination or seepage from fertilizers. This is even more probable for private wells,generaly located near sanitation facilities. Concentrations of nitrate observed in many wellsparticularly in Thiaroye generally exceed the limit prescribed in the WHO's drinking waterguidelines and may cause methemoglobinemia. This suggests that groundwater in the area may beaffected by seepage from on-site sanitation facilities.

2.8 In fast-growing urban areas, experience has shown that intermittent supply of water andchronic water shortages have a detrimental impact on public health. An intermittent water supplyalso leads to water waste and disrupts industry causing economic losses. The proposed projectwould help to alleviate this problem.

2.9 Other water quality concerns are pollution from chemical products (in particularpesticides) in agriculture, which could be contaminating large areas, the most vulnerable beingRichard Toll and the Lac de Guiers.

2.10 Water Reuse. Despite serious water shortages in Dakar, about 11 percent of the drinkingwater production is currently being used for horticulture, although according to the directives of theSociete nationale d'exploitation des eaux du Sdndgal (SONEES) it should not exceed 7 percent(para. 3.19). The feasibility of reusing urban sewage (after treatment) for market gardeningirrigation has been studied but not implemented. While reuse of wastewater for agriculturalirrigation is often considered as an additional water resource in arid areas like the region Dakar-Thies, it is not Senegal's only, or even major reason for water recycling. Wastewater is a publichealth and environmental concern. If the means are economically and technically feasible andsocially acceptable, agricultural or industrial reuse would dispose of wastewater in a sanitarymanner. Reuse of sewage could thus become a key feature in future water demand managementand help reconcile Dakar's water needs. But, because of the limited number of connections to theexisting sewerage system in Dakar, the volume of treated wastewater today is relatively limited(approximately 4,000 to 5,000 cubic meters per day) as compared to horticultural demands (morethan 15,000 cubic meters per day).

2.11 Urban Runoff. Increasing urbanization affects all phases of the water cycle in settlementareas, with far-reaching changes taking place in precipitation, evaporation, evapotranspiration,infiltration, and runoff. Urban drainage is becoming a key issue in the management of waterresources. According to a recent study on urban drainage and wastewater systems in the greaterDakar area-financed by the Japan International Cooperation Agency (JICA)-drainage of all areashaving an elevation of higher than four meters should be done by infiltration. Depressed areas ineach closed catchment area (except for the proposed pump drainage areas) should be kept forinfiltration and retention, and on-site infiltration should be applied in high areas. In the CentralPikine area, an urban drainage priority pilot-project is being prepared which will address anenvironmental health problem caused by bodies of stagnant water in this area.

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Demand and Resource Allocation

2.12 Urban Water Demand Demand forecasts in the Dakar/Cap Vert regions show aconstrained water supply with unsatisfied demand growing by as much as 30 percent in the comingdecade. Population growth in the Dakar/Cap Vert region is projected to decrease from the present5.3 percent to 3.8 percent a year during the 1990s, to 3.2 percent a year during the first decade ofthe next century, thereafter to 2 percent a year. Basic per capita consumption for houseconnections is estimated to remain at 110 liters per capita per day until the year 2000 and toincrease to 120 liters per capita per day by the year 2020. Water consumption at public standpipesis projected to remain constant at 20 liters per capita per day.

2.13 In 1994, the total theoretical demand of the Greater Dakar region, which comprises fouragglomerated urban areas, Dakar, Pikine, Rufisque and Sebikotane, and two rural communitiesSangalkam and Bambylor, with a total estimated population of 1,96 million, is estimated at230,000 cubic meters per day. This demand figure assumes a 100 percent population supplied,with 80 percent household consumption by house connection and 20 percent by public standpipes.In addition, water consumption by industry, commerce and governmental agencies would accountfor about 50,000 cubic meters per day. By the year 2000, taking into account a 3.8 percent annualgrowth rate of the population in the Dakar region, total demand will increase to about 275,000cubic meters per day. In 1994, about 80,2 percent of the total population in the Dakar region wasserved with piped drinking water supply, or about 1,57 million people. In order to provide 24hours of service per day, a drinking water supply of about 210,000 cubic meters per day would berequired. This was calculated on the basis of 129,414 house connections (with 10 inhabitantsserved per connection) and 928 public standpipes (with 300 inhabitants served per standpipe).(Annex 2-2).

2.14 In 1994, SONEES supplied 94 million cubic meters for all of Senegal's urban areas. Thedrinking water volume available to meet demand in 1994 in the Dakar region was however onlyequal to 128,000 cubic meters per day, which translates into a deficit of about 82,000 cubic metersper day. This deficit lead, on average, to only 16 hours of service per day, which has a detrimentalimpact on water quality as a result of intermittent water supply (para. 2.8). Water losses fromleakage and illegal connections, were estimated at 27 percent of production in 1994 but areprojected to be reduced to 15 percent by the year 2000. As altemative sources are developed, theuse of costly potable water for market gardening (11 percent of production in 1993, or 23,000cubic meters per day) is targeted to diminish to 4 percent (or 14,000 cubic meters per day) in theyear 2000. Works included in the proposed project will increase drinking water productioncapacity from 202,000 to 266,000 cubic meters per day, of which 60,000 cubic meters per dayadditional capacity will directly benefit the Dakar region. As location of demand does not coincidewith the location where water is available, new transmission systems will have to be built. A newtransmission from the Senegal river, planned within the framework of the long-term solution forwater supply for Dakar, would not be ready before 2003-2005, when unsatisfied demand in Dakarwill have risen again to about 30 percent of the total estimated water demand.

2.15 In addition to running the Dakar water supply system, SONEES also manages watersupply facilities in 48 secondary centers. Although the situation in these areas is less serious thanin Dakar and present demand is being almost fully met, considerable investment will have to bemade to meet future demand. The estimated long-term water supply demand for the Dakar regionas a whole is projected to grow from about 100 million cubic meters per year (275,000 cubic

6

meters per day) in 2000 to about 160 million cubic meters per year (435,000 cubic meters per day)in 2020.

2.16 Rural Water Demand It is estimated that one-fifth of Senegal's rural population of about4.2 million is scattered or nomadic and can not be provided with water by conventional supplysystems. These people will continue to use such traditional water sources as rivers, springs, andponds. The remaining 80 percent of Senegal's rural population-some 3.4 million people-depend onconstructed wells or bore-hole systems. From 1981 to 1994, the number of deep wells increasedfrom 101 to 697 units, with a total capacity of 80,000 cubic meters per day. The average ruraldweller, therefore, has about 24 liters of water available per day, although some regions andvillages are in fact more advanced, while others receive almost no service. The Govemment'sobjective is to supply all of Senegal's sedentary rural population with a volume of 35 liters percapita per day by the year 2010. By then, the target population will have grown to about 4.7million, and the total required capacity will be 165,000 cubic meters per day. Additional capacityof over 80,000 cubic meters per day must consequently be created. All rural water supplynetworks will have to be extended, 800 new wells and 2,880 boreholes will have to be constructed,and 4,500 wells and boreholes will have to be rehabilitated and deepened.

2.17 Senegal River Left Bank. This project, which is under preparation with IDA assistance,aims to irrigate the left bank of the Senegal River Valley, where anticipated water demand is on theorder of 2 billion cubic meters per year.

2.18 The Compagnie Sucriere du Sne6gal (CSS). Located on the left bank of the SenegalRiver near Richard Toll, has developed some 8,000 hectares of sugar cane fields, which requireapproximately 188 million cubic meters of water a year.

2.19 The Canal du Cayor. This proposal, in the making for almost a decade, would offer onealtemative way to satisfy the long-term demand for domestic water in the Dakar region. The canalwould be 240 kilometers long from the Lac de Guiers to the Thies Region (Map IBRD 23122).The canal would also supply water for aquifer recharge along its course and irrigation water forsome 8,500 hectares in the Cap Vert and the Cayor area. Its maximum transport capacity fordomestic water supply in the year 2020 is estimated at about 880,000 cubic meters per day, whilethe peak water demand for irrigation water during March-April is 610,000 cubic meters per day.In 2020, the canal would have an average total hydraulic capacity of 1.73 million cubic meters perday. As agreed by Governments concerned (Mali, Mauritania, Senegal) at the Organisation pourla Mise en Valeur du Fleuve Senegal (OMVS) meeting (para. 2.23) in Nouakchott in July 1994,the total water allocation to Senegal from the Senegal River for the Canal du Cayor project wouldbe 820 million cubic meters per year (or 26 cubic meters per second). An IDA-financed feasibilitystudy has indicated that the conveyance of water through an open canal seems to be the mosteconomic long-term solution for the Dakar water supply. It is necessary to re-assess the alternativesolutions from a technical and from a multisectoral water resource management perspective beforea definitive decision can be taken. The Canal du Cayor proposal is not expected to have financialimpact until the year 2003, when the definitive solution would be agreed and the water supplysector finances would be in balance (para. 5.3).

2.20 The Vall6es Fossiles. This proposal aims at revitalizing the hydrological systems in thefossil valleys to preserve their groundwater resources while supporting the development ofagriculture, livestock production, and fisheries, and the reforestation and restoration of ecosystems.The water would be partly abstracted from the Senegal River at Bakel and partly from the Diama

7

Dam via the Lac de Guiers. Cooperation has been established between the Vallees Fossiles projectand the Canal du Cayor project to share the water allocated to Senegal from the Diama Damoperations. Projected water demand for the Vallees Fossiles proposal is approximately 1.4 billioncubic meters per year (3,836 million cubic meters per day), which would be diverted from theSenegal River during the flooding period, when an estimated excess of 10 billion cubic meters ofwater from the river flows into the sea.

2.21 Hydroelectric power. The hydroelectric operations at Manantali, to be completed in 1998,will reduce downstream flow-rates by 10 to 15 percent. Hydroelectric operations require timing ofwater flows to meet electricity demands, which do not necessarily match demands for irrigation,artificial flooding (the Vallees Fossiles), or other uses downstream. These concerns are under theresponsibility of OMVS. They will have implications for the operation of the Manantali and theDiama Dam and are to be addressed in a broader water resource management strategy (para. 4.9).

Table 2.1. Allocation of Senegal River water (Annex 1-1)

Land WaterDevelopment Project (hectare) (million cubic______________________________________ _____________ meter/year)

Plan directeur Rive Gauche (PDRG) 88,000 2,000Compagnie sucri4re du Senegal (CSS) 8,000 188Canal du Cayor (MEACC) Irrigation 8,500 223

Recharge and losses n/a 1 87Domestic Water Supply inthe Dakar Region n/a 321VaUliesFossiles rMEA VP) 60,000 1,400Water Supply for towns along the river I18Total allocated ____ 4,237Unallocated 1,763Tota quota for Senegal | 6,000

2.22 Even if the current groundwater extraction stipulated in table 2.2, is only about 5 percentof the estimated national groundwater recharge capacity, some aquifers in densely populated areas,such as the Cap Vert region, are prone to over-exploitation. The main environmental concern is theimpact of the temporary over-exploitation of the littoral soil aquifers, which could lead to salt-water intrusion, which would ruin traditional shallow wells now used for rural water supply. Anenvironmental impact assessment study based on a groundwater model concluded that another35,000 cubic meters per day can be drawn from Senegal's north coastal groundwater resourceswith moderate environmental consequences (para. 7.12)

Table 2.2. Senegal's current groundwater extraction rates.

ExtractionAquifer system (million cubic meter/year)

Shallow 55 to 60Irtermediate 35 to 45Deep 60 to 70Totd 140to 175

Institutions

2.23 By joint agreement with Senegal, Mauritania, and Mali, the OMVS was established in1972 to foster irrigation development along the Senegal River (Guinea is not a signatory). OMVS

8

is a river basin management organization responsible for coordination and harmonization ofprojects in the Senegal River catchment area. It is responsible for hydrological services, long-termwater allocation among the riparian countries, and ensuring that the operation of the dam systems(including hydropower, for instance by artificial floods) is environmentally sustainable. The treatyrequires member states to inform the OMVS of any works undertaken on the river, which must beapproved by the Conseil des Ministres de l'OMVS before they can be implemented. OMVS alsoproposes to its member countries how the financing of its operations shall be shared.

2.24 In spite of its relatively modest track record, OMVS is still a key partner in developing theregion's water resource management strategy and in preparing similar strategies for other ripariancountries. The Canal du Cayor was endorsed by OMVS and integrated in its water allocationbudgets, whereas the Vallees Fossiles is still under OMVS consideration. Meetings betweenOMVS and representatives of the Canal du Cayor and Vall&es Fossiles projects help to assurecoordination in the use of land and water resources between these two ventures.

2.25 The Organisation de Mise en Valeur du Fleuve Gambie (OMVG) was originallyestablished by Senegal and the Gambia in 1978. Guinea joined in 1980 and Guinea Bissau in1983. Guinea Bissau contains only 0.02 percent of the Gambia catchment. The OMVG does notconfine its concern solely to development within the Gambia River basin but also sponsors studieson other basins within the member states.

2.26 Ministry of Hydraulics. The overall responsibility for water resource management,drinking water supply, and sewerage in urban and rural areas lies with the Ministry of Hydraulics.The Ministry of Hydraulics has three departments: (Annex 2-1)

* The Service de Gestion et de Planification des Ressources en Eau (SGPRE) isresponsible for water resource studies, the determination of the water balance, themonitoring of water resources, water resource management and allocation, thepreparation of laws and regulations related to the management and protection ofwater resources, and regulatory enforcement. It comprises the Central Bureau andthree Regional Brigades responsible for hydrological data collection, processing,analysis and study. This department also disseminates data and information tousers.

* The Direction de l'Hydraulique et de l'Assainissement (DHA) is responsible forengineering studies and the supervision of works on dams and other hydraulicprojects in rural areas (wells, reservoirs, etc.), and sewerage and waste-watertreatment plants. It also supervises SONEES.

* The Direction de 'Exploitation et de la Maintenance des Ouvrages d'HydrauliqueRurale (DEM) is responsible (with DHA), for the development and implementationof water supply projects in rural areas, for technical support to and coordination ofthe actions of village committees, and for the maintenance and renovation of ruralwater supply installations.

2.27 Other Water Resource Management Actors. The Ministry of Hydraulics oversees boththe Mission d'Etude et d'Amenagement du Canal du Cayor (MEACC) and the Mission d'Etude etdAmenagement des Valles Fossiles (MEAVF). MEACC carries out studies and works related to

9

the long-term supply of water from the Senegal River via the Lac de Guiers to the Dakar/Cap Vertregions. MEAVF is responsible for the execution of studies and the development of all fossilvalleys in the country (Ferlo, Sine, Saloum, Baobolong, and Sandougou). Its works include riverprofiles, dikes, water intakes, and canals that reintroduce water into the valleys. Its aim is toreconstitute the national hydrographic network.

2.28 The Ministere du developpement rural (MDR) has the supervision of the Unite depolitique agricole (UPA) dealing with agriculture policy matters, and linked to the use of waterresources. The Ministere de I 'Economie, des Finances et du Plan (MEFP) supervises the Celluleapres barrages (CAB), an institution in charge of preparing a master plan for the development ofthe left bank of the Senegal River, the Plan Directeur de la Rive Gauche (PDRG). The Directionde la Sante Publique under the Ministere de la Sante is responsible for the establishment andenforcement of the national drinking water quality standards.

2.29 Creation of the Conseil superieur de l'environnement et des ressources naturelles(CONSERE) in 1993 ushered in a new era in environmental management in Senegal. It isnecessary to coordinate the water resource management strategy with the Ministry ofEnvironment's new National Environmental Action Plan (NEAP), which sets forth the institutional,legal, economic, and technical measures needed to safeguard the environment while pursuingdevelopment goals.

2.30 Water Resource Information Systems. Two information systems were created as part ofthe Planification des ressources en eau project. The Systeme d'information geographique sur lesressources en eau du Senegal (SIGRES) is an information system on water resources, water use,and users. The Banque informatique de suivi et d'evaluation des projects du secteur eau(BISEPSE) is a data base with information about water-related projects. SIGRES and BISEPSEserved as the basis for the report Bilan diagnostic des ressources en eau du Senegal (September1994), prepared by a group of national and international experts. These systems will also serve asthe basis for the Schemas directeurs regionaux d'amenagement hydraulique (SDAH), whichproposes to establish seven water management zones selected on the basis of water resources andwater development typologies, and the national Plan directeur de developpement des ressourcesen Eau (PDRE).

Emerging Strategy

2.31 Although many studies have been conducted on Senegal's surface water and groundwaterresources, no comprehensive water resource management strategy has yet been devised forbalancing these resources with demand. Water has been extracted on an ad hoc basis and -exceptfor the Senegal River-, no authority controls water use. The discharge of domestic, industrial, andagricultural wastewater is also not regulated and lack of water resource management has resultedin mineral accumulation in the Lac de Guiers from agricultural runoff, over-exploitation of theCape Vert aquifers at the risk of salt intrusion, and the discharge of untreated urban domesticsewage into surface and groundwater bodies. With no coherent sector development strategy inplace, furthermore, no major expansion work have been realized since 1975.

2.32 Coordination among several large water development programs, (like Dakar WaterSupply, Rive Gauche, Vallees Fossiles and Canal du Cayor) has now been established, and theOMVS is engaged in overall water allocation among the three major countries bordering theSenegal River. Basic principles guiding the allocation of water to large development projects in

10

Senegal from the Senegal River include the aim of promoting agriculture and rural developmentthrough synergy between the projects and equitable allocation of water; ensuring efficient andcoherent water resource management; rehabilitating and protecting the environment; and securinglong-term and sustainable urban and rural water supplies.

2.33 Proposed Framework. To establish a commonly recognized water resource managementstrategy for managing water resources, Senegal's Government is implementing new laws andinstitutional adjustments based on the Decrets du Code de l'Eau (Loi 81-13 du 4 mars 1981). Therecent consolidation of the Ministry of Hydraulics and the creation of SGPRE aim to improve themanagement of water resources. The Government's intention is to strengthen this division, give itresponsibility for managing and allocating all national water resources, and give it full authorityover permits for water extraction. The SGPRE recently established a data base for water resourceplanning and management (through the UNDP-supported Water Master Plan Project). Thatincludes a Geographical Information System (GIS) for the processing of water and other naturalresource information from various bases (such as water supply, sanitation, agriculture, livestock,industry, fisheries, mining, energy, and tourism).

2.34 The Conseil Superieur de l'Eau (CSE) is being created to act as a steering committee ofthe water resource management process, once its structure is formally approved by the Cabinet ofMinisters. Representation on the CSE includes: consumers associations, farmers associations, theAssociation des presidents de communautes rurales, the Ministry of Hydraulics, the Ministere de laSante, the Ministere du Developpement Rural, the Ministere du Environnement, the Patronat desindustriels, the Associations d'eleveurs, the mayors; SONEES (or the new Societe de Patrimoine,SONES, after the institutional reform of the water supply subsector), and the Water and ForestryAssociations.

2.35 The planned Comite Technique de l'Eau (CTE) will be a consultative committee where allwater-related ministries, organizations, consumer associations, and other stakeholders engaged inwater development can discuss common concerns and prepare proposals for new interventions(CTE is already functioning as an informal water forum while awaiting its formal establishment).

2.36 The proposed water resources management strategy would further harmonize the functionsof these new bodies with existing institutional arrangements with regard to water-relatedresponsibilities. It would help establish mechanisms to secure the representation of all partiesinvolved in the management and allocation of water resources in the strategy formulation process.Further legislation is also needed to cover waste-water management, environmental qualitystandards (particularly with respect to the protection of water resources), drinking water qualitystandards, and the reuse of sewage waters (user rights, property rights, and quality standards fortreated waste-water to be reused for crop irrigation and aquifer recharge). Developing newregulations would be task of the proposed, integrated water resource management strategy formanaging water resources.

I1

3. THE SECTOR

Drinking Water and Sanitation

Urban Water Supply

3.1 Outside the Senegal River valley, provision of water is restricted by the lack of adequatewater resources. Dakar is currently dependent on water drawn from fossil aquifers as far inland asThies, which are already over-exploited and risk being contaminated by salt water intrusion.Water for Dakar is also drawn from shallow aquifers in the Niayes area that were traditionallyused for market gardening. Although SONEES only manages 41 of the 75 towns with more than5,000 inhabitants (plus 8 localities with less than 5,000 inhabitants), SONEES' service area coversclose to 90 percent of the total urban population in Senegal. However, only 54 percent of Senegal' surban population has access to a safe water supply of piped water (para. 1.6).

3.2 Since 1984 the overall responsibility of the urban water supply sector has been withSONEES, a financially independent enterprise now under the administrative supervision of theMinistry of Hydraulics. Over the past decade SONEES developed into a capable organization,particularly with regard to its technical responsibilities. It implemented the Eleven Centers WaterSupply Project efficiently, completing it well within the planned time-frame (Project CompletionReport No. 13833). Compared with similar companies in West Africa, SONEES has kept watersupply facilities generally in good condition, but its preventive maintenance and sewerageoperations need to be improved.

3.3 The responsibilities of SONEES and the Government are laid down in a Contrat-Plan, tobe renewed every five years. The first Contrat-Plan was concluded on December 31, 1988. Asecond version, which took into account experience and sector developments over the first five-yearperiod, covered 1990 to 1994. Results have been mixed. Some of SONEES' water sales targetswere over-ambitious, and the Government was not able to honor its financial obligations. Physicaltargets for secondary centers were attained.

3.4 The 1990 sector institutional reform aimed to strengthen SONEES in operations,maintenance, and project implementation. New institutional and financial arrangements were togive SONEES full responsibility for the urban water supply and institute measures to ensure thatthe Government and municipalities would pay regularly for the water they consumed. But whilethe first objective was achieved to some extent, the second was not.

3.5 SONEES departments include finance, data processing, human resources, administration,operations, and technical matters. Planning and studies, audit, and management control unitsreport directly to the general manager. The Division of Studies and New Works now has qualifiedstaff and technical equipment to carry out feasibility studies, do appraisals of projects for smallcenters, implement projects, and introduce preventive maintenance programs. Managementpositions are staffed with competent Senegalese professionals. Intermediate level staff, while alsocompetent, needs further training.

3.6 To correct the growing imbalance between supply and demand and reduce the enormouscost of new fresh-water catchment works, SONEES has embarked on a leakage reduction program,

12

an extensive water conservation and waste reduction campaign, and a number of other measures(such as a dissuasive, high-tariff block and a public awareness media program). SONEES alsorecently privatized its public standpipes, which resulted in substantial water consumption savings.The privatization program was 97 percent effective, with 2,534 of 2,621 formerly publicstandpipes now being privately managed. A high-priority investment program was also devised toincrease production capacity to at least cover the demand until the year 2000-including theconstruction of 14 additional boreholes and transmission pipelines to the existing transport system,the temporary over-exploitation of the Littoral Nord aquifer, the upgrading of the drinking waterproduction plant Ngnith, the construction of a booster pumping station at Carmel on the existingThies-Dakar pipeline, the duplication of the pipeline Thies-Gudoul, the expansion of thedistribution networks, construction of an additional reservoir at Mamelles, and the addition of fiftypiezometers to monitor groundwater level and salinity. Germany (KfW) has already financed thefirst, urgent phase of the work-construction of a booster pumping station at Carmel and of tenboreholes in the Thies area. It has also supplied the equipment and pipelines needed to connectthese boreholes to the existing water supply system.

3.7 Ratio comparisons amongst other water utilities in Subsahara Africa show that the staffingof SONEES with 1,459 employees in 1994 for water supply (1,559 employees in total of which100 work in the sanitation subsector) is within acceptable norms. In 1994, the actual ratio ofpopulation served per employee is about 1,075, personnel expenditures per operating revenue ratiois about 21.5 percent, personnel expenditures per cash operating cost is about 26, and the numberof house connections per employee is about 89.

3.8 Since its creation, SONEES' financial performance has been uneven. It has evolved from apoor performance during the 1980's to more encouraging but not sustainable today. As can be seenin the table below, water sales have stagnated mainly as a result of serious constraints in waterproduction capacity. Also, inadequate tariff increases did not allow SONEES to fully recoveroperating expenses which have been increasing mainly as a result of the costs of fuel, materials andsupplies for operations and maintenance. Moreover, due to Senegal's overall fiscal situation,Government agencies and municipalities have not paid their water bills within the four monthperiod agreed under a covenant of the previous project. Faced with cash shortfalls, the companyhas often delayed payment on its debt service obligations to Government and of its electricity billsto SENELEC, the State-owned electricity company. The resulting low net income of SONEES hastherefore limited the financing of new investments from its own resources, which should be at least10 percent of SONEES' total gross annual revenues. Financial results for the period from 1990 to1993 are shown in Annex 3-1 and summarized below. The 14.4 percent increase in revenues from1991 to 1992 was essentially due to a 16 percent increase in the average tariff and a 3.1 percentincrease in the volume of water sold. This large tariff adjustment was made to reflect costincreases over the years, since no significant tariff adjustments had been made since early 1986.The increase in volume sold is due to urgency investments in water supply capacity. The balanceof the revenue increases in 1992 was due to the amortization of subsidies corresponding to thetransfer from Government to SONEES of fixed assets previously State-owned. The large increasein non-operating expenses was due to an exceptional write-off on unpaid receivables, particularlyincluding those of the market garden sector, which had been rolled over during many years andwere finally recognized as non-collectable. The financial situation of SONEES was severelyaffected after the 100 percent devaluation of the CFAF on January, 1994. While Governmentauthorized an increase of 30 percent in the water tariffs in April, 1994, this was not sufficient tofully offset the increased cost of imported goods and the debt service payment requirements on theexternal debt.

13

Table 3.1. Financial results of SONEES 1990-1993

1990 1991 1992 1993

Income Statement ItemsUnit Volume sold (million )m3 67 65 67 66Revenues (CFAF millions) 15572 16129 18458 18482Opeating Income -42 214 1,890 -696Net Income 124 107 294 644

Balance Sheet ItemsCufrent Assets Less Current Liabilities 3990 5010 3002 -1390Net Fixed Assets 53274 54359 53452 54157Total Assets 70699 72221 70188 76245

Debt (long-& medium-tenn) 17357 16042 15263 14432Equity 51669 53668 50457 46127

Operating Income as % of Revenue 1.3% 10.2% Less than 0Nt Income as a % of Revenues .8% .7% 1.6% 3.5%Debt Service Coverage 1.3 1.3 1.5 1.3

3.9 SONEES has a commercial double-entry accounting system, which is in accordance withsound and internationally recognized accounting principles and practices. Under the previous IDAoperation, several actions aimed at improving the financial performance of SONEES: the use ofcost-center accounting and budgetary accounting, making a physical inventory and evaluation ofthe fixed assets previously owned by the Government and passed on SONEES in 1983, improvingthe recording of new investments, and the use of data processing as part of SONEES managementinformation system MIS. Audited 1993 accounts were submitted to IDA in August 1994 forreview. The audit report was qualified due to unexplained differences in the accounts receivable,lack of provision for benefits for staff retiring, and the inability of the auditors to certify the valueof the stocks. It is expected that these items will be dealt with in the report for the period endingDecember 1994.

3.10 Challenges. The country's fiscal situation has had major a impact on SONEES. Non-payment for water consumed by Government and municipal institutions, combined withGovernment's reluctance to increase tariffs, endanger SONEES' solvency. Government hastherefore agreed to implement a number of corrective measures to redress the problem ofGovernment arrears, high water consumption by public agencies, non-reliable water quality, tariffsbelow cost recovery for water services, potable water used for market gardening, and the lack of asafe water supply for the urban poor:

Arrears. In 1984, legislation was passed requiring Government to settle arrears forwater consumed and to pay its water bills regularly. But liquidity problemsprevented many municipalities in particular, from settling their arrears. To lightentheir charges, public standpipes were privatized. Consumers now pay for theirwater directly, which has resulted in a decrease of about 51 percent in municipalwater bills. In the framework of the Structural Adjustment Program, the nationalGovernment had settled its arrears to SONEES and other public enterprises by theend of 1990. Arrears among public enterprises, and from these enterprises to theGovernment, were also settled or renegotiated in February 1992. In April 1994 theGovernment signed a new convention to settle its arrears to SONEES as ofDecember 31, 1993, which resulted in a net debt of US$3.9 million from SONEESto the Government. In June 1994, the mid-term balance was US$1.8 million in

14

favor of the Government, not including accounts payable by municipalities andpublic agencies, which amount to US$1.16 million.

Tariffs. According to the "cahier des clauses et conditions generales", water tariffsshould be reviewed twice a year (on January I and July 1), using a formula thattakes into account all price components (operation, renewal, growth, sanitation,rural water supply, and taxes). When the formula suggests more than a 2-percentincrease, SONEES must submit the proposed tariff increase to the Ministry ofHydraulics for approval. If no response is received within fifteen days, the increasewill go into effect automatically. This schedule was followed, however, only in1985 and 1986. Tariffs were increased in 1989 by about 21 percent, in 1992 byabout 12.9 percent (with the exception of the social tariff and tariffs for standpipesand agricultural water use), and again in 1994 -following the CFAF devaluation- byabout 30 percent (Annex 3-2). Tariff policies should support the principle of costrecovery for water services. Tariff adjustment formulas should reflect changes incosts, inflation, and the exchange rate for local and hard currency. Senegal'smacroeconomic objectives (presented in a Letter of Intent submitted to the IMF inJanuary 1994 and in a Policy Framework Paper agreed upon with the Bank and theIMF in July 1994) include increasing energy and utilities prices to reflect currentproduction costs more closely.

Drinking water quality. An ad hoc analysis of drinking water quality showed that,in a number of cases in the four secondary cities targeted by the ConmmunityNutrition Project, fecal streptococcus and coliforms were present at the end of thedistribution system. In most of these cases, no chlorine remained. In Kaolack andZiguinchor, coliforms have been noted at the exit of the water-towers. Thesefindings underscore the need for water sector and policy reform to guarantee safeand reliable drinking water for the population.

* Water Consumption by Public Agencies. A recent study indicated that in 1991water losses and wastage amounted to about 47.2 percent of the total volume ofwater billed to public agencies, which corresponded at that time to 15,000 cubicmeters per day. Stopping 70 percent of these losses is a realistic objective. TheGovernment is committed to move rapidly on its new water sector action plan torehabilitate water meters, reduce water leakage, rationalize public administrationwater usage, budget annual public agency water consumption, and schedulepayment of Government water bills. During negotiations, Government agreed aspart of its sector policy, to take all necessary measures to implement the watersector action plan with time table, acceptable to IDA (Annex 8).

Market gardening. The practice of using potable water for irrigation in the marketgardening sector in the Cap Vert area continues. More than 10 percent of SONEES'annual production was consumed in 1993 for irrigation. The action plan in order todiscourage this practice and eventually phase out the use of potable water forirrigation is discussed in paras. 3.19 to 3.23.

* Water for the urban poor. SONEES has not yet provided the bulk of Dakar's poorwith access to affordable drinking water, except through public fountains. The

15

proposed sector and policy reform aims to make safe drinking water available toabout 460,000 additional poor people in Dakar (paras. 4.17 and 4.31).

3.11 Rationale for Institutional Reform. Senegal aims at reforming the water supply sectorinstitutions to create a regulatory environment conducive to sector growth, to ensure continuity ofmanagement and rational organization, to encourage the development of human resources, tosupport operation and maintenance improvements, to institute a new tariff policy for better costrecovery, and to enforce new increased block tariffs in the market gardening subsector. Althoughthe water supply subsector is currently handled by a reasonably efficient parastatal, SONEES,private sector participation is required to achieve the above-mentioned objectives. The sector isindeed facing two major issues which cannot be addressed by the public company: (a) a mediumterm shortage of production and distribution capacity in the Dakar area requiring heavy immediateinvestments; (b) the future need to have access to large sources of private capital for the futurelarge investment program needed to meet the long-term demand for water in the Dakar area (para.5.4). Financial viability of the sector, independent from Government, will therefore be an essentialcondition for the development of the sector (para. 5.3). The analysis of various levels of tariffincreases necessary to achieve financial viability showed that without any private participation, atariff increase of about 6 to 7 percent would be required to reach equilibrium by the end of the year2003. The participation of the private sector in the water supply operation would reduce thenecessary increase for two main reasons. First, progress could be achieved by a professionaloperator in terms of productivity. Secondly, increased managerial autonomy would result in higheroperational efficiency. In December 1993, the Senegalese Government confirmed its preference forentrusting a private company with the task of managing day-to-day operations through anaffermage contract, while a public holding company will remain in charge of managing the assetsof the sector. More broadly, privatizing water sector operations fits within the overall Governmentstrategy to disengage from production and commnercial activities and to focus on a limited numberof priority services.

Urban Sanitation

3.12 Sanitation installations throughout Senegal are very poor. According to the 1988 census,only 13 percent of households are connected to the sewerage system and 40 percent relievethemselves outdoors. The percentage of households without any sanitary facilities is 62 percent inrural areas and 33 percent in urban areas. The sanitation subsector is hampered by an inadequateinstitutional structure and by insufficient investment. Sanitation sector issues include lack ofcoordination among the actors involved, inadequate financial resources for capital expenditures,lack of clarity about the respective boundaries for storm drainage works and on-site sanitation,inadequate cost recovery for operating and maintaining subsurface systems (mainly as a result ofthe low sanitation surcharge on drinking water distribution), inadequate individual on-site orcollective sanitation system coverage of the urban and peri-urban areas, and extensive use ofshallow wells in areas where sewage can pollute shallow aquifers.

3.13 Since January 1990, SONEES has operated and maintained sewerage installations on amanagement-contract basis. In centers with sanitation services, SONEES collects a surcharge ofCFAF 28.90 (about US$0.05) per cubic meter of water sold, but Government continues to servicethe related sewerage sector debt. Only Dakar, Kaolack, Thies, Louga, and Saint Louis havestandard sewerage systems, but even there the rate of connection is less than 30 percent. Urbanhouseholds not connected to the sewer system generally dispose of wastewater into drainageditches, which adds to unsanitary conditions.

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3.14 The sewerage infrastructure consists of 640 kilometers of main sewers, 200 kilometers ofstormwater channels and pipes, 40 pumping stations- including four for stormwater and six watertreatment plants. The investment plan of the Government proposes increasing connections to theexisting sewer system, building decentralized small-scale treatment plants for the reuse of peri-urban municipal wastewater in the Greater Dakar area, constructing a new Rufisque seweragesystem, preparing sewerage master plans for six riparian centers (to serve a population of 133,570)and thirteen secondary centers (serving a population of 600,580). Other secondary cities and 44percent of all Senegalese households rely on such independent sanitary facilities as septic tankswith sumps or watertight pits.

Rural Water Supply and Sanitation

3.15 Over 4 million Senegalese live in some 12,000 villages and have very limited financialmeans to invest, operate, and maintain water systems. In large parts of Senegal where groundwateris situated at great depths (150 to 300 meters), wells and small boreholes equipped with handpumps are impractical and ground water must be extracted by motorized equipment with highdischarge and held in elevated reservoirs. In 1989, 661 deep boreholes existed, of which 495 werewell-equipped. The remaining 166 were either not equipped or were equipped only with hand-orwind-driven pumps.

3.16 Large-diameter boreholes equipped with mechanically driven pumps connected to smalldistribution systems are the only feasible solution, but operation and maintenance of these systemsis not within the scope of the country's villages. The new DEM directorate was given soleresponsibility for the operation and maintenance of rural water supply systems in December 1993.Over the next four years, DEM's workload is expected to more than double with the construction of350 new boreholes.

3.17 Government strategy aims to transfer responsibility for the larger rural water supplyschemes to the urban sector, while the operation and maintenance for smaller schemes will beprivatized, gradually transferring responsibility for them to the communities they serve. Villagecommittees have been formed to collect contributions from the villagers. At the moment, thecontributions cover about 90 percent of the cost of fuel. This contribution is to be increasedgradually to cover the total cost of operations and maintenance. Responsibility for debt servicewill remain for the foreseeable future with the Government, because rural communities are notfinancially strong enough to support these charges. But, in fifteen to twenty years, when normaldemand will have grown and all presently constructed boreholes will need to be renewed, newproblems will arise. A proposed study would review the feasibility of increasing the voluntarycontribution; introducing water tariffs; or imposing Government, municipal, or village taxes.

3.18 With few regulation latrines in rural areas, excreta is generally deposited outdoors. Whilerural sanitation services in Senegal are hardly adequate, activities in the proposed project toimprove them are presently limited to including sanitation and health information programs in ruralwater supply projects and constructing pilot VIP latrines. The strategy envisaged for the futurewould be to continue the program to provide villages with latrines and other low-cost sanitationsystems of proven efficacy.

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Irrigation in the Dakar and Thies Areas

3.19 The scarcity of water in Dakar is exacerbated by the fact that SONEES is currentlydelivering potable water for irrigation to market gardens at below cost, encouraging wastefulconsumption. This practice threatens the sustainability of water resources and requires greatervolumes of wastewater to be treated. The use of potable water for irrigation in Dakar is difficult todefend in view of Dakar's chronic water shortages. In some areas, it deprives the urban poor andindustry of water for up to 22 hours per day. This was the rationale for the Government to preparean irrigation action plan to phase out the use of drinking water for irrigation (para. 3.23).

3.20 The Dakar region's limited water production potential puts a limit on the production ofcrops. To prevent the depletion of the shallow aquifers in the Niayes area, which are traditionallyused for market gardening, Government has established a water quota for horticulture equivalent to7 percent of SONEES' production. But in 1993 11 percent of the drinking water production wasbeing used for market gardening - 12 percent in the Dakar area and 10 percent in the Thies area.From 1985 to 1990, unpaid water bills by the market gardening subsector in the Niayes areaamnounted to 1.18 billion CFAF; from 1991 to 1993, they amounted to 585 million CFAF. Thiscorresponds to the accounts receivable of 759 horticulture consumers, with the 22 largestconsumers accounting for about half of arrears and the three largest consumers for a quarter. Theirrigation action plan contains measures to ensure that, after a short transition period (ending1995), the bill collection rate and the collection period for accounts receivable of marget gardenersbecome equal to these of other private water consumers. Consumers currently in large arrears maybe asked to provide equity for the new operating company SdE, thus giving them an incentive topay up, or would be provided with autonomous boreholes.

3.21 After the devaluation of the CFAF, market gardening became highlv competitive. Thiswvas considered as a window of opportunity to increase the water tariffs to discourage, or evenphase out entirely, the use of potable water for agricultural purposes. A socio-economic studyshowed that an average tariff increase applied to the market gardening sector by 45 percent, or upto 100 CFAF per cubic meter on average (in 1995 francs), would be affordable by the majority oflow-income gardeners. On that basis, and as part of the irrigation action plan, Governmenttherefore committed itself to impose as from July 1, 1995, a new, increasing block-rate structurefor market gardening water consumption, and to dissuade enterprises from continuing marketgardening that is not profitable without a water subsidy. Furthermore, a training and educationprogram is envisaged by Government, to promote the use of new and more efficient irrigationtechniques to achieve water savings and reduce wastages.

3.22 Even with the new tariff increase, the water tariff currently charged to market gardenersremains well below the average operational cost per cubic meter of production of potable water forurban use. The irrigation action plan contains a gradual increase of the water tariff charged to themarket gardening sector, with the aim of charging the opportunity cost of potable water once thesolution to the long-term water demand in the Dakar area is operational (para. 7.12). In the meantime, linked with the provision of alternative, less costly water (treated wastewater) being madeavailable to market gardeners by the end of 1997 (paras. 2.10 and 4.18), as of January 1, 1998,average tariff will be increased to 160 CFAF per cubic meters (in real terms, in 1995 francs),which corresponds to the marginal cost of operations at the point of water supply in the Niayes.

3.23 During negotiations, Government agreed, as part of its sector policy, to take all necessarymeasures to implement the irrigation action plan with time table, acceptable to IDA (Annex 8).

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Environment and Health

3.24 Environmental health hazards-brought on by contaminated drinking water, lack of accessto clean water, and unreliability of water supply-can cause disease and death. Water is necessaryfor drinking, cooking, personal hygiene, and the maintenance of hygienic living conditions, thatprevent disease.

3.25 Established standards for drinking water are needed to monitor the quality of treated waterand to estimate potential health hazards. Insufficient treatment (due to shortages of chlorine,intermittent water supply, break-down of equipment, and leakages) leads to contamination of thewater supply. In well-operated and well-maintained water treatment plants and distributionsystems, moreover, leakages can be kept as low as 2 to 5 percent. In Senegal, the results of waterquality assessments are usually skewed by water tested from the capital and other big cities, whichhave generally better-quality water. While no national drinking water quality standards have yetbeen developed, the WHO drinking water quality guidelines are followed in Senegal.

3.26 Malaria. The incidence of malaria can be used as an indicator for the presence of stagnantwater that is a threat to human health. In the Pikine neighborhood of Dakar, for instance, themalaria incidence was higher for those living near a marsh where Anopheles mosquito breeding-sites were located. A one-year study of 343 schoolchildren showed that, during the period ofmaximum transmission, malaria was responsible for 36 percent of school absences for medicalreasons. Another study showed that 34 percent of fevers showing up at Dakar hospitals were dueto malaria, as opposed to 23 percent of fevers in rural Casamance.

3.27 Sanitation. The spread of fecal contamination is a constant threat to public health,primarily where inadequate and unsanitary disposal of excreta, results in the pollution of both soiland drinking water. Infections and epidemics attributable to fecal matter cause both death anddisability. The absence of a sanitation strategy and coordination among the various agenciesresponsible for waste disposal and the shortage of resources available for sewerage in Senegal,have both added to the country's environmental and health problems.

3.28 Public awareness and participation. There is presently little information provided to thegeneral public regarding water resources and quality and projections for the future. Yet publicawareness and community management are necessary to improve the effectiveness ofenvironmental and health control in Dakar. Currently, thousands throw refuse into drainagecanals. No city-and especially one with small crews and limited resources-would be able to keepthese canals clear without the public's cooperation. An education and demand managementprogram is therefore essential to improve water use and sanitation practices in Senegal. A first stepint this direction will be implemented by the AGETIP in the context of the Community NutritionProject (para. 4.11).

Emerging Policy

3.29 Government's emerging water sector policy aims to provide affordable access to potablewater and adequate sanitation facilities to all urban and agglomerated rural populations and, at thesame time to reduce the dependency of the sector on the Government's budget. Accordingly, theGovernment's sector policy (Annex 8 has the following objectives:

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* In the area of urban water supply, it aims to satisfy the total urban demand by theyear 2000 and to reduce the cost of potable water by giving full responsibility formanaging the subsector to an autonomous, financially independent enterprise. Aninstitutional reform to be completed by the end of 1995 includes the creation of anasset holding agency SONES (Societe Nationale des Eaux du Senegal) and a privateoperating company SdE (Societe d'Exploitation) (para 3.11). Further institutionalreforms included defining the functional relationships between the state, SONES,and the SdE and establishing terms of reference and financial projections for neededinvestments and operating costs. Financed by charges paid by the SdE and byexternal resources, SONES will program and execute investments it will own. TheSdE will be private, owned by a technical, professional, majority partner (51percent) and private Senegalese minority partners (49 percent). The public and staffof the former SONEES will be allowed to buy shares in SdE.

* In the area of rural water supply, it aims to make available 35 liters per capita a dayby the year 2000 to all rural households. Users are to be responsible for generatingfunds to cover operations and maintenance. No cost recovery for investments isenvisaged in the short term. Institutional reform will give the responsibility forplanning and implementation of projects to DHA and privatize DEM, which is tooperate and maintain the system.

* In the area of urban sanitation, it aims to set up by December 31, 1995-inconjunction with the institutional reform of the urban water supply sector-anautonomous national sanitation office (Office National d'Assainissement, ONAS) incharge of managing and developing the existing collective sanitation infrastructureand developing and promoting individual sanitation systems. DHA is to retainoverall responsibility for setting policy, doing long-term planning, and implementingthe investment program.

As a condition of Board presentation, Government submitted to IDA the signed letter of SectorPolicy, satisfactory to IDA. (para. 8.2)

IDA Involvement

3.30 Lessons from previous IDA involvement. Past IDA-financcd projects have beeninstrunental in Senegal's water sector reorganization and the establishment of SONEES. Duringthe 1970s, the Government, IDA, and the Caisse francaise de developpement maintained acontinuing dialogue regarding institutional and sector reform that resulted in IDA's first project inthe sector, the Senegal Engineering Project (Credit S23-SE, approved in April 1979 and closed onDecember 31, 1984). This credit provided funds for the preliminary studies needed for sectorreorganization, training, financial and tariff reform, and the technical aspects of the Eleven CentersWater Supply Project (Cr. 1554 - SE). IDA also assisted in the preparation of a sector report,completed in May 1990, which served as a basis for a donors' meeting.

3.31 The Eleven Centers Water Supply Project helped transform a Governnent Department intoa parastatal, SONEES, an agency that is technically effective and has excellent procurementperformance. Its bidding was done on schedule, and its contracts were concluded without problemsand below appraisal cost. Continuing issues that were not resolved, but which are specificallyaddressed in the proposed project, included (paras 3.10 and 3.12):

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* Insufficient autonomy for SONEES.

* Irregular payment of water bills by Government agencies.

* Lack of a tariff policy that will ensure long-term financial viability.

* Lack of attention to and investment in sanitation infrastructure.

IDA delayed the proposed project, which was originally appraised in 1991, because of lack ofprogress in implementing institutional and financial reforms. A consensus has now been reachedwith Govermment on sector reform, building upon and extending successful western Africaexperiences reviewed in the 1994 World Development Report: e.g. Guinea, where water supply isowned by a state enterprise and operations leased to a private operating company since 1989; andCMte d'Ivoire, where an urban water supply concession was given to a private consortium, whichreceives no operating subsidies and self-finances investments. The lessons of the Lima and BuenosAires operations have also been taken into consideration.

3.32 Rationale for IDA Involvement. The proposed operation fits within the overall CountryAssistance Strategy presented at the Board on February 16, 1995. Senegal is maintaining themomentum on the implementation of its reform program, allowing IDA to increase commitrnents inFY95 to reflect its satisfaction. As the CAS emphasized the need for change with both the powerand water sectors this operation supports the Govermment's efforts to redefine and focus its roleaway from commercial activities and to improve the competitiveness of the economy. On the waterside, continued IDA support is necessary to deepen sector reform, ensure financial disciplinethrough a private operating company, and help consolidate cofinancing. On the sanitation side,IDA support will help define a strategy and investments to address the growing peri-urban low-income population. The proposed operation is part of a comprehensive, long-term water sectordevelopment strategy to improve the competitiveness of the economy by reducing the cost of inputsand to reduce poverty through safe water and sanitation for low-income households.

4. THE PROPOSED PROJECT

Project Objectives

4.1 Long-term development of Senegal's water sector began with the Eleven Centers WaterSupply Project (closed in 1993) which helped to establish SONEES, a competent parastatal. Asecond project aims to deepen these institutional reforms and to make critical investments so thatSenegal can meet its demand for safe water in the year 2000. This is the proposed project.Ensuring long-term sustainability of the sector, will require a future operation. The overalldevelopment objectives of the proposed project are to address: (a) sustainabilUty, by improvingmanagement, pricing, and cost recovery and reducing Government subsidy for industrial, domesticand irrigation water; (b) poverty alleviation and health, by increasing access to safe potable waterand adequate and more affordable sanitation for the urban poor; and, (c) private sectorparticipation, by engaging a private company to manage urban water supply.

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4.2 Specific project objectives are:

* Water resource management. to formulate an integrated, multisectoral policy andstrategy for the shared use of water by households, industry, and agriculture thatwould also be coordinated with future development projects in these sectors.

* Institutional capacity building. to strengthen the MH's capacity to monitor aquiferexploitation, to strengthen the newly established SONES, for policy and strategy, tostrengthen the newly established ONAS and develop a strategy for urban and peri-urban sanitation improvement.

* Urban water production and distribution. to reduce leakages in the Greater Dakarwater distribution system (from the current estimated 27 to 15 percent), and toincrease the Dakar region's water production capacity by 34 percent (from the currentproduction capacity of 202,000 to 266,000 m3 per day).

* Urban sanitation. to increase the effectiveness of the existing Dakar seweragesystem, develop sanitation in secondary towns, and promote the reuse of treatedmunicipal wastewater for irrigation.

Description

4.3 The proposed project is sector-wide in scope and promotes sector strategy development,institutional capacity building, and investment programs. It is supported by key donors involved inthe water sector. To create more sustainable development, institutional reform and the design ofinvestments are coupled with the building of capacity in the newly established entities SGPRE,SONES, SdE, and ONAS.

4.4 The proposed project includes the following features:

* Discrete Implementation Phases. The proposed implementation schedule is designedin three discrete, free-standing phases designed to reflect donor financingcommitments more realistically and to permit a gradual approach to the staging oflarge civil works.

* Private operator targets. As an incentive for the private operator to renewinvestments and limit water losses, nonrevenue water performance targets are includedm the contractual agreement.

* Sector financial equilibrium. To ensure long-term sustainability and free up fiscalresources for other sectors, a specific timeframe is stipulated for reaching cash-flowequilibrium.

* Commercial loan. To cover the temporary cash flow shortfall of the sector until suchequilibrium is reached, the project includes a commercial loan from a local andregional bank.

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* World Bank's water policy. The proposed operation builds upon the principles of theBank's stated 1993 Water Sector Policy, namely the environmentally sustainable useof water resources through a set of coherent measures in the regulatory (water demandmanagement), institutional (privatization and decentralization) and economic (costrecovery) areas.

4.5 The Project contains components in institutional capacity building (particularly in waterresource management, increasing the water supply to urban and pen'-urban areas improvingsanitation facilities in urban and peri-urban areas. About 65 percent of all investments would go toincrease water production transport to greater Dakar; about 15 percent would go to reduceleakages in the water distribution network and improve the accessibility to a safe water supply; theremaining 20 percent would go to support water resource management, urban sanitation andcapacity building. A list of all project components is shown in Annex 6-5.

Component A: Institutional Strengthening and Capacity Building

4.6 This component (base cost US$8.1 million) consists of three subcomponents: (a) in waterresource management, support Ministry of Hydraulics and SPGRE, prepare a national waterresource management strategy and prepare future projects, (b) in potable water, support the newlycreated SONES in managing sector policy, including auditing and cost accounting; and (c) insanitation, support the newly created ONAS in the formulation of a national strategy for sanitationin urban and peri-urban areas (para. 3.29).

4.7 The water resource management subcomponent supports a broad-based, intersectoral andparticipatory process for developing a country-wide strategy in water resource management. Italso supports related water resource management project preparation which would be required toattract investments for the long-term water supply solution of the Dakar region. The waterresource management process will build on earlier studies and project proposals, which have beensupported by UNDP and other donors. It will be launched with a stakeholder workshop, supportedby EDI, to be held soon after project effectiveness. To set in motion this first workshop, thefollowing steps are planned: (a) prepare terms of reference for the appointment of the members ofthe CSE; (b) appoint short-term consultants to plan and implement the workshop, identify keystakeholders at the national, regional and local levels and help draft the water resource managementobjectives; (c) outline an information and dissemination program; (d) prepare a draft waterresource management strategy document; and (e) set up a mechanism to monitor the waterresource management process after the launching workshop.

4.8 To ensure that the improvements in the potable water supply sector and water resourcemanagement efforts are closely coordinated, the water resource management activities will belinked to the project's phases, as follows: Phase I will set the process in motion, build consensusand prepare the draft strategy. Phase II will begin implementation of the water resourcemanagement strategy, so that it prepares the ground for the long-term water supply solutionproposed for Greater Dakar (para 2.19). The water resource management process will also buildupon and coordinate the activities related to the Water Master Plan for Greater Dakar and theongoing NEAP process.

4.9 The first stakeholder workshop is planned for March 1996 and would launch the waterresource management process. Its aims are: (a) to create greater awareness among key users anddecision makers of the physical, social, economic and environmental interdependencies involved in

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water resources; (b) to improve the understanding of formulating a comprehensive, country-widestrategy; (c) to develop the foundations for establishing a shared vision of water resources anduses; and (d) to prepare recommendations to underpin the national strategy. The workshop shouldbe attended by representatives from related sector ministries, public service, the private sector,NGOs, donors, and other stakeholders concerned with or having an interest in water resourcesdevelopment. At appraisal, agreement was reached on the nature and timing of the launchingworkshop for the water resource management strategy.

4.10 The water resource management subcomponent supports specific hydrological studies,including the Lac de Guiers, the revitalization of the Vallees Fossiles. and the study of theMaestrichtian aquifer. In addition, (a) technical advisory services will be provided to MH ir. thesubject area of water resource management, and (b) training in the use of PC-based groundwatermodelling, will be given to key staff of SGPRE, who are preparing a special groundwater controlprogram to monitor saline water movements and the ground water level in water catchment areas.(para 7.12)

4.11 The potable water institutional capacity building subcomponent would support and helpfurther develop the newly created SONES (a) to develop and manage the national water sectorpolicy, (b) to control the SdE, and (c) to develop capacity in financial management, cost accountingand maintenance auditing. The project would provide (a) technical, advisory services in theseareas., and (b) organization of short and long-term training programs for the benefit of SONESstaff, including participation in specialized conferences and technical visits to other water utilities.In addition, a public health education and demand management campaign throughout Senegal isincluded in the project dealing with issues as: (i) proper use of a clear and safe water; (ii) cost ofaccess to safe water (use water wisely); and (iii) basic sanitary and healthy behaviors (para 3.28).This program will use the same approach as the Information, Education and Coordination (IEC)program developed for the Community Nutrition Project (Cr. 2723-SE) implemented by theAGETIP. Coordination between the two programs will be ensured.

4.12 The sanitation institutional capacity building subcomponent would support the newlycreated ONAS (para. 3.29) to prepare and implement a sustainable, urban sanitation developmentstrategy. The proposed project would provide technical, advisory services in the following areas:(a) conducting institutional, technical and financial studies, including inter alia a willingness to paystudy (para. 4.31); (b) providing management assistance and modernization of financialmanagement and cost recovery; (c) designing a sector investment and maintenance program forDakar and secondary cities to include a menu of technological options; and, (d) developing a publicinformation and stakeholder consultation process to include non-governmental organizations. Thestrengthening of the institutional, financial and technological framework of ONAS represents anumber of challenges, including the improved access to sustainable sanitation services to allsegments of the urban population. A launching workshop will be organized with the support ofGREA for early 1996 to support the formulation of the national urban sanitation strategy (Annex4). In addition the proposed project would provide the organization of short and long-termtraining programs for the benefit of ONAS staff, including participation in specialized conferencesand technical visits to other urban sanitation projects.

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Component B: Urban Water Supply

4.13 This component (base cost US$207.5 million) consists of three subcomponents: (a)drinking water production (base cost: US$162.5 million); (b) water supply and distribution (basecost US$29.7 million); and (c) logistic support (base cost US$15.3 million). The increase of watersupply capacity to Dakar and its surroundings from 202,000 to 266,000 cubic meters per day, tomeet the short-term demand, is summarized in the table 4.1.

Table 4.1. Increase of drinking water supply capacity

Additional Abstraction Additional AbstractionWater resource (m3/day) (million m3 /year)

Senegal River (Ngnith: increased production) 25,000 9.1Litoral Nord aquifer 35,000 12.8Aquifer near Thies Maestrichtien 4,000 1.5

Total additional supply capacity 64,000 23.4

4.14 The drinking water production component comprises the following subcomponents: (i) theincrease of production capacity for Dakar and its pen'-urban areas, (ii) the transport of theadditional volume to the Dakar area; and (iii) the optimization of water supply operations. Theproject supports:

(a) carrying out of water treatment works to increase the capacity of the existingNgiith intake and treatment works from 39,000 to 64,000 cubic meters per day;

(b) constructing 11 boreholes in the Littoral Nord including the related pipeworklinking them to the existing transmission system, for an additional productioncapacity of 35,000 cubic meters per day;

(c) installing piezometers to monitor the Littoral Nord groundwater table;(d) constructing about 103 km of buried transmission main of 1000 mm diameter

between Ngnith and Thies;(e) constructing about 55 km of buried transmission main of 1,200 mm diameter

between Thies and Point B;(f) constructing a 25,000 cubic meters reservoir at Mamelles, increasing the storage

capacity from 10,000 cubic meters to 35,000 cubic meters;(g) constructing 2 boreholes near Thies including the related pipework linking them to

the existing transmission system, for an additional production capacity of 4,000cubic meters per day;

(h) installing a remote control and management system to optimize operation of theproduction and transmission system of the Dakar water supply.

4.15 The water supply distribution component comprises the following subcomponents: (i) thereduction of water losses; (ii) the installation of low income house connections and publicstandpipes; and (iii) the extension of the distribution network. The project supports:

(a) reducing leakages in the secondary distribution network in the Dakar area, byrehabilitating about 100 km pipe of equivalent diameter (100 mm) and about30,000 connections;

(b) expanding the existing water distribution network following an indicative five-yearmasterplan prepared by SONES, to be updated yearly;

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(c) installing about 34,000 low-income house connections and 200 standpipes in theDakar region;

(d) installing large diameter water meters in the primary distribution system of theDakar region.

4.16 The subcomponent logistical support, including engineering, studies and supervisioncomprises:

(a) provision of technical advisory services to SONES in the carrying out of finalstudies, preparation of bid documents, and supervision of works;

(b) preparation of the future water sector project (long-term solution of water supplyto Dakar) including designing and operating a pilot plant as model for a newtreatment plant; and, conducting an environmental impact study for the saidtreatment plant;

(c) conducting maintenance and financial audits of SdE for the period covering 1996-2000;

(d) provision of laboratory equipment for water quality control and computerequipment and software for modernization of management;

(e) rehabilitation of office facilities for SONES.

4.17 An important feature of the proposed project is to increase accessibility to safe drinkingwater for the urban poor (Annex 4-2). Recommendations of a willingness to pay/affordabilitystudy will serve as a basis for defining priority areas for extending and installing low-income houseconnections and public standpipes (para. 4.31). Recently the possibility was offered by SONEESto pay water bills in instalments, which would free households from the obligation to pay a majoramount (on average, US$8-10 every two months) in a single payment. A major constraint inproviding the peri-urban areas with safe drinking water is the high cost of connections compared tothe low incomes of the population. Therefore, it is necessary to allocate some subventions for theirinstallation, as provided in this component. Public standpipes will be considered in less denselypopulated areas and in urban poor fringe areas. This increased accessibility to safe piped drinkingwater will go along with lower costs for households and a positive impact on health and hygiene.

Component C: Urban Sanitation

4.18 To improve sanitation in urban and peri-urban areas and to deal with increased amounts ofsewage as a result of the increased drinking water supply of the proposed project, this component(base cost US$32.0 million) comprises:

* Dakar region(a) carrying out of works to increase with about 25 percent the connections to the

existing sewer system in Dakar (10,000 new connections are planned);(b) carrying out of works related to the treatment and reuse of periurban municipal

waste waters in peri-urban areas of Dakar; the project will support the equipmentof the Camberene wastewater treatment plant with tertiary treatment facilities andthe construction of three small-scale decentralized wastewater treatment plants.

* Secondary towns and riparian centers(a) preparing sewerage master plans for 13 secondary towns and six centers riparian

to the Senegal River with a total population of about 734,150 inhabitants;(b) carrying out of drainage works in St. Louis;

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* Saint Louis(a) carrying out of detailed design studies and supervision of the drainage works in

Saint Louis;(b) carrying out of drainage works in St. Louis;

* Rufisque(a) carrying out of detailed design studies and supervision of the sewerage and

sanitation works in Rufisque;(b) carrying out of sewerage and sanitation works in Rufisque;

4.19 Two criteria will be used to determine the locality of the planned 10,000 new connectionsto the existing sewer system in the Greater Dakar area: first, the willingness to pay of thepopulation for a sustainable sanitation service (para. 4.31); second, environmental, the fact that insome urban areas the groundwater level is close to the surface, which makes the application of on-site sanitation and latrines not feasible. The willingness to pay study for sanitation services will beintegrated in the planned study for water supply services (para. 4.17).

Project Preparation

4.20 The proposed project is a result of a continuing dialogue between the Government,SONEES, IDA, and other interested donors (France (CFD), Germany (KfW), BEI and BOAD)regarding how to develop Senegal's water sector, and to finance SONEES' investment plan. Theproject was prepared by SONEES, with the assistance of consultants, under the Eleven CentersWater Supply Project (Cr 1554-SE)

4.21 The project was first appraised in April 1991 and focused on an interim solution to providewater to the Dakar area, SONEES' major problem. Final agreement was not reached with theGovernment of Senegal on a number of issues (paras 3.10 and 3.23), which were finally resolvedand consensus reached during the February 1995 appraisal. In the interim, a hydrogeological studywas conducted. It was completed in 1992, and demonstrated that the aquifer of the Littoral Nordcould be temporarily overexploited for a period of up to ten years without serious environmentalconsequences.

4.22 Since 1991, Germany (KfW) has been financing the first (high priority) stage of the Dakarwater supply program, which has been implemented. This stage covered the construction of tenboreholes near Pout, the piping system linking them to the Thies-Dakar transmission main, and abooster pumping station in Carmel. Subprojects in secondary centers include: AEP Petite C6te(financed by France (CFD)), AEP Six Centres (financed by Germany (KfW)), and AEP HuitCentres (financed by Japan (JICA)). Feasibility studies for the Dakar water supply componenthave been completed. Final design studies and the preparation of bidding documents, financed byFrance (CFD), started in June 1994 and are expected to be ready in mid-1995.

Studies and PPF

4.23 An IDA advance (P 864-0 SE) to the Government of Senegal for US$820,000 wasapproved to finance studies on the actualization of recommendations from the environmentalimpact study of August 1990, an institutional and financial and economic feasibility study of thelong-term solution for water supply to the Dakar/Cap Vert region's (Canal du Cayor), a study of

27

institutional reform in the urban sanitation subsector, consultant services for the evaluation of bidsto establish and run the private operating company, training in project planning and management,improving the local ability to audit maintenance and to select appropriate water supplytechnologies, and support for Senegalese staff training missions to other water utilities. A secondIDA advance (P 864-1 SE) to the Government of Senegal for US$1,180,000 was approved on May30, 1995 to support the implementation of the institutional reform of the urban water supplysubsector (para. 3.29), including financial studies, the study of staffing of SONES, assistance toGovernment for bid evaluation and contract negotiation of the SdE (para. 4.37), the willingness topay study (paras. 4.17 and 4.19), and capacity building workshops for SONES, and to support theimplementation of the institutional reform of the urban sanitation subsector (para. 3.29).

Donor Coordination

4.24 Two donor meetings were held, the first in December 1994 and the second in March 1995.The Government prepared a report on institutional reform of the urban water subsector, a reportsummarizing the proposed investment plan, and a strategy for Senegal's water sector from 1994 to2000. The reports were distributed to the donors community in November 1994 and are includedin the project file. These donors meetings allowed the financing gap of the first phase of theproposed project to be bridged. France (CFD), Germany (KfW) and EIB are to participate innegotiations. The financing gap of US$20.5 million relates to phases II and III of the proposedproject.

Client consultation

4.25 During the preparation of the project, a series of workshops were organized to ensure therewas extensive and systematic client consultation on the central features of the project, namely:pricing, privatization options, irrigation versus industrial and human consumption, water resourcemanagement, etc. With the assistance of EDI and GREA, further client consultation workshopswill be held before credit effectiveness and during implementation.

4.26 During project preparation in Spring 1994, an IDA-financed fact-finding mission studiedinstitutional reforms in C6te d'Ivoire, Guinea and the Gambia. All parties (representatives of theGovernment, Ministries, SONEES, and the unions) concemed in the reform process, discussedconclusions and recommendations from this mission at a workshop in Saly Portudal, Senegal, inJuly 1994

4.27 Workshop on communication of water sector reforms. A workshop will be organized inDecember 1995 to help the Government of Senegal develop an appropriate strategy tocommunicate effectively the objectives of the reform process to the general public. The experienceof other African countries which have already implemented similar reforms will be studied in orderto draw lessons from the successes and failures of the different communication policies which theyadopted. Communication experts from Senegal, from other African countries and public relationspecialists working for some of the best known professional operators will be called upon to giveadvise on the elaboration of a communication strategy adapted to the specific environment ofSenegal. The success of such a communication strategy is indeed crucial to dispel misconceptions,increase support for the reform process and ultimately enable and motivate the public to exertpressure on the authorities to ensure that the reform process stays on track.

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4.28 This workshop will be planned and delivered in partnership with the Government ofSenegal. It will be prepared by EDI with support from the External Affairs Unit of the AfricanRegion (AFREA). It will be the first in a series of workshops prior to credit effectiveness, to assistSenegal in the implementation of the reforms. A panel of specialists in communication willintervene to help formulate practical and immediately implementable recommendations. Thediscussions will be based on a survey of the public's attitude toward the reforms, carried outshortly before the workshop. The main objectives of the workshop are: (i) to inform theparticipants of the reforms' background, their content and intended impact; (ii) to give participantsthe opportunity of exchanging views on the issues and challenges of the reforms and the way tocommunicate them to the public; (iii) to inform them of experiences outside Senegal; and (iv) toenable the participants to identify target groups among the public and to define the respective rolesof the various stakeholders.

4.29 Workshop on the actors' functions and roles. Sustainable reform of the urban watersupply sector is vital to the success of the water sector project and requires a complex relationshipbetween the State, SONES and the SdE. The main objective of this workshop is to ensure thesustainability of the reform of the water supply sector. It will therefore (a) clarify theresponsibilities, roles and tasks of the newly created SONES; and (b) define the scope of therelationship between the three actors : the State, the SONES and the SdE. Finally, the workshopwill address the issue of the private sector development, especially the infrastructure use. Thisworkshop is planned for December 1995 after the establishment of the SdE.

4.30 Selection of appropriate water treatment techniques. This workshop will be the final inthe series of workshops aimed at ensuring the sustainability of the water sector reform. It isplanned for January 1996 and aims at: (a) to improve the awareness of the participants to theavailable technologies in water management and treatment, and (b) to establish a conceptual designfor the future pilot plant to prepare the future investment program (para 4.16). This workshop willcontribute to the selection of appropriate water treatment techniques adapted to local conditions, inpreparation of a future water production plant within the context of the long-term water supply ofDakar.

4.31 Finally, Government will undertake a study in collaboration with GREA to determine thepopulation's willingness to pay/affordability of water supply and sanitation services in 1995. Thisstudy will serve as the basis on which recommendations will be formulated for the installation oflow income house connections and connections to the sewer system in Greater Dakar (paras. 4.17and 4.19)

Establishment of SONES

4.32 The law implementing the institutional reform of the urban water supply sector was passedon March 24, 1995. The new asset holding company, SONES, is a national company. It willaccordingly be governed by Law No. 90-07 of June 26, 1990, on supervision of parapublic sectorenterprises. This status was adjusted in order to give SONES the autonomy necessary to ensuretotal synergy with the future operator. It was agreed that SONES, who would control the leasecontract, should be effective and efficient, strong in competence but lean in staffing, and havecredible autonomy (para. 5.18).

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Establishment of the SdE

4.33 Role of the State. The success of the institutional reform of the urban water sector inSenegal will depend on the state's ability to limit its role to defining strategy for the water sector,the country's ability to form a small, competent holding company to manage sector assets, and theefficiency of the private operating company's technical and commercial management (Annex 4-3).Lessons learned from similar institutional reforms indicate that unless responsibilities are clearlydefined between the state, SONES and SdE, the sustainability of the reform will suffer fromtensions between stakeholders (Annex 4-4). The parties involved in urban water supply followingthe institutional reformn of this subsector will be three in number: the State, SONES and SdE. Therelations between these parties will be both legal and functional in nature (Annex 4-3). In Annex4-4, a matrix of SONES and SdE responsibilities is shown.

4.34 Transfer of stafffrom previous SONEES. During the Parliamentary discussions precedingthe passage of the law at the National Assembly which authorized the creation of SONES, thedeputies requested Government's commitment to guarantee employment of SONEES' currentpernanent staff (excluding fixed-term and temporary staff) (para. 3.7). An agreement was reachedbetween Government and the unions, that the 1559 staff members of SONEES (situation as per ofDecember 31, 1994) would be divided up among the three new entities in the following way:

• SONES: About 100 staff members, with totalled personnel expenditure not exceeding tenpercent of the SONEES' personnel expenditure (para. 4.32);

• ONAS: 100 staff members, currently working in the sanitation sector (para. 3.29);* SdE: The remaining 1359 staff members.

Among the staff to be taken over by the SdE, 54 staff members will have retired by the end of1995, and it is estimated that 430 staff members will be retiring by the year 2004. In December1994, Senegal has adopted a new law amending article 47 of the labor code, allowing any privateenterprise in Senegal, to layoff personmel for economic reasons. This would allow the SdE thenecessary flexibility to build an effective and efficient utility.

4.35 An overview of technical and financial objectives of the management-lease contract whichincludes water quality, level of service standards sought, levels of flow, levels of leakage, andcredible target values is given in Annex 4-4. Contractually binding performance targets for non-revenue water will be imposed on the private operator whose remuneration serves as an incentive tolimit wastage and water losses, which would internalize the incentive to use existing capacity moreefficiently (Annex 4-5). This is linked to making the private operator responsible for renewinginvestments in the distribution network (at a contractual rate of 17 km pipe of equivalent diameter100 mm per year and 6,000 house connections), thus securing the funding of these investments(para. 6.2). As SdE has a direct financial interest in reducing water losses, SdE will be closelyassociated with the design, the bid evaluation and the supervision of the rehabilitation componentof the distribution network (para 4.17).

4.36 Selection of the private professional partner for the SdE. The following selectionprocedure is being applied: prequalification of private operator candidates, information day ondraft tender documents and on key features of Government/SONES/SdE relations, organized by theBorrower for prequalified private operators candidates; and launching of the call for bids followinga two-stage bidding procedure. The contract will be awarded based on IDA Standard BiddingDocuments, to the successful bidder whose second stage bid has been determined to be

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substantially responsive and has been determined as the lowest evaluated bid. Credit effectivenesswill be subject to the establishment of SdE, under the terms and conditions acceptable to IDA, andthe Government having entered into the affermage contract with SdE and the concession contractwith SONES, both under the terms and conditions satisfactory to IDA (paras. 5.19 and 8.3(b)).

4.37 Stakeholder Participation. As part of the process for selection of the professional partnerfor the new private operating company, a prebid conference, during which prequalified firms wereinvited to comment on the draft bidding documents, was held in Dakar on May 11 and 12, 1995.This meeting provided an opportunity for the key Senegalese sector actors and the potential biddersto engage in a frank exchange on a number of issues. In addition to the selection process itself,discussions revolved around issues such as the transition period, the remuneration of the operatorand of the future SONES, the content of the renewal program to be implemented by the operator,the performance standards to be respected by the operator, and SONEES' experience with regard tothe collection of payment from users, particularly the public agencies. The tenor of this meetingwas very constructive. It showed that there existed a high degree of interest on the part of theprequalified operators and it demonstrated a high level of understanding of the issues on both sides.

4.38 Minimizing the risks of non-payment by the public sector. Given the importance of waterconsumption by Public Agencies and the poor payment record of the Government (para. 3.8), therisk of non-payment or late payment of water bills by public entities is a very serious one for theprivate operator. A high level of risk perceived by the candidates could drive bidding prices up,jeopardizing the financial viability of the water sector except with tariff increases which would besocially and politically unacceptable for Senegal, or it could even prevent the candidates frompresenting any bids.

4.39 The project addresses the issue in a variety of ways: (a) Within the framework of thewater sector action plan, measures have been adopted (i) to force the Government to schedulepayment of its water bills and (ii) to limit the water consumption of Public Agencies (para.3. 10);(b) The SdE will prepare annual forecasts of water bills for each Government agency no later thanthree months before the end of the preceding year and the Government will budget funds for itsfuture bills on the basis of those forecasts. (c) The way in which the monthly payments of the SdEto SONES will be calculated also protects, to a certain extent, the operator against late payment ornon-payment by Government.

4.40 The exact amnount to be paid to SONES by the SdE during each year of the leasingagreement period can only be determined after the end of the year for which those sums are due(Annex 4-5). It has therefore been decided that the SdE would pay every month to SONES aprespecified amount and that, at the end of the year, any sum which would remain due by oneentity to the other would be transferred as soon as the data required to calculate the exact value ofthat sum becomes available. The predetermined monthly payments are calculated, not on the basisof an estimate of volumes produced or sold, but on the basis of the amount of money actuallycollected by the operator. Non-payment or late-payment by the Government would therefore resultinto lower monthly payments to SONES. The operator's incentives to increase the collection ratioremain however intact because, when the exact amount due to SONES for a given year is preciselycalculated after the end of that year on the basis of the relevant data, it is not the amount ofcollected revenues but the volume of water produced which is then taken into account, as indicatedin Annex 4-5.

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4.41 In addition, a transitory regime will be devised with respect to the SdE's monthlypaymrents. This regime will take into account the fact that Government Agencies will have fourmonths to pay their bills (para. 3.10) and that consequently, during the first few months of itsactivities, the SdE will receive lower revenues. Most of the sums which it will collect during thatperiod will have to be transferred back to SONES, as those sums will relate to services renderedprior to the establishment of the SdE.

4.42 The design of the project in three distinct, self-contained, consecutive phases, with eachphase starting once the previous one is successfully completed, contributes to ensure that thegovernment does comply with its obligations, in particular those related to the payment of its waterbills. Threats of suspending disbursements can of course be effective only until the lastdisbursement has been carried out. In the long run it is therefore preferable to rely on pressurefrom the consumers themselves to force the Government to comply with its obligations with respectto the private operator. The project also promotes that long-term objective by providing for theorganization of different workshops aimed at increasing understanding and support of the reformson the part of the public (para. 4.27).

Establishment of ONAS

4.43 Parallel to the implementation of the institutional reform of the urban water supply sector,the Government decided to establish ONAS before the end of 1995 parallel with the establishmentof the SdE, which would make it possible for SONEES' current sanitation functions to betransferred when the SdE is established. (para. 3.29) (Annex 4-1 . ONAS' immediate duties wouldbe to ensure the operation and maintain collective sanitation structures, which are now managed bySONEES. It was furthermore agreed that the SdE would be given the task of billing, collection andtransfer of the sanitation payments to ONAS. A follow-up study, financed by the PPF, will identifystaffing needs as well as the financial equilibrium conditions allowing for the prompt establishrmentof the public sanitation agency.

Cost Estimates

4.44 Project costs (net of direct and indirect taxes and duties) are based on SONEES investmentplan and on the findings of a feasibility study for the Dakar region financed by France (CFD). Asummary of cost estimates is presented in table 4.2 (detail cost tables appear in Annex 4-6). Basecosts are expressed at January 1995 levels, with 10 percent added for physical contingencies.Inflation for imported goods and services was estimated in accordance with Bank guidelines (1.5percent for 1995, 1.8 for 1996, 2.6 for 1997, and 2.5 for 1998, 1999, and 2000). Local inflationwas estimated at 2.5 percent per year during the project period. Total project costs amount toCFAF 155.2 billion or US$290.1 million in current prices.

4.45 The Government agreed to defer the collection of taxes and duties during the previousproject (Cr. 1554-SE) to lessen the impact of these taxes and duties on SONEES during the projectperiod. This deferment is still in effect. Prior to negotiations, the Government confirmed that thisdeferment continues to be applied to the newly established public holding company, SONES.

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Table 4.2. Estimated Project Costs rin US$ million)

Project Component Local Foreign Total % Foreign % Total BaseExchange Costs

percentage of total

Phase 1Institutional Capacity Building 1.2 6.6 7.11 84 3Urban Water Supply

Drinking Water Production 40.6 109.1 149.8 73 60Water Supply and Distribution 3.6 10.1 13.7 74 6Engineering, Studies, Supervision 2.2 4.6 6.7 68 3Subtotal Urban Water Supply 46.4 123.8 170.2 73 69

Urban SanitationSewerage/Urban Drainage 1.6 10.0 11.6 86 5

Subtotal Phase 1 49.3 140.4 189.7 74 77

Phase 2institutional Capacity Building 0.1 0.4 0.5 73 -

Urban Water SupplyDrinking Water Production 3.1 9.3 12.4 75 5Water Supply and Distribution 2.9 8.4 11.2 75 5Engineering, Studies & Supervision 0.1 0.9 1.0 91 -



Phase 3Institutional Capacity Building 0.1 0.3 0.4 77 -

Urban Water SupplyWater Supply and Distribution 2.1 6.7 8.7 76 4Engineering, Studies, Supervision 0.5 1.0 1.6 66 1



PPF Refinancing - 2.0 2.0 100 1Total Baseline Costs 61.3 186.3 247.8 75 100

Physical Contingencies 6.1 18.4 24.6 75 10Price Contingencies 8.1 9.9 17.11 55 7

Total Project Costs 75.4 214.6 290.1 74 117*Costs are net of duties and direct and indirect taxes.

Financing Plan

4.46 Project costs would be financed by an IDA credit of US$100 million equivalent, whichwould account for about 34.5 percent of the total project costs. France (CFD) (who jointlyappraised the project) would finance US$65.7 million. Other financiers include: Germany (KfW)(US$25.5 million), Belgium (AGCD) (US$4.1 million), IEB (US$18 million), NDF (US$10.3million), BOAD (US$11.9 million), BADEA (US$10.9 million). SONES would provide US$23.1million, or 10 percent of potable water investments, which will be generated through sales revenuesof potable water. Other donors, still to be confirmed, will be providing the remaining US$20.5million for Phases II and III of the proposed project. The detailed financing plan is present in

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Annex 4-7. As a condition of credit effectiveness, cofinancing agreements have been executed onbehalf of Government and cofinanciers, and all conditions of effectiveness and initial disbursementof funds thereunder (except the effectiveness of IDA's agreement) have been satisfied (para.8.3(h)). Furthermore, credit effectiveness will be subject to the execution of the Subsidiary LoanAgreement on behalf of Government and SONES (para. 8.3(a)).

4.47 The Government would pass US$85.0 million equivalent of IDA's credit to SONES ofwhich 45 percent will be onlent to SONES at IBRD terms to signal the cost of capital, and 55percent would be provided in the form of equity. SONES would bear the foreign exchange risk.During negotiations, Government agreed to the proposed IBRD terms of 20 years, including 5years of grace, at an annual interest rate of 7.1 percent (para 8.1 (a)). The loan/equity breakdownhas been deternined taking into account three constraints: (a) adequately capitalized publicholding company, (b) financial equilibrium of the potable water sector by the year 2003(cumulative cash shortfall equal to zero or positive), and (c) politically and socially sustainabletariff increases, required to achieve such financial equilibrium. The need to maintain tariffs withinan affordable range in the early years of the project (1995-1998) when efficiency gains are not yetfully realized, will create a temporary cash shortage, which commercial banks have agreed tofinance (para. 5.14). The potable water sector would generate all the counterpart funds and carrythe debt service for water supply investments.

4.48 US$15.0 million equivalent of the IDA credit would be passed on to the Ministry ofHydraulics through a budgetary allocation for the implementation of strengthening the newlyestablished public enterprise for urban sanitation (ONAS), for capacity building of SGPRE and theConseil Superieur de l'Eau, and for executing projects and studies for water resources managementand urban sanitation. The Government would make available to ONAS an amount not exceedingUS$9.0 million equivalent on a grant basis for the purpose of the implementation of the urbansanitization component of the proposed project.

Advance Contracting

4.49 Construction work should begin as soon as possible in order to relieve the burden of watershortages in the Dakar region. The preparation of final studies and bid documents for theproduction part of the project is ongoing, and is being financed by France (CFD). Advancecontracting is proposed in order that instructions to begin the work can be given immediately uponcredit effectiveness. No retroactive financing is considered.

5. FINANCIAL ANALYSIS

Introduction

5.1 SONEES' past financial performance is discussed in Chapter 3. This chapter discusses thefinances of the sector as well as the six scenarios prepared to estimate tariff increases needed toreach financial equilibrium and the rationale for the initial tariff increase. The analysis alsoquantifies the rationale for the institutional reform of the urban water supply sector, without whichmuch higher increases would have been necessary to achieve financial equilibrium in 2003 whileimplementing an ambitious investment program.

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Future Scenarios

5.2 The financial equilibrium of the sector is affected by three main factors: (a) level of watertariffs; (b) efficiency of water distribution of the sector linked to a reform of the sector; and (c) theproposed project. To evaluate the relative impact of these three factors on the equilibrium of thesector, six scenarios were developed. The six scenarios aim to: (a) project into the future thecurrent situation assuming no reforms, no tariff increases nor the proposed project investments; (b)evaluate the impact of the proposed reforms supported by the proposed project and its investments;and (c) estimate alternative water tariff increases, resulting cash flow shortfalls and time framnesrequired for achieving financial equilibrium. The following table summarizes these scenarios.

Table 5.1. Overview of financial scenarios(interest charges of financing temporary cash shortfall not included)

Scenario Water Sector Institutional Tariff Peak Temporary Year of CommentsProject Reform Increase Cunulativc Cash Equilibrium

shortfallCFAF billion

1 No project No No 6.2 in 1998 2005 Sector achieves equilibrium in 2005 but theproblem of the critical water shortage is notresolved.

2 No project No Yes 3.8 in 1997 2000 With an annual tariff increase of 2.4% from1995 through 2000, the sector is in equilibrium

_______ ______ _____________ in 2000.3 Project No No 61.8in2011 Beyond 2021 Evenin2021sectorisnotinequilibrium.4 Project No Yes 21.9 in 2003 2008 With an annual tariff increase of 2.4% from

1995 through 2008, the sector is in equilibriumin 2008. To maintain year 2003 as the year oequilibrium, tariff increases of 5% from 1995through 2003 would be required.

5 Project Yes No 17.7 in 2004 2010 Sector is in equilibrium in 2010.6 Project Yes Yes 16.5 in 1997 2002 With an annual tariff increase of 2.4% from

1995 through 2002, sector achieves equilibriumI__________ =__________ _______________ ____________ in 2002.

Scenario 2 would be acceptable as it would result in a financially viable sector vis-a-vis the State,but does not address the serious impact on productivity and poverty alleviation which would beexacerbated by the acute shortage of potable water, particularly in the Dakar area. Scenario 4demonstrates the positive impact of the tariff increases without the planned reforms. This wouldresult in financial equilibrium in the year 2008. Scenario 6 is the base case upon which thefinancial projections were prepared for the proposed operation and is described below. Scenario 6shows that financial equilibrium would be attained earlier than Scenarios 4 or 5. The chosenscenario assumes that a tariff increase of 3 percent is implemented in July 1, 1995 and annual realincreases of 2.4 percent are implemented starting in January 1996.

Financial Equilibrium

5.3 Restoring financial equilibrium to the water sector is necessary to: (i) alleviate the burdenof direct and indirect subsidies, or other forns of fiscal support to urban water supply in order toliberate finds for other sectors; (ii) bring the level of indebtedness to a level compatible with thesector's capacity to service it; (iii) generate enough resources to finance part of the future capitalexpenditures which cannot be financed with loans and also contribute as counterpart funding; and(iv) help create the conditions for future private lenders and equity investors to finance anincreasing part of investments through new financial instruments.

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5.4 The specific target date of 2003 for bringing the sector to financial equilibrium is justifiedfor several reasons. First, this is also the current estimated target date for putting in place therequired financing for the long-term solution to the water problem of the Dakar area, and a soundfinancial footing is necessary before new financial obligations are assumed for the sector. Second,Government aims to involve the private sector further through direct financing of futureinvestments, in which case, a sound financial footing is also a precondition. And third, a shortertime period to achieve financial equilibrium requiring higher tariff increases would be sociallydifficult to implement and inflationary (para. 7.14). The year 2003 of financial equilibriumcorresponds to scenario 6 in Table 5.1 which shows equilibrium in year 2002. The year ofequilibrium of the sector is delayed by one year from 2002 to 2003 as account is taken of theadditional interest charges on the financing of the temporary cash shortfall of the sector which isdiscussed later in this chapter (para. 5.9).

Future Tariffs

5.5 Although both historical and current water vendor rates indicate that consumers are in factwilling to pay for services at tariffs that reflect the quality of service, this would need to beconfirmed by the ongoing willingness to pay study. The method proposed to adjust tariffs wouldreflect changes in urban operating costs and debt service throughout the project period. Except formarket gardening which is treated separately (paras. 3.19, 3.20 and 3.21) the 2.4 percent realincrease would be initially applied to all tariff categories. However, beginning in 1998, tariffincreases would be applied differentially to the various categories on the basis of demand studies tobe completed during the first two project years. These studies would assess the impact of socialtariffs which, at minimum, cover operating costs. Currently, there is little information on the priceelasticity of demand by service categories or cross elasticities for alternative sources of supply tojustify an approach by categories.

5.6 For purposes of determining the effect on the tariff, it was assumed that the worst casescenario would be where the price of the private operator would be so high so as to eliminate allgains achieved through the reform. The results of this analysis indicate that the tariff increasewould have to double in order to achieve equilibrium in the year 2003 (Scenario 4 in Table 5.1).

5.7 A sensitivity analysis was also carried out to determine the effect on the tariff and the yearof equilibrium if the distribution efficiency indicator (as defined in Annex 4-5) is varied. As thetable below illustrates, if the distribution efficiency target is delayed by 2 years (for instance 85%distribution efficiency achieved in 2002 instead of 2000), the year of equilibrium is attained in2004 with a 2.4% tariff increase, and the peak cash shortfall rises to -21 billion CFAF in 1998.Conversely, if 2003 is maintained as the year of equilibrium, a 3. 1 % tariff increase is required. Ifthe distribution efficiency target is delayed even further (85% only achieved in 2005), the year ofequilibrium is 2006 with a tariff increase of 2.4%. It will require a tariff increase of 3.8% tomaintain 2003 as the year of equilibrium.

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Table 5.2. Sensitivity Analysis of Distribution Efficiency Performance Target(interest charges of fanmcing temporaiy cash shortfall included)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

cator base 73% 74% 77% 80% 83% 85% 85% 85% 85% 85% 85%

icator (sensitivity 1) 73% 74% 75% 77% 79% 81% 83% 85% 85% 85% 85%

Tariff Incr. 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 0%

Cumul. cashflow -3036 -11305 -19159 -21071 -19724 -16584 -13111 -9561 4398 2354 11512

Tarifftncr. 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 0% 0%

Cumul. cashflow -3036 -11191 -18754 -20033 -17668 -13153 -7955 -2440 4923 13165 23614

(sensitivity 2) 73% 73% 74% 74% 77% 77% 80% 80% 83% 83% 85%

Tariff Encr. 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%

Cumul. cashflow -3036 -11565 -19794 -22910 -22797 -21724 -20412 -19988 -17140 -12178 -2987

Tariff Incr. 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 0% 0%

Cumul. cashflow -3036 -11341 -18995 -20885 -18777 -14904 -9878 -4900 3233 12652 25203

5.8 During negotiations, Government agreed to take all necessary measures to increase,annually, the tariff of water, except for water for market gardening, starting January 1, 1996, so asto allow SONES to achieve a targeted financial equilibrium in the water supply sub-sector byDecember 31, 2003. (para. 8.1 (g)). The Govenmment furthermore agreed to, not later than October31 of each year, commencing October 31, 1996, review the updated financial projections, and ifnecessary, readjust the annual tariff increase, so as to permit the realization of the targetedfinancial equilibrium referred to. For the purposes of the preceding, the increase of water tariff, in1996 and 1997, shall be across the board to all tariff categories (para. 8.1(h)). In addition, theGovernment agreed to, not later than July 1, 1997, prepare and furnish to IDA: (a) a proposal on anew tariff structure for water, except for market gardening, to be implemented as of January 1,1998; (b) a proposal on a mechanism to apply the annual percentage increase of the water tariffdifferentially to the various tariff categories, excluding market gardening; and (c) subject toapproval from IDA, implement these proposals (para. 8.1 (i)). As a condition of crediteffectiveness, in a manner satisfactory to IDA, Government would have increased the tariff forwater by 3 percent in real terms, and applied the increase as of July 1, 1995, except for the marketgardening sub-sector(para. 8.3 (c)).

Cash Shortfall/Surplus, Rescheduling and Equity Capital

5.9 The financial projections as detailed in Annex 5-1 and 5-2 indicate that it will not be untilthe year 2000 that the sector will generate sufficient revenues which would cover operatingexpenses, increases in working capital requirements, debt service payments and a portion of capitalexpenditures. The investments of phase I would, by the year 2000, become operational andrevenues increase accordingly. Thereafter, between 2000 and 2003, the annual cashflow generatedby the sector will be positive and the sector's accumulated cash deficit will decline progressivelywhen, in 2002, the sector will start generating a net cumulative cash surplus. Further increases intariffs would not be necessary other than to cover inflation (para. 7.3). It is aso expected that theoperating and working ratios will decrease substantially when the cashflow becomes positive. Bythe end of the project (year 2000), the working ratio will be at an acceptable level (.57). Althoughthe operating ratio in the year 2000 is still high (.92), it is expected that by the year of equilibriumit will be within an acceptable range (.87). These ratios are included in the Water Sector

37

Monitoring Indicators (Annex 4-41. The assumptions used in the financial projections are detailedin Annex 5-2.

5.10 Before the year 2000, however, the accumulated cash shortfall in the sector is projected toincrease substantially until the year 1999 due to the low starting point for tariff levels and themagnitude of investments to be made between 1996 to 1998. The evolution of the annual andcumulative cash shortfall is shown in the following table.

Table 5.3. Evolution in Annual and Cumulative Cash Shortfall(interest charges of financing temporary cash shorifall not included)

(CFAF million)

Year 1995 196 1997 1996 1999 2000 2001 2002 2003 2004

Annual cash -647 -7549 -5943 716 4284 5901 5230 4077 5322 6113shortfallmVrplus

Cnuldativecash -3036 -10585 -16528 -15812 -11528 -5627 -397 3680 9002 15114shortfals/urplus

5.11 Given the current state of public finance, the financing of this shortfall by the Governmentis not possible. Twelve options were examined to raise the necessary amount of temporaryfinancing (Annex 5-3 and 5-4). Out of the options analyzed, four measures (commercial bankloans, rescheduling of existing sector debt, 55 percent of IDA and 50 percent of KfW financing asequity and sale of equipment to SdE) were retained as having a significant impact on the reductionin the temporary cash shortfall. The impact of the other three measures are shown in the tablebelow. The impact of the financing as equity is already reflected in the financial projections(Annex 5-1 and 5-2).

Table 5.4. Impact of Measures on Cumulative Cash Shortfall(CFAF million)

Year 1995 1996 1997 1998 1999 2000 2001 2002 2003

Cumulative cash shortfall/surplus -3,036 -10,585 -16,528 -15,812 -11,528 -5,627 -397 3,680 9,002

Partial reschedulingofexisting sector debt (interest and 1,120 2,103 2,954 3,673 4,267 4,342 4,331 4,290 2,722principal)Sale of equipment and ater assets to SDE 0 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Commercial bank loan drawing 0 7,202 13,660 13,583 9,974 6,3661 2,757 589 0

Interests on commercial bank loan 0 -720 -2,806 -3,445 -4,442 -5,079 -5,354 -5,413 -5,413

Cumulative cash dortfallsurplu afler measures -1,917 -0 0 -0 272 2,002 3,337 5,146 8,311

5.12 The loans by local commercial banks would be made to SONES. The correspondinginterest payments on the commercial bank loans being an additional charge to the sector, theequilibrium of the sector is reached one year later, i.e., in the year 2003 instead of 2002. Aninterest rate of 10 percent has been assumed for this purpose. The repayment of the loans could besupported through an irrevocable instruction by SONES to SdE to transfer a certain percentage ofthe revenues of the sector, after payment of the remuneration of SdE, to an escrow account heldwith an escrow agent. The funds in the escrow account would be secured in favor of the lending

38

banks. As a condition of credit effectiveness, SONES would have entered into agreements withcommercial banks, under terms and conditions acceptable to IDA, to provide a line of credit in anaggregrate amount equivalent to US$30.5 million, for the purpose of financing the temporary cashshortfall of the water supply sub-sector (para. 8.3 (f)). To closely monitor the changes in cashshortfall of SONES, a cashflow management system in the form of a monthly cashflow model willbe developed. During negotiations, Government agreed that SONES not later than June 30, 1996,establish a monthly cashflow model for the purpose of managing cash, acceptable to IDA (para.8.1 (c)).

5.13 The rescheduling of the sector's existing debt to the Government is justified on the groundsthat the amounts which would be rescheduled correspond to portions of existing donors' loans tothe Government of Senegal which have been canceled. The corresponding portion of the sectordebt to the Government would be rescheduled, and not canceled, in order to avoid any long-term,favorable treatment of the water sector relative to the other sectors of the economy, which wouldnot be acceptable as a matter of sound macroeconomic policy.

5.14 The impact of the on-lending of 55 percent of the IDA credit and 50% of the KfW loan inthe form of equity capital on the reduction of the temporary cash shortfall is US$12.33 million(CFAF 6,597 million). This corresponds to a subscription of equity capital of US$55.6 million(CFAF 29,749 million). The impact on the temporary cash shortfall is equal to the amount ofinterest which would have to be paid on the US$55.6 million (CFAF 29,749 million) of the IDAcredit and KfW loan which would be on-lent to the sector instead of provided in the form of equity.There is no impact of the principal repayment on the temporary cash shortfall since there is noprincipal repayment in the period. The sale of equipment and other assets to SdE is also part of themeasures needed to implement the reform of the water sector and the financing would be providedby the private operator.

5.15 Surcharge. An analysis was also carried out to determine how much of a surcharge eachyear would be required in order to reduce or eliminate the cash shortfall. The following tablepresents the results of this analysis.

Table 5.5. Alternative Tariff Surcharge to Eliminate Cash Shortfall

Cumulative Shortfall

1995 1996 1997 1998 1999 2000 2001 2002 2003

Shortfall -3,036 -10,585 -16,528 -15,812 -11,528 -5,627 -397 3,680 9,002

Surcharge 10% 10% 10% 10% 0% 0% 0% 0%

Revenue from 0 2,239 2,414 3,300 3,619 0 0 0 0surcharge I________

Cumulative 2,239 4,653 7,953 11,572 11,572 11,572 11,572 11,572revenue

New deficit -3,036 -8,346 -11,875 -7,859 44 5,945 11,175 15,252 20,574

If a surcharge of 10 percent in real terms for 4 years is implemented starting in 1996, the deficitcould be brought down to levels that are manageable and the year of equilibrium would be attainedin 1999. Considering however the current level of water tariffs, other measures discussed in thepreceding paragraphs are proposed (paras. 5.13 and 5.14).

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Financial Projection of SONES/Capital Structure of SdE

5.16 The following discussion of the capital structure of SONES is based on the financialprojections developed for the sector (Annex 5-1 and 5-2). The capital structure of SONES andthat of the water sector are virtually identical since all the capital investments of the sector will becarried on the balance sheet of SONES whereas the private operator will carry on its balance sheetonly the working capital of the sector.

5.17 As a result of the large investments in the proposed project, the non current portion of thelong term debt of SONES is projected to increase from US$68.0 million in 1995 (CFAF 36,366rnillion) to US$267.7 million in 1999 (CFAF 143,115). In 1999 it would therefore represent 84.5percent of long term capital. To mitigate the impact of this large increase, it is proposed that 55percent of the IDA credit and 50 percent of the KfW1 loan be passed on to the sector in the form ofequity capital instead of debt. The long-term debt would then represent 70.6 percent of long-termcapital, which is still high but is compatible with the debt service payment capacity of the sector asevidenced in the financial projections. During negotiations, Government agreed that (i) SONESwould not incur any long term debt without IDA's concurrence, unless its net revenues for the fiscalyear immediately preceding the date of such incurrence or for a latter twelve-month period endedprior to the date of such incurrence, whichever is the greater, shall be at least, for the year 1996,0.8, for the year 1997, 0.9, for the year 1998, 1.3, for the year 1999 and thereafter, 1.4 times itsestimated maximum debt service requirements for any succeeding fiscal year on all its debtincluding the debt to be incurred (para. 8.1 (e)); and, (ii), SONES would produce, for each of itsfiscal years, commencing from the fiscal year 1996, funds from internal sources or from any otherprivate commercial sources, equivalent to not less than 10 percent of SONES' annual averagecapital expenditures incurred, or expected to be incurred, for that year, the previous year and thethree next following fiscal years (para 8.1 (d)).

5.18 One of the objectives of the reform is to increase the efficiency of the sector. One indicatorof this efficiency will be the amount of fixed costs of SONES, and in particular the amount ofpersonnel expenses. The basis for 1996 was derived by applying 10 percent of the salary costs ofSONEES for 1993. During negotiations, Government agreed that SONES would maintain itsannual expenditures on personnel to an amount, in constant 1995 CFAF, equivalent to not morethan CFAF 500 million for the year 1996, CFAF 510 million for the year 1997, CFAF 520 millionfor the year 1998, CFAF 530 million for the year 1999, CFAF 540 million for the year 2000,CFAF 550 million for the year 2001, CFAF 560 million for the year 2002, and CFAF 570 millionfor the year 2003.(para. 8.1 (f)).

Capital Structure of SdE

5.19 The SdE does not carry any fixed assets other than equipment and vehicles on its books.Accordingly, it does not require a significant amount of long term capital either in the form of debtor equity capital other than to finance the net working capital requirements. On the basis of anextrapolation of the working capital requirements of the sector and projections of revenues, it isestimated that the net capital requirement of SdE would be approximately US$9.3 million (CFAF5,000 million) in the year 1997. Using a long-term debt/long-term capital ratio of 65 percent, thiswould require CFAF 1,650 million (US$3.1 million equivalent) million in the form of equitycapital or quasi-equity capital, such as subordinated debt. With the proposed long-term capitalstructure, the ratio of coverage of debt by net working capital will be 1.5:1 which is adequate. It

40

will be the responsibility of the private operator to raise whatever capital is necessary to financeoperations, either in the form of equity or debt (para. 4.36).

6. PROJECT IMPLEMENTATION

Implementing Agencies and Responsibilities

6.1 Within the Direction of Water Works and Sanitation (DHA) of the Ministry of Hydraulicsa Coordination Unit will monitor progress of the project in coordination with the implementingagencies. The manager of this unit will provide periodic reports monitoring the execution of thevarious components of the Project and will particularly focus on the level of fulfillment of theGovernment's commitments. He will be in charge of organizing the dialogue meetings andpreparing the donors' meeting on the Senegalese side, in particular for the evaluation procedure atthe end of each phase (para. 6.21).

6.2 SONES would manage the urban water production and supply components. The privateenterprise, SdE, would be contracted by the Government to assume technical and commercialmanagement of the urban water supply service. In order to implicate the private operator inreducing water leakages and to secure continuity in this effort, the SdE would finance andimplement renewal of the distribution network as part of its management-lease contract. The SdE,will also be closely associated for the preparation of tender documents, bid evaluation andsupervision of works for the rehabilitation of the distribution network (para. 4.35).

6.3 The Ministry of Hydraulics would manage the implementation of the institution buildingcomponents (strengthening the public holding company (SONES) and the newly established publicenterprise for urban sanitation (ONAS), and, capacity building of CSE and SGPRE). TheMinistry of Hydraulics would oversee the implementation of the urban sanitation components byONAS. Credit effectiveness will be subject to the establishment of ONAS and the Governmenthaving entered into an implementation agreement with ONAS with the purpose of managing theurban sanitation component (para. 8.3(d)).

6.4 During negotiations, the Government agreed to organize, jointly with SONES and ONAS,a Project Launch Workshop not later one month after the effectiveness date (para. 8.1 (n)). Crediteffectiveness will be subject to the adoption by Government of an implementation manual,satisfactory to IDA (para. 8.3(i)).

Implementation Schedule

6.5 The implementation schedule for the various components of the proposed project is shownin Annex 6-1 and 6-2. Implementation would extend over five-years, 1996-2000, divided in threedistinct phases of 2, 1.5 and 1.5 years, to ensure that new investment follows improvements insector management expected from the new private-public partnership. Each phase is complete initself and consists of a coherent set of components. Subject to completion of the investments andcompliance with the reform conditions of the previous phase, the following phase will beimplemented. Phase I will (i) formulate a national water resource management strategy; (ii)prepare a strategy for urban sanitation development; (iii) reduce water leakages and increase safedrinking water production capacity; and (iv) implement waste water reuse. Phase II will (i)

41

increase drinking water storage and optimize operations, (ii) increase access to safe drinking water,and (iii) implement rainwater sanitation for the St. Louis area. Phase III will increase access tosafe drinking water and implement sanitation for Rufisque. Bidding documents for large watersupply works (increase of production capacity and transmission mains) will be available end ofJune 1995. Advance contracting is proposed in order to begin works immediately upon crediteffectiveness (para. 4.49). Recommendations of the willingness to pay study (para. 4.31) will bethe basis for implementing the components low-income house connections and sewer connections(paras. 4.17 and 4.19). The project is expected to be completed by December 31, 2000.

Monitoring and Reporting

6.6 Key performance indicators would be used to monitor meeting financial and technicaltargets set for the project (paras. 5.18 and 5.19, Annex 6-3 and 8). During negotiations,Government agreed to ensure that the Ministry of Hydraulics, SONES and ONAS report quarterlyto IDA on the progress of each project component and on the evolution of monitoring indicators,and that SONES and Government would take all reasonable, remedial action (after discussion withIDA) needed for the proper execution of the project, efficient management of the institutions, or themeeting of set targets of performance (para. 8.1(k)). These reports would provide timely andupdated information on project implementation, highlight problem areas, recommend actions to betaken and comment on progress in resolving issues and adopting previous recommendations.Progress in the implementation of the project will be based on the indicators in Annex 6-4.

6.7 During negotiations, Government agreed that within six months following the closing dateof the credit, Mi-, SONES and ONAS will prepare and furnish to IDA a completion report on theexecution and initial operation of the project components, the cost of, and benefits derived or to bederived from, the project, the fulfilment by SONES and the Government of their obligations underthe Credit Agreement, and the project's success in accomplishing the project objectives (para.8.1(1)).

Procurement

6.8 Table 6.1 below summarizes the project elements by disbursement category, theirestimated costs, and proposed procurement methods. A Country Procurement Assessment Report(CPAR) was completed in July 1994. For this project, findings of the CPAR remain valid. Ingeneral, Senegal's procurement laws and regulations do not conflict with IDA Guidelines. Nospecial exemptions, permits, or licenses need to be specified in the Credit documents forInternational Competitive Bidding (ICB), since Senegal's procurement practices allow IDAprocedures to take precedence over any contrary provisions in local regulations. IDA-financedgoods and works will be procured in accordance with Bank's Guidelines for Procurement underIBRD Loans and IDA Credits (January 1995). National Competitive Bidding (NBC) advertisedlocally would be carried out in accordance with Senegal's procurement laws and regulations,provided that: (i) any bidders are given sufficient time to submit bids (three to four weeks); (ii)bid evaluation and bidder qualification are clearly specified in bidding documents; (iii) nopreference margin is granted to domestic manufacturers; (iv) eligible firms are not precluded fromparticipation; (v) award will be made to the lowest evaluated bidder; and (vi) prior to issuing thefirst call for bids, draft standard bidding documents are submitted to IDA and found acceptable.Annex 6-5 summarizes the project elements by disbursement category, estimated cost, andproposed procurement method. A list of contracts and estimated cost, to be financed out of theIDA credit is shown in Annex 6-6.

42

6.9 Civil works. IDA credit would finance 29.6 percent of the civil works program (orUS$68.8 million equivalent, net of duties and direct and indirect taxes). Contracts for treatmentplants for urban water supply and wastewater purification using performance specifications, andcontracts for works above US$500,000 equivalent, will be procured through ICB. For contractsestimated to cost less than US$500,000 equivalent, national competitive bidding (NCB) may beused, provided that the aggregate amount of such procurement does not exceed US$4.7 millionequivalent. Bidders for the treatment plants and civil works projects will be prequalified using IDAstandard documents and prior review procedures.

6.10 Goods. The IDA credit would finance 61.4 percent of the project's goods (or US$20.5million equivalent, net of duties and direct and indirect taxes). IDA-financed goods will beprocured through ICB except for goods that cannot be grouped into packages of at leastUS$100,000 equivalent which would be procured through NCB and adequate competition isexpected, provided that the aggregate amount of such procurement does not exceed US$0.3 millionequivalent. In accordance with the Bank's Guidelines, a preferential margin of 15 percent (or theapplicable customs duty, whichever is less), over c.i.f. prices of competing goods for all ICBprocurement would be given to domestically manufactured goods.

6.11 Consultant and other services. The IDA credit would finance 38.7 percent of services (orUS$8.7 million equivalent, net of duties and direct and indirect taxes). IDA-financed contracts willbe contracted in accordance with the Bank's Guidelines for the Use of Consultants (August 1981).

Table 6.1. Procurement Method(US$ Million)

Procurement Method

International National International Other N.B.F. TotalCompetitive Competitive Shopping

Bidding Bidding

Civil Works 73.5 4.5 - - 154.2 232.2(64.8) (4.0) (H) (68.8)

Goods and Equipment 19.8 1.0 - - 12.6 33.4(19.5) (1.0) () (20.5)

Studies, Capacity - - - 8.7 13.8 22.5building and Training (8.7) (--) (8.7)

- - 0.0 2.0 2.0PPF Refinancing (0.0) (2.0) ( (2.0)

93.4 5.4 0.0 10.7 180.6 290.1(84.3) (5.0) (0.0) (10.7) (100.0)

Note: Figures in parenthesis are the respective amounts financed by IDA and are net of duties and direct and indirect taxes.Numbers may not add up due to rounding

6.12 Contract Review. IDA-financed contracts for works and goods (above US$500,000equivalent for works and US$100,000 equivalent for goods) would be subject to IDA's priorreview procedures. For consultants services, prior IDA review would not apply to contracts withfirms selected from a short-list estimated to cost less than US$100,000 equivalent and US$50,000for individual consultants, but would apply to the terms of reference for such contracts, single-

43

source hiring of firms, assignments of a critical nature (as determined by IDA), and amendments tocontracts that raise their value to more than US$100,000 or US$50,000, respectively. The reviewprocess would therefore cover approximately 55 percent of the number of contracts and 95 percentof the value contracted. On that basis, approximately 34 contracts or eight contracts per year(amounting to about US$95 million equivalent) would be subject to prior review which requires areasonable individual workload for the task manager. The number of contracts is limnited to 19 forworks and 15 for goods. Random checking of smaller contracts subject to post review would becarried out in the field during supervision mission and/or by a procurement officer at the ResidentMission. Bank's SBDs and Standard Prequalification Documents will be used under ICB. Draftstandard bidding documents for NCB would be reviewed by and agreed upon with IDA. Contractsfor goods and services financed under parallel cofinancing arrangements would be awarded inaccordance with the cofinancier's procurement regulations.

Disbursement

6.13 The proposed credit of US$100 million would be disbursed against the cost of the projectas follows:

Table 6.2. Allocation and Disbursement of IDA Credit

Amount of Percent of ExpenditureDisbunement category Credit to be financed

(USS mllnion)

1. Civil works(a) under pat B of the project 64.10 90%(b) under part C of the project 0.20 90%

2. Goods and equipment(a) under part A ofthe project 0.20 100%(b) underpart B of the project 12.10 100% of foreign; 90% of

local(c) under part C of the project 6.70 100% of foreign; 90% of

local3. Consultant's Services

(a)underpartAoftheproject 5.60 100%(b) under part B of the project 0.90 100%(c) under part C ofthe project 1.70 100%

4. PPF refmnancing 2.0 100%

5. Unallocated 6.5

TOTAL 100.0

Note: Figures in parenthesis are the respective amounts financed by iDA and are net of duties anddirect and indirect taxes.

Specific disbursement conditions would assure that the project components were fully funded (byIDA, Government and, or other cofinanciers) before contracts were awarded. The table belowgives the estimated schedule of disbursements for the IDA Credit. The closing date of the creditwould be June 30, 2001. The estimated disbursement schedule for the proposed IDA credit isshown in Annex 6-7. It is faster than the profile for Bank/IDA-financed water projects in Africaand in Senegal, which reflects the advanced preparation and action taken to expedite procurementin anticipation of the IDA credit as well as the implementation arrangements that have been made.It is understood that the percentages in Table 6.2 have been calculated on the basis of the

44

provisions 309 and 1091 of the law 92-40 of July 9, 1992 of the Govermnent of Senegal, whichexempt the goods and works to be financed from taxes and customs duties levied by theGovernment of Senegal. If any change is made to this Law which has the effect of levying taxes orcustoms duties on such goods or works, the percentages referred to above shall be decreased inaccordance with the provisions of Section 5.08 of the General Conditions.

Table 6.3. Estimated IDA Disbursements by Semester(in US$ million)

Bank FY and Dixrsedr semester Cumuladve %Semester pe Disbursements

Phase I Phase 2 Phase 3

1996Ist sernester 2.0 - 2.0 22nd semester 15.5 - 17.7 17

1997Ist semester 15.5 - 33.0 332nd semester 16 - 49.0 49

1998Ist semester 16 - 65.0 652nd semester - 8.0 73.0 73

1999Ist semester 8.0 - 81.0 812nd semester 4.1 1.7 86.8 86

2000Ist senester 4.1*' 1.7 92.6 922nd semester 3.8 96.4 96

2001lst semeter - 3.6 100 100

'Costs are net of duties, direc and indirec taxes.*Payment for works completed during Phse H.

Special Account

6.14 To facilitate implementation of the project, Govermnent would establish a special accountat a commercial bank in Senegal on terns and conditions satisfactory to IDA. Since the contractsfor civil works and the supply of naterials and equipment will be large, payment for these can bemade through direct payment, thus reducing overall need for a Special Account for studies,capacity building, and training components. Therefore, the authorized allocation to the accountwould be the equivalent in CFAF of US$1,000,000. Upon effectiveness, IDA woiild advance halfof this authorized allocation and would release the balance when the cumulative disbursementunder the category of equipment and capacity building studies reaches US$1,500,000. The SpecialAccount would be replenished monthly with all replenishment requests being fully documented(except for contracts less than US$500,000 equivalent for works, US$100,000 equivalent forgoods, and other expenditure, which may be claimed on the basis of statements of expenditures orSOEs). Documentation supporting Statements of Expenditure would be retained by the Ministry ofHydraulics and SONES and be mnade available to IDA supervision missions and external auditorsfor review.

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Accounting, Auditing and Insurance

6.15 During negotiations, Government agreed to ensure that SONES and ONAS prepare theirfinancial statements in accordance with International Accounting Standards, have their accountsaudited in accordance with Internationi Auditing Standards by independent auditors acceptable toIDA, and SONES and ONAS submit their audited accounts to IDA within six months after theclose of its fiscal year (para. 8.1 (j)). Furthermore, during negotiations, Government agreed thatSONES furnishes the audit report for 1994 of SONEES to IDA before July 31, 1995 (para.8.1(b)). The audit report will include separate opinions on the project's financial statements, thestatement of expenditures, and the IDA Special Account. Separate statements on the adequacy ofSONES' accounting system, internal controls, and compliance with financial covenants will beprovided to IDA. Credit effectiveness will be subject to the appointment of an external auditor onthe basis of a multi-year contract for the purpose of carrying out auditing of the instituionalcapacity building, urban water supply, and, urban sanitation parts of the project (para. 8.3(g)).

6.16 During negotiations, Government agreed to ensure that SONES and ONAS furnish forIDA's review and comment their annual capital and operating budgets (para. 8.1 (m)).

6.17 SONES wili carry insurance covering the risks of public utility institution. SONES willalso cause SdE to insure all fixed assets.

Supervision

6.18 Taking into account the complexity of the project, in particular the institution capacitybuilding and cofinancing, clos.e supervision will be required (see Annex 6-8). Supervisionmissions should occur at least twice a year, preferably in conjunction with participatingcofinanciers. In addition to nonnal supervision activities related to the physical implementation ofthe project and to procurement, monitoring indicators and compliance with covenants would befollowed closely. Corrective measures must be agreed upon and implemented immediately, shoulda new buildup of arrears occur, or in case of non-compliance.

6.19 During negotiations, Government agreed to organize not later than December 31, 1997,June 30, 1999, and, December 31, 2000, a comprehensive project review involving MH, SONES,SdE, ONAS and related donors (para. 8.1 (o)). It would review the status of the entire project indetail. During these reviews, particular attention would be paid to compliance with covenants,progress in implementation and institution capacity building, and the status of the environmentalmitigation plan. These reviews could lead to corrective measures and possibly to modifications inthe scope of the proposed project.

7. PROJECT JUSTIFICATION AND RISKS

7.1 Water is a scarce resource in Senegal. An adequate quantity of safe water is basic tohealth, poverty alleviation and productivity. The supply of water to the Dakar region, whichgenerates more than 50 percent of Senegal's GNP and its allocation would be made more efficientthrough the proposed project. It would promote conservation and reduce waste. The proposedproject covers a part of the urban water supply sector investment program from 1996 to 2000. Itaims at keeping unsatisfied demand in the Dakar region within manageable limits, pending the

46

completion of the long-term Dakar water provision project. IDA has endorsed the project's basicassumptions about water use and demand forecast as well as the design for the proposed systems.All sub-components represent least-cost solutions based on discount rates of 10 and 12 percent.

Institutional Capacity Building

7.2 Establishing a public holding company (SONES) and a private operating company (SdE)would strengthen the sector's institutional capacity to implement an ambitious investment program,establish the financial viability of the sector, and improve the quality of service. Establishing apublic company (ONAS) to manage the existing infrastructure in urban sanitation and to developthe urban and peri-urban sanitation sub-sector, is a measure to reduce the development lag of thissector vis-a-vis the water supply sector. The project includes components to strengthen thesenewly established institutions. The project also includes subprojects to provide technical assistanceto the Ministry of Hydraulics, and strengthen the capacity of CSE and SGPRE in water resourcemanagement.

Poverty Alleviation and Health

7.3 The proposed project is a poverty-focused intervention, geared to improving accessibilityof safe drinking water to those who do not have it, and sanitation in targeted poor fringe areas ofGreater Dakar based on conclusions of willingness-to-pay and affordability studies to be carriedout during project preparation (para. 4.31). It is estimated that the project will provide, for the firsttime, a safe water supply to approximately 460,000 inhabitants.

7.4 When provided with house connections low-income families consume an average of 6cubic meters of water per month. At the social (subsidized) tariff of US$0.28 (CFAF 152.19) percubic meter they would pay US$0.78 (CFAF 419) per month less than people drawing water atprivatized public standpipes, where 20 liters cost about US$0.01 (CFAF4.5). The socialconsumption limit of 10 cubic meters per month, would cost just 4 percent of the poverty income(assumed to be US$200 per capita per year in urban areas) making water highly affordable andleaving room for future tariff increases (Annex 4-3). As the flourishing trade of water vendors whoget triple or higher the official prices - demonstrates, people are willing to pay higher prices for aregular, safe and in-yard water supply.

7.5 In addition, the project's construction activities would create about 15,000 man-years oftemporary employment.

7.6 Dakar's overall population would benefit from the project in varying degrees. The urbanpopulation in the Dakar region (estimated at 1.8 million) would benefit from reduction of the waterdeficit, while more equitable distribution will relieve the hardship on the poor, particularly inperiurban areas. Although men and women would equally benefit from improved water supplyservice levels, the women in the Dakar region, who traditionally obtain water from distantstandpipes for their families, would realize substantial savings in time due to improved access. Theproposed project would lay the ground work for next operation (long-term solution for the Dakarwater supply), which would bring additional water from the Senegal River and increase Dakar'sdrinking water production capacity, which, in turn, would eliminate the deficit and conveysufficient water to the area to satisfy the total demand until the year 2020. The Rufisquepopulation (estimated at 150,000) would benefit from the improved sanitary conditions that resultfrom the Rufisque sanitation project. In addition, sewerage master plans would be prepared for 19

47

urban secondary centers, recently provided with piped water, with the aim of improving sanitationservices to about 735,000 people (para. 4.18).

Financial and Economic Justification

Financial analysis

7.7 Financially, the proposed water sector project is sound. Tariffs would be set and annuallyadjusted to a level that would, by the end of the year 2003 bring about financial equilibrium in thesector. The project would put no additional burden on the national treasury and would enhancefinancial discipline for the sector in general.

7.8 The financial internal rate of return (FIRR) of the water supply project is 6.2 percent. Themodest rate of return is due in part to the fact that tariffs are currently below the full-cost recoverylevel. The analysis assumes that tariffs will be increased gradually over the next eight years so asto ensure financial equilibrium for the sector in the year 2003, i.e. cumulative cashflow equal tozero or positive (para. 5.4). A sensitivity analysis was conducted assuming increased investmentcosts of the project without further tariff increases. As the table below demonstrates, although theFIRR is not at all sensitive, the year when the sector achieves equilibrium is. The peak cashshortfall is also notably affected by an increase in costs.

Table 7.1. Sensitivity analysis of investment costs

Percent of Increase FIRR Year of equilibrium Peak Cash ShortfallCFAF Million

10% 5.3% 2004 26.9 in 199815% 4.9% 2005 32.5 in 199820% 4.5% 2006 38.1 in 1998

Economic analysis

7.9 The economic internal rate of return EIRR of the water supply project as a whole is 14.1percent. The EIRR of the investments in production capacity alone is 17.0 percent. For the purposeof the economic evaluation, financial costs were adjusted downward to eliminate income taxes,interest, and the depreciation allowance. The exchange rate was assumed to be in equilibrium as aresult of the 1994 devaluation. Incremental revenues from the sale of water were taken as a proxyfor direct use benefits. In addition consumer surplus due to the increase in the volume of waterconsumed was estimated based on an assumed price elasticity of -.2. Sensitivity analyses assumingincreases of 10 percent and 15 percent in operating and/or investment costs resulted in an EIRR of11.8 to 13.8 percent for the project as a whole. (Annex 7-1). In addition to the quantified benefitsincluded in the economic analysis, there are a number of non-quantified benefits which, if theycould be included in the analysis, would further increase the EIRR. These include the income effectof lower water prices as a result of the installation of 34,000 new low-income house connectionsand 400 public standpipes. Many of the consumers who will benefit from these componentscurrently buy water for cooking and drinking from vendors at prices which are estimated to be atleast three times higher than the unit cost of piped water. Savings in the time and/or investment andmaintenance costs associated with other alternative sources of water to meet bathing and cleaningneeds will also contribute to the income effect. Finally, although some of the direct health benefits

48

to household members are probably taken into account in the price paid for water services, theindirect benefits accruing to other members of the community are not, and thus represent additionalbenefits.

7.10 At CFAF 550 per cubic meter, the average incremental cost (AIC) of water sold issubstantially higher than the projected average tariff for 1996 (CFAF 343). However, it is lowerthan the tariff paid by the largest consumers (CFAF 565). Annual real increases of 2.4 percentfrom 1997 -2003 would result in an average tariff which is about 74 percent of the AIC by the year2003. By that time, the tariff for the largest consumers could be substantially higher than the AIC,depending on how the increases are distributed among the tariff blocks. Initially, the planned tariffincreases will be applied across the board to all user groups. Demand studies to be conductedduring the next two years will determine how tariff increases should be distributed among usergroups in the future to improve financial and economic performance (para. 5.5). In addition toraising tariffs, the government is committed to several other actions which will greatly improve thefinancial and economic viability of the sector over the next ten years. These include the reductionof unnecessary water consumption and waste in public facilities, the elimination of potable wateruse in the market garden sector, and educational programs to sensitize the public to the economicvalue of water (paras. 3.28 and 4.11) .

Environmental and Health Impact

7.11 The proposed Water Sector Project is category B. A detailed environmental analysisshowed that the project would affect positively the environment, particularly in the area of publichealth. The environmental impact assessment study was carried out in August 1990, updated in1995, and has been made available to the public and to all parties concerned. While the proposedproject would use some of Senegal's groundwater resources, the overall reserves are comparablyabundant, despite the low recharge rates. The most easily accessible sources near urban areas areoverexploited, whereas the remote or less accessible aquifers are still underutilized. The long termwater supply solution for Dakar will likely be based on surface water from Senegal river. Themost feasible solution is to allow overpumping of accessible groundwater reservoirs, until thesurface water sources are fully developed. Every effort is, therefore, required to reduce thisoverpumping as soon as possible.

7.12 The main enviromnental concern is the imnpact of the over-exploitation of the littoralaquifers, which could lead to salt water intrusion and deprivation of the traditional shallow wellsfor 12 villages. Key questions include: how much will the saline front move every year, how muchwill the groundwater level drop in the affected areas, and what will the mitigation measures tominimize the negative consequences be. These questions have been addressed in the groundwaterstudy, which has served as a basis for the environmental impact assessment. The environmentalmitigation plan (Annex 7-2) includes the preparation by SGPRE of a special groundwater controlprogram to monitor saline water movements and the ground water level in the influence areas.Moreover, the plan includes the following measures: (a) terminate the overexploitation from theLittoral Nord aquifer not later than the year 2005, and, within the framework of the long-termwater supply solution for Dakar, bring in additional sources of water to recharge the depletedaquifers at that time; (b) intensify the groundwater monitoring performance, including groundwaterflow and water quality; (c) in order to safeguard the underground watertable, cap the production ofthe Littoral Nord and Pout/Sebikotane according to the conclusions of the "Environmental ImpactStudy", and avoid all under-use of the Ngnith treatment station; and (d) anticipate the possibility of

49

linking the villagers affected by groundwater depletion to the new piped water supply systemCredit effectiveness will be subject to the adoption by Government of the environmental mitiationplan, satisfactory to IDA (para. 8.3 (i)).

7.13 The environmental problems that may occur during the construction period can beminimized through careful management of men and materials, especially waste materials.Recommended measures are included in the environmental mitigation plan (Annex 7-2). Theincreased amounts of sewage in the Dakar sewerage system as result of this project will be treatedat the existing Camberene treatment plant, which has the necessary spare capacity to meet the extrainput (para. 4.18). Additionally, decentralized small-scale municipal wastewater treatment plantswill be built for wastewater reuse for irrigation. In the secondary urban centres it is important tocoordinate water supply and waste and wastewater disposal measures. The Water Sector Projectincludes sewerage master plans for 19 centers recently supplied with water. It also includes effortsto inform inhabitants about problems involved in wastewater disposal and the need to maintain andkeep clean engineering structures designed for waste, wastewater and drainage purposes.

Risks

7.14 There are four primary risks: (a) at the institutional level, it is uncertain that: SONESwill assume responsibilities from SONEES in an effective and timely manner. To address this risk,capacity building for SONES would include: (i) water sector planning and development; (ii)project management and implementation; (iii) selection of appropriate water supply and sanitationtechnologies; and (iv) performance monitoring, including maintenance audits; (b) at the financiallevel: whether the objective of sector equilibrium in 2003 will be met within the establishedtimeframe given the country's precarious economic and fiscal situation remains questionable. Toaddress this risk, (i) a politically and socially sustainable tariff policy would be applied to achievesector financial equilibrium by the year 2003, and key performance indicators would be usedduring project supervison, with clear targets; and (c) at the private sector level: whether there willbe a sufficient interest, given the complexity of the Dakar situation and the introduction of renewalof the distribution network as part of the affermage contract. To address this risk, several upfrontactions are taken before negotiations, namely: the creation of SONES, the information workshopfor the prequalified firms. In addition, as a condition of effectiveness, Government would enterinto an affermage contract satisfactory to IDA, with the private operator; (d) at the privateoperator level: whether the lowest bid will be sufficiently low to allow for financial viability of thewater sector at a tariff level acceptable to the Senegalese authorities. This issue has beenaddressed through a series of measures aimed at decreasing the risks incurred by the professionaloperator. Such measures include (i) the capacity building program devised for SONES (see (a)above), (ii) the actions adopted in order to ensure sufficient interest from different privatecompanies (see (b) above) and (iii) measures, described under paras. 4.37-4.41, aimed atminimizing the risks of non-payment or late payment of water bills by Government.

International Implications

7.15 The water resources to be used in the Water Sector Project to increase Dakar-area waterproduction would be drawn almost exclusively from aquifers within Senegal, with the exception ofsurface water from the Lac de Guiers, which would pass the existing water treatment plant. Theamount of the water abstracted from the Senegal River for this purpose will be small,approximately 0.05 percent of the average river flow at Richard Toll, the junction of the river andcanal feeding the Lac de Guiers. This amount is well within Senegal's existing rights under

50

OMVS agreements. Even though the portion of total water resources needed for municipal watersupply is comparably small, necessary steps have been taken under the SWSP to prepare a nationalwater resource management strategy, to ensure that future water allocations are harmonized withother national and international water interests.

8. AGREEMENTS REACHED AND RECOMMENDATION

8.1 During negotiations, Government agreed to the following:

(a) the proposed onlending IBRD terms (para. 4.47);

(b) to ensure that SONES furnishes the audit report for 1994 of SONEES to IDAbefore July 31, 1995 (para. 6.15);

(c) to ensure that SONES not later than June 30, 1996, establish a monthly cashflowmodel for the purpose of managing cash, acceptable to IDA (para. 5.12);

(d) to confirm that, unless agreed by IDA, SONES would produce, for each of itsfiscal years, commencing from the fiscal year 1996, funds from internal sourcesor from any other private commercial sources, equivalent to not less than 10percent of SONES' annual average capital expenditures incurred, or expected tobe incurred, for that year, the previous fiscal year, and the three next followingfiscal years (para. 5.17);

(e) to ensure that SONES would not incur any debt, unless the next revenues ofSONES for the fiscal year immediately preceding the date of such incurrence orfor a later twelve-month period ended prior to the date of such incurrence,whichever is the greater, shall be, for the year 1996, at least 0.8, for the year 1997,at least 0.9, for the year 1998, at least 1.3, and for the year 1999 and thereafter, atleast 1.4 times, the estimated maximum debt service requirements of SONES forany succeeding fiscal year on all debt of SONES, including the debt to be incurred(para. 5.17);

(f) to ensure that SONES would maintain its annual expenditures on personnel to anamount in constant 1995, equivalent to not more than CFAF 500 million for theyear 1996, CFAF 510 million for the year 1997, CFAF 520 million for the year1998, CFAF 530 million for the year 1999, CFAF 540 million for the year 2000,CFAF 550 million for the year 2001, CFAF 560 million for the year 2002 andCFAF 570 million for the year 2003 (para. 5.18);

(g) to take all necessary measures to increase, annually, the tariff of water, except forwater for market gardening, starting January 1, 1996, so as to allow SONES toachieve a targeted financial equilibrium in the water supply sub-sector byDecember 31, 2003. (para. 5.8);

(h) not later than October 31 of each year, commencing October 31, 1996, review theupdated financial projections, and if necessary, readjust the annual tariff increase,

51

so as to permit the realization of the targeted financial equilibrium referred to inpara. 8.1 (g) above. For the purposes of the preceding, the increase of water tariff,in 1996 and 1997, shall be across the board to all tariff categories (para. 5.8);

(i) not later than July 1, 1997, prepare and furnish to IDA: (a) a proposal on a newtariff structure for water, except for market gardening, to be implemented as ofJanuary 1, 1998; (b) a proposal on a mechanism to apply the annual percentageincrease of the water tariff differentially to the various tariff categories, excludingmarket gardening; and (c) subject to approval from IDA, implement theseproposals (para. 5.8);

(j) to ensure that SONES and ONAS prepare their financial statements in accordancewith international accounting standards, have their accounts audited in accordancewith international auditing standards by independent auditors acceptable to IDA,and SONES and ONAS submit their certified copies of their financial statementsand audited accounts to IDA within six months after the close of its fiscal year(para. 6.15);

(k) to ensure that the Ministry of Hydraulics, SONES and ONAS report quarterly toIDA on the progress of each project component and on the evolution of specifiedmonitoring indicators, and that SONES and Government would take allreasonable, remedial action (after discussion with IDA) needed for the properexecution of the project, efficient management of the institutions, or the meeting ofset targets of performance (para.6.6);

(I) to ensure that the Ministry of Hydraulics, SONES and ONAS prepare and fumishto IDA not later than six months after the closing date or such later date as may beagreed for this purpose between Government and IDA, a completion report on theexecution and initial operation of the project components, the cost of, and benefitsderived or to be derived from, the project, the fulfillment by SONES, ONAS andthe Government of their obligations under the Credit Agreement, and the project'ssuccess in accomplishing the project objectives (para. 6.7);

(m) to ensure that SONES and ONAS furnish for IDA's review and comment, theirannual capital and operating budgets (para. 6.16);

(n) to organize, jointly with SONES and ONAS, a Project Launch Workshop not laterone month after the effectiveness date (para. 6.4);

(o) to organize not later than December 31, 1997, June 30, 1999, and December 31,2000, a comprehensive project review involving the Ministry of Hydraulics,SONES, SdE, ONAS and related donors (para. 6.19).

8.2 As a condition of Board presentation, Government submitted to IDA the signed letter ofSector Policy, satisfactory to IDA (para. 3.29).

52

8.3 Effectiveness of this Credit will be subject to the following conditions:

(a) the Subsidiary Loan Agreement has been executed on behalf of Government andSONES (para. 4.46);

(b) the establishment of SdE, under the terms and conditions acceptable to IDA, andthe Government having entered into the affermage contract with SdE and theconcession contract with SONES, both under the ternns and conditions satisfactoryto IDA (paras.4.36 and 5.19);

(c) Government having increased the tariff for water by 3 percent in real terns andapplied the increase as of July 1, 1995, except for the market gardening sub-sector(para. 5.8);

(d) the establishment of ONAS and the entering into the Implementation Agreementfor purpose of managing the urban sanitation component (para. 6.3);

(e) the adoption of the Environmental Mitigation Plan, satisfactory to IDA (para.7.12);

(f) SONES having entered into agreements with commercial banks, under terms andconditions acceptable to IDA, to provide a line of credit in an aggregate amountequivalent to US$30.5 million, to finance the temporary cash shortfall of the watersupply subsector (para. 5.14);

(g) the appointment of an external auditor on the basis of a multi-year contract for thepurpose of carrying out auditing of the institutional capacity building, urban watersupply, and, urban sanitation parts of the Project (para. 5.17);

(h) Cofinancing agreements having been executed on behalf of Government andcofinanciers, and all conditions of effectiveness and initial disbursement of fundsthereunder (except the effectiveness of IDA's agreement) having been satisfied(para. 4.45); and

(i) the adoption by Government of an implementation manual, satisfactory to IDA(para. 6.4).

8.4 Subject to the above terms and conditions, the proposed project is suitable for an IDAcredit of SDR 63.5 million. (US$100 million equivalent) on standard IDA terms.

53 Annex 1-1Page 1 of I

SENEGAL


Monthly average rainfall in Senegal (1947-1989)

250-

E 200 -E

150 -

Z% 100

o 50

0-Jan Mar May Jul Sep Nov

Water Allocation Distribution from The Senegal RiverCanal du Cayor (Dakar

WS)

Canal du Cayor ;%(irrigation and recharge) Rive Gauche (PDRG)

5% 34%

Unallocated30%

Sugar Company (CSS)3%TownshipWS3/

0% Vallee Fossile (MEAVF)23%

The figure shows the distribution of the total quota of water from the Senegal river allocated to Senegal,over the major projects using Senegal river water. On average, there is a significant part (29 percent)unallocated. However, this should be interpreted with caution, taking into account that (i) these areaverage figures; (ii) significant seasonal variations in demand and availability may occur; and, (iii)environmental "demands" must also be considered.

54 Annex 2-1Page I of I

SENEGAL


Water Resource Management strategyInstitutional Framework

Conseil Superieurde I'Eau (CSE)

Cornit6 deI'Eau (CTE)

SONEESMinistere charge de MEASI'hydraulique (MH) MEAVF

-SGPRE | L'organisation pour la- DHA r.n} mise en valeur- DEM R } du Fleuve Senegal (OMVS)

Ministere charge deRI'agriculture UPA

Ministere charge DP L'organisation pour la

mise en valeur-CAB du Fleuve Garnbie (OMVG)

Minist&e charge de -Direction de 1'environnementI'environnernent - CONSERE

NEAPMfinist&re charge

de la sante publique Direction de la Sante Publique

Ministere charge de - Direction de l'IndustrieI'energie et de l'industrie Direction de l'Energie

Ministere de l'Interieur Direction des collectivites locales

year 1 1993 1994 1995 1996 1997 1998 1999 2000population Dakar region inh 1890000 1961820 2036369 2113751 2194074 2277449 2363992 2453823 (a)

number of BP - Dakar 121522 129414 135414 141414 149414 157414 165414 173414 (b)population served (@ 10 inh/BP) inh 1215220 1294140 1354140 1414140 1494140 1574140 1654140 1734140 (1)% of population served 64,3 66,0 66,5 66,9 68,1 69,1 70,0 70,7demand ( @ 110 lcd) m3/d 133674 142355 148955 155555 164355 173155 181955 190755 (2)

number of BF - Dakar 895 928 940 1040 1140 1240 1340 1340 (c)population served (@ 300 inh/BF) inh 268500 278400 282000 312000 342000 372000 402000 402000 (3)% of population served 14,2 14,2 13,8 14,8 15,6 16,3 17,0 16,4demand (@ 20 lcd) m3/d 5370 5568 5640 6240 6840 7440 8040 8040 (4)

total population served (BP + BF) inh 1483720 1572540 1636140 1726140 1836140 1946140 2056140 2136140 (5)=(1)+(3)% of population served 78,5 80,2 80,3 81,7 83,7 85,5 87,0 87,1total demand (population served) m3/d 139044 147923 154595 161795 171195 180595 189995 198795 (6)=(2)+(4)average per inhabitant served lcd 94 94 94 94 93 93 92 93

demand of population not served (@ 8 lcd) m3/d 3250 3114 3202 3101 2863 2650 2463 2541 (d) (7)IC & AS m3/d 53470 59156 60000 60000 60000 50000 50000 50000 (e) (8)total demand (Dakar region) m3/d 195764 210194 217797 224896 234059 233246 242458 251337 (9)=(6)+(7)+(8) I'

volume supplied to Dakar region m3/d 17-5027 175027 175027 175027 175027 233827 233827 233827 (10) 0)gain of phasing out market gardening m3/d 0 0 0 1500 6000 10000 10000 10000 (f) (11) Oefficiency of distribution network 73 73 73 74 77 80 83 85 (12) 0volume available for distribution m3/d 127770 127770 127770 129520 134771 187062 194077 198753 (13)=[(10)+(1 I) *(12)

average hours of service per day h 16 15 14 14 14 19 19 19 (g) raverage consumption per inhabitant led 86 81 78 75 73 96 94 93 CDcurrent deficit (actual served) m3/d 67994 82424 90027 95376 99288 46184 48381 52584 (14)=(9)-(13)

total theoretical demand (Dakar region) m3/d 223880 230487 237346 244465 251855 259525 267487 275752 (h) (15) Hdeficit (100% served) m3/d 96110 102717 109576 114945 117084 72463 73410 76998 (I16)=(15)-(13)

0Q

(a) estimates of population in the Dakar region, based on an annual growth of 3.8%;(b) number of house connections; the project comprises a program of 34,000 low-income house connections, to be installed from 1996 to 2000; new connections following network extensions are

estimated at 1000 per year,(c) the project comprises a program of 400 public standpipes to be installed between 1996 and 1999;(d) the demand of population not having direct access to piped water supply is estimated at 8 liters per capita per day;(e) demand of IC & AS (Industry, Commerce, Government Agencies) is estimated at 50,000 cubic meters per day, after a voluntary effort by Government to reduce in-house leakages in public

buildings, with results noticeable as from 1998 (cf. water sector action plan);(f) net results of irrigation action plan; eD(g) average hours of service per day; some areas have a 24 hours of service, whereas other areas have less than 10 hours of service; x(h) total theoretical demand is calculated on the basis of 1 00% of population served (80% with house connection and 20% with public stanpipe) plus 50,000 cubic meters per day IC & AS. ,'t

56 Annex 3-1Page 1 of 2

SENEGAL


SONEES Balance sheet (1990-1993)

SONEESBILAN 1990 1991 1992 1993(CFAF Millions)

FRAIS at VALEURS INCORPORELSValeurs brutes 1,368 1,351 1,395 1,404Moins-amortlsseaments cumul6s 593 826 1,065 1,302

TOTAL 776 525 330 102

IMMOBILISATIONS CORPORELLESValeurs brutes 67,344 72,189 75,524 80,573Moins-amortissements cumules 15,283 18,716 22,847 27,200

TOTAL 52,061 53,473 52,677 53,373

Autres valeurs Immobilises -net 438 362 444 682

TOTAL ACTIF IMMOBILISE 53,274 54,359 53,452 54,157

Vakeurs D'exploitaton stocls- brutes 1,423 1,670 2,094 2,182Moins-amortissements cumules 118 96 30 47

TOTAL ,305 , ;574 2,064 2,i34

VALEURS REALISABLESAvances aux foumisseurs 131 202 138 189Clients 15.027 13,774 9,822 15,198Moins provision pour depr6ciatlon 1,956 2,937 677 669

13,072 10,837 9,145 14,529Personnel - net 368 310 357 206Etat 1,200 3,618 3,605 3,698DbRteurs divers-net 701 932 539 554Comptes de Regularisation- ActUf 213 178 249 359Banques et caisses 435 211 639 419

ACTIF CIRCULANT 17,425 17,862 16,736 22,088

TOTAL ACTIF |70,699 72,221 70,188 76,245PASSIFCAPITAUX PROPRESCapial social 3,928 3,928 3,928 3,928Reserve legale 135 141 146 161Report a nouveau 1,409 1,527 1,628 1,907Risufat de 1'exercice 124 107 294 644Provisions r6glement6es 3,253 3,652 6,476 4,472Biens de rEtat acquis a tRtre gratuit-net 28,202 26,925 21,700 20,332Subventions d'equipement-net 2,856 6,984 6,969 6,853Emprunts a long et moyen tbrmes 17,357 16,042 15,263 14,432Provisions pour pertes d charges 1 64 51 38

TOTAL CAPITAUX PERMANENTS 51,669 53,668 50,457 46,127

DETTES A COURT TERMEFoumisseurs 4,558 2,587 2,803 8,912Personnel 51 70 77 90Etat 1,321 996 934 1,396Taxes municipales 476 554 901 961Fonds gins 1,548 1,547 1,547 1,547Fonds de branchement 121 121 121 121Cr6diteurs divers 672 921 574 373Comptes de r6gularisatlon -passU 1,828 2,591 2,962 4,352Emprunts a court terms 1,767 2,064 2,636 4,023Effets a payer 137 577 540 642Banques 956 825 639 1,062

TOTAL DETTES A COURT TERME 13,435 12,852 13,734 23,478

TOTAL PASSIF 70,699 72,221 70,188 76,245

57 Annex 3-IPage 2 of 2

SONEESINCOME STATEMENTACTUAL(CFAF M,lIMon)

1Ql90 1991 1s92 19931REVENUSVans Eau 14077 14306 17132 16968Trax 205 196 169 435Aue revenues 1290 1829 1167 1091

REVEMNES dUtPLOITATION 16672 16129 1B456 16482

CHARGESMoUrn foumituns 1174 -1406 -1524 -1603EectnciM force morIoe -2340 -2653 -2393 -2956Oee @1 -653 407 -403 -499Prodlis chirmiques -289 -44O -381 -364Fre. do Persoe -3496 -3955 -4010 -4181Autrw srices consomme -2916 -2470 -2442 -2996Chag et pate d hese -178 -140 -223 -1445Impbts & tens -267 -443 -712 -607

CHARGES dELOITATION -1 1723 -12020 -12068 -14541Anxortssment -891 -3695 4480 -4637

CHARGES + AMORT -15814 -15915 -18o66 -19178

Cotaions aux Prosions -4317 -3823 -5495 -5158Repris s/Provsons 3940 2432 4611 6531PadtSubv. vire aufRfhsat 1815 1629 6832 1985Charges eeplonnelles -3598 -728 -7191 -1021Produbt cephonnels 3331 1583 1679 168

TOTAL CHARGES -14443 -14922 -17132 -1 673

RESULTAT AVANT INTERETS 1129 1207 1326 1809INTERETS

Inters de Emprunts -870 -90 -78s -724Autbs lntrts &Frais flranc. -134 -191 -137 -120

TOTAL INTERETS -1004 -1099 -922 -44RESULTAT AVANT IMPOTS 125 108 404 965Impots sies Soci ts I 1 110 321

tESULTATNET 1241 1071 2941

RATIOSWorkng rato: -0.75 -0.75 4.65 -0.79Openrt raio: 0.93 4.93 4.93 -0.90Dabt sevic coverg rato 1.33 1.34 1.53 1.27

SONEESTABLEAU DE FINANCEMENT DES EXERCICES(CFAF MlUonsj

1990 1991 1992 1993RESSOURCESRcuft de rexercice 124 107 294 644Proswn pour pa e charges -35 462 2,810 -2.016Amorimsant des Immobisallotsn 3,777 3,686 4,370 4,590Subvwntons dlqulpemert 1,801 4.128 -15 -115Empnas 6,512Bin de I Etl scquls tire grtit 28,202 -1,278 -5,225 -1,368Prions pour dipltlon oes tIles 37Avancs at acornptes sur commnides dlmmobitinations 74Remboursements de p ts crt c (long at moyan term*e) 48 76 .9 8

TOTAL RESSOURCES 40.216 7,181 2,225 1,743

EMPLOISAcquiio dflmmobUileons:Immobiasto corporallee-net 8,510 4,845 3,409 5,049Velours incorporelbe 1,252 -17 44 9

Aulre veur Imniobulds 22 780 245Renboumement crnb mp edeis (letong."mo trn) 39,393 1,314 831

TOTAL EMPLOIS 49,177 8,142 4.233 6,134

Variton du fonds de roulement 4,961 1,019 -2,008 -4,391


SENEGAL

WATER SECTOR PROJECTGRILLE TARIFAIRE DE LA SONEES POUR LES *VILLES ASSAINIES

TYPE DE ClIENTS = oropo..nl C Composnt. CoCopogol. onoom,I Soo-tolel TVA Stalsa. S-la.. TOTAL TTC

11t. PARTICULlERS0 A 20 m31bimestl 1989 105,06 10506 .35 2,41

1992 105,06 105 06 7.35 1.6 113,911994 136.58 136,58 1365 I 91, 152,

1 ,,wm.A-J, 94192 30,600____ _ _ 30.00 86.85 30.00 33.41Sti08 160 a rnlaion s. 1986 1 t51.59 36,30 131.87 319.06 22.38 2.56 344,64De 20 6 100 m3dbim. 1992 200.34 56.21 57.94 45,47 359.96 26519 1.50 2.60 389,15

1994 260,44 73,07 75,32 569.11 467,94 46.7 1.95 3.25 519,9S aupmamalior 94192 30.00 29,99 30.00 30.00 730.00 85.75 30.00 30.00 33.61• 10.31bimflwe 11986 151.59 36,30 179.77 367.56 2. 2.50,76 395,90• l00o3/1bi.eslm 1199 200.34 56.21 57,94 45.47 53.9 413.95 28.97 I.50 2,0 446.92

1994 260.44 73.07 75.32 59.11 70.19 536.13 53.81 1.96 3.2 597.1_ .ug7rn,nlio. 94/92 30.00 29.99 30.00 30.00 30.01 30.00 85.74 30.00 30,00 33.61

12. G.o. dial.uss_< X m3/bi-..l. 1969 151.59 36.30 131.87 319.76 22.38 2,50 344.64

199 200.34 5521 57.94 45.47 359.96 25.19 1.50 2.50| 389.11994 250.44 73.01 75,32 59.11 467.94 __46.79 1.95 3.25 519.93

gur,.o!Irwio 94/92 30,001 29,991 30.00 30.00 30.00 6.75 30.00 30.00 33,61>_X_,o3/bim,srol | 1989 151,59 36.30 179.77 367.66 25.74 2.50 395.90

11992 200,34 56.21 57.94 45,47 53.99 413.95 26897 1.50 2.50 446.921994 260.44 73,07 75.32 59. 1 70.19 538.13 53.81 1.95 3.25 r97.14

1Va ,llElion94192 30.00 29.99 30.00 30.00 30.01 30.00 85 74 30.00 30.00 33.61I13 I -lfibu l o 1989 161,.6 16156t 10,61 162 17i

eonecilw ' 99; ~~~~16 .5il7 ,t- O-,6156 1,5( 2,5( 1 66.1711994 197.07 197,071 19,71 1 95 .2-3,5 221,90

X*g"èm.nlAw 94,92p 30.03 30ao3 B5i 7-7 30.00 360.0 ~315J13. M rch_ I 1981 45,39 453 19 73. 18 _48.67

45 _39 10 45.39 3 . 38 1 0 t 50 07| 1994 9,01 69,01 69t 11.5 1 9, 1

X uomenlal/on 94292 30 01 30.00 85.53 30.00 33.53D218M3rel,mer 31989 64,4 30 125 4,6 6 260,92 5enlre3el 201 100 m31992 179.56 1 56,21 57.94 44,47339,18 23,6 4 1 152 7034 6

1994 233'43 73.07 1532 .1383 47 8038 .X entatlon 94192 30 30 01 3 30,01 85.72 3030 . 33060

l mnatioJl 9h/2 3109.0 _ ___30.01 85.3 3.0Muat rer hr 198 649 4 644 4.O_ _ 0,O

> 20DOGO m319i2 119921 2 359,1 64 2 4. 20 61 38911.114 26 4 732 07 73 59. 01 7 92 016,6

I X a ation94 on 94 3 0 0 29.99 30,00 30.0 30.00 8 30 70 32.72

L. dfa 71t j ,It.GRiLLE TARIFAIRE DE LA SONEES POUR LES "VILLES NON ASSAINIES'

TYPEDECLIENTS __Composonts Composante _Compootnt Compos?ente Economba Soug-tload TVA |Surta7xe I Surtaex TOTALTTC|

*?lplollant dette ~~~renouvallt robssanex d'eau hors taxses | y wd nunkipeb |I11 PARTICULIERSIII0 A20 m3lImestre 1989 105,0f 105,06 7,3S| l 12,41|

1992 105,06 10s.0e 7,351 1 501 113,9111994 136,58 136,58 13,661 1.95l 152,19

'au '-natt794'2 9 30.00 30.00 B S.B5 | 30.001 33.6tlDe7 296*1"80rn3him_1989 128,46 36,30 131,81 296,57 20,761 2.o0 319,83|

De 20aS100 mihime| 1992 179,56 56,21 57,94 45,_47 339,18 23,741 1,50| 2,sol 366.92li394 233,43 73,07 75,32 69,1 I < 440,93 44,095 1 95 3,251 490.221

|X@U9mentat;s719422 300,00 29,99 3,t 30.00 = 30,00 AmS8,72| 30,001 30,001 3350|= :10m1iestl |1989| 128,4E61 36,30 176,30 _ 341,06 23,871 2.501 367.431

|> 100 m3hhimestra |11992| 179,5f6_ 56,21 57,94 45,47 50,87 3900 2,30150 2.5 4213

1 119941 233,4.~ ~ 73,07 75,32 59,11 6614 507,07 60,711 1,95 3=,25 529

sxugrnentatioJn9419? 30,00 29,99 30.00 30.00 30,02 30.00 85.75| .0.001 30.001 3J,61.112. aFo. diambu@ss||< X m3toimestre |989| 128,46 36,30 131,81. 296,57 20.781 2.501 319,83

19 179,56 56,21 57,94 45,471 i339,1-8 23,741 1,SO 2,50l 366.92

| ~~~~~~~~1 1994 233,43 73,07 75,32 59,1 1 440,93 44,091 1,95[ 3,261 490.221% *ugmenlaflo7n94192 30ac0 29,99 30,00 30,00 3 0,00 85,72| 30.00r 30,001 i3,6-0

1> X m3tbimestre 119891 128,4f 36,30 176,30 341.06 23,871 2.50 367,431

1 1~~~~~~~~19921 179,56 56,21 57,94 45,47 50,87 390 05 27,30| 1,50| 2,50| 421,35|§ [~~~ ~~~~~1994 233,43 73,07 75,32 59,11 66,14 507,07 50,71 1,951 3.25 562.981

%aut7mentation 94192 30,00 29,99 30.00 30Q00 30,02 30,00 s 5,75| 30.001 30,00| 33:6,1I1 3 Dhtlstlo= 119891 12 8,46 1 2 8,46 a ,99 1 37,45i

icle 19921 128,46 J28,46 8 991 1,SO 2 sol 141.45|

1 | ~~~~~~~1994| 167,00 167,00 16,70| 1,95| 3251 188 90

|% ugmenfraio>n941-92 .30.00 30.00 85.76| 30.00 30,001 337,5513.Merce 1989| 45,39' 45,39 3,18| 48.57|<3 0010M3him 119921 45,39 45,39 3.181 1,60| 50,07

| ~~~~~~~1 19941 59,01 59,01 5,90l 1,95l 66,B61IX wgientation 94192 30,0t 30,0t B5.53 30.00T 33153Mbleetchers |1989| 64,4; 64,42 4,601 68,92|

enire 3 et 20 000 m3l 199 2 84,42 64,42 4 501 1.501 70.42

I | ~~~~~~~194 83,75 =83,75 8,38| 1,95| 94.081|X augmentation941/92 1 30.01 30.0t 86,22| 30,001 33.601

IMtrddrel4s 1189,00 II1 0.001

|>20 000 m3lm. |92 179,5 66,21 67,94 45,47 339,18 23,74, 1.50 2.501 366.92|19941 2334. 73,07 75,32 59,1 1 440,93 44,091 I.951 486,971

IXougmenttvtlon 4/92 | 30.00C 29,991 30,00 30,00 00 571 l.o lool 3,2

Le 2JJ"Xllet l0JC

59 Annex 4-1

Page 1 of 2SENEGAL


Institutional Reform of the sanitation subsector

Identification of a scenario for the reform

1. Background. The increase in water supply capacity as a result of the project, coupled with the factthat the institutional and financial framework of the sanitation subsector is far behind that of water supply,raises the issue of the future status of the sanitation subsector and makes sanitation issues even more urgent.During the preparation of the Water Sector Project, a study of the sanitation subsector was carried out. Thepurpose of this study was to propose institutional arrangements to assure both sustainable development andoperational profitability. Its findings were submitted to the Senegalese authorities in February 1995.

2. Proposed Institutional Arrangement. Given the underdevelopment of sanitation services, it was notfeasible to include them in the contract for private operation of water supply. The creation of a separateinstitutional arrangement for the sanitation subsector was deemed necessary to give it a higher profile andensure its development. The study recommended that, for the near term, its management and development beentrusted to an autonomous operating agency, and that steps be taken to ensure close coordination with thewater supply sector. The Government has decided to establish an Autonomous National Office of UrbanSanitation (ONAS) to be in place before the end of 1995. SONEES will transfer its current sanitationfunctions to ONAS when the water operating company is established. The water company will continue tobill consumers and collect sanitation fees, and will transfer them to ONAS. During an initial phase, ONASwill limit its efforts to urban and peri-urban areas. It will deal with individual as well as collectivesanitation, but its immediate duties will be to ensure the operation and upkeep of the collective sanitationstructures which are now managed by SONEES. Local communities would remain responsible for planning,construction and operation of drainage works and systems.

3. Implementing the reform. A follow-up study will propose (i) the legal framework and functionalrelationships between ONAS and the various stakeholders; (ii) its organization and staffing; (iii) conditionsfor ensuring financial equilibrium; (iv) options for making greater use of subcontracting; and (v) a high-priority action program to rehabilitate the existing networks and increase connections along with potentialsources of finance.

Strengthening the new institutional framework

4. Remaining challenges. The water sector project includes studies and investments for sewerage in19 cities of Senegal at a total cost of more than US$25 million. The success of this component will beensured only if the new institutional framework constructively addresses a number of challenges, and iffinancial and technological issues are dealt with..

5. Institutional principles. Responsibilities must be clearly assigned to create an environment whichcreates incentives for efficiency and financial viability. Although ONAS will play a key role in thedevelopment of urban sanitation, the efforts of a variety of sector stakeholders (Government andmunicipalities, as well as the private sector, NGOs and communities) will remain important and must becoordinated in order to avoid an overlapping of authority and functions. Users must be involved in order toensure the long-term viability of the subsector. The public's understanding of sanitation problems must beevaluated and the demand for improved sanitation estimated, for example, through studies to measurewillingness to pay. The capacity of all stakeholders to manage their new responsibilities should bereinforced.


6. Financing principles. Sustainable mechanisms for financing sanitation and achieving cost recoveryin the sector must be found. The sanitation tax which is added to the water supply bill should be increasedgradually to reflect more accurately the value of the service received by the user, while remainingaffordable. Programs to promote sanitation need to be accompanied by appropriate financing mechanisms.Sources of finance for on-site sanitation and new connections to existing networks need to be identified.

7. Technological principles. Senegal has a relatively well developed collective sanitationinfrastructure, compared to other countries of the subregion. Nevertheless, sewerage networks are under-utilized and sophisticated treatment plants impose a burden in terms of maintenance and operating costs.Improving urban sanitation services must be consistent with the socio-economic characteristics of thepopulation, the physical constraints of the environment and the circumstances of urban development.Technologies should be consistent with user preferences and needs, and acceptable from the environmentalstandpoint. In support of low-cost, on-site solutions, a strategy for the treatment of fecal matter from septictanks and latrines, and for final disposal of wastes needs to be elaborated.

Formulation of a national urban sanitation strategy

8. The strategy will be formulated after ONAS is established, but prior to the implementation of thesanitation engineering studies and investments, planned in Phase II and III of the Project. All sectorstakeholders will be involved. In addition to the specific issues of the subsector, the strategy will addresscross-sectoral issues and the environmental awareness of the population. ONAS will play a leading role inthe steering committee, which will be chaired by the MI. This committee will include representatives ofvarious ministries dealing with sanitation, and SONES. A launching workshop will be organized early 1996with support of IDA and GREA, to discuss priorities of the national urban sanitation strategy and to defineterms of reference.

61 Annex 4-2Page I of 2

SENEGAL


La consommation d'eau potable dans les quartiersurbains defavorises

1. La forte densite de l'habitat a Dakar et Pikine a permis que la couverture en reseaud'adduction d'eau soit relativement elevee. II reste encore pres de 5000 puits dans le Grand Dakar,mais, avec l'extension de la couverture en eau par la SONEES, la plupart sont abandonnes. Seulscertains quartiers de Keur Massar, et les extensions de Thiaroye Kao et des zones ponctuelles aGuinaw Rail et Darou Salam ont une couverture en eau de la SONEES inferieure a 50%. Lasituation est plus mitigee dans les autres villes. Diourbel, certains quartiers centraux de Kaolack etde Ziguinchor presentent des conditions assez similaires a Dakar. Les autres quartiers, recemmentoccupes, peu peuples, avec des constructions en paille, banco ont une couverture en eau tres faiblc.

2. Deux causes expliquent le faible taux de couverture en eau de la SONEES: dans lesquartiers urbanises, la population revendique la couverture en eau de la SONEES a 100%, et lavolonte de payer l'eau au prix SONEES est independante de la capacite financiere des m6nages.Meme les menages les plus pauvres depenseront, si necessaire, bien plus de 10% de leurs revenusmonetaires pour s'assurer une eau disponible et saine. A Dakar et a Pikine, les zonesinsuffisanmment couvertes en eau sont des zones d'habitat recent. Ces zones sont encore peu peupl6spour justifier une extension importante du reseau. La population demande un approvisionnementr6gulier en eau, mais concoit que des bomes fontaines soient bien suffisantes en l'absence d'unedensification de l'habitat.

3. La region de Dakar souffre d'un deficit permanent de la production d'eau, dui a unecroissance rapide de la demande. En effet, en 1994 la demande moyenne etait de 230,000 m3/jpour un volume disponible d'environ 128,000 m3/j. Les autres difficultes qui contribuent a ladegradation de l'alimentation en eau de la region de Dakar sont essentiellement liees a la vetuste eta l'heterogeneite du reseau, notamment a Dakar Centre, Pikine, Sicap, Grand -Yoff, Rufisque - auxfuites dans les reseaux (env. 60.000 m3/j), aux extensions successives du reseau initial pour suivreI'evolution de l'habitat, au deblocage de l'attribution des quotas maraichers, ce qui entra7ne undepassement des volumes alloues au maraichages (9,4% au lieu de 7% autorises). Ces facteursaffectent la qualite du service et se traduisent par des manques d'eau et des baisses de pression dansplusieurs quartiers de Dakar et de la banlieue. Face a cette situation de deficit, une serie desolutions a e etudiee. Parmi celles retenues et mises en oeuvre on peut mentionner une tarificationdissuasive pour eviter les gaspillages, la suspension de l'attribution de quotas maraîchers, ladiminution des pertes, la privatisation des bornes-fontaines, le renouvellement du reseau de Dakaret la realisation de travaux urgents.

4. Malgre ces mesures, la production d'eau n'est pas suffisante pour satisfaire les besoins. ADakar, la SONEES est obligee de proceder regulierement a des r66quilibrages de son reseau pouralimenter les quartiers periurbains. Toutefois une extension projetee dans les quartiers defavorisesreste possible du fait de la proximite de ces quartiers par rapport aux conduites maitressesd'adduction et des faibles consommations d'eau des populations pauvres. Les zones periurbainesdes autres grandes villes ne connaissent pas, pour le moment de problemes relatifs a la quantite


d'eau produite. Les extensions realisees ne posent aucun probleme au niveau de la quantite d'eau etil n'y a pas de problemes de pression de service.

5. L'une des plus grandes contraintes pour l'acces des pauvres a l'eau potable, est le coateleve du branchement qui est incompatible avec les revenus modestes des populations defavoris6es.C'est pourquoi, il est necessaire d'inclure dans les nouveaux programmes d'hydraulique urbainedes operations de branchements sociaux subventionnes avec une faible participation despopulations beneficiaires. II ne s'agit bien entendu que du coat d'etablissement du branchement, lesfactures d'eau etant entierement a la charge des abonnes.

6. En plus de la lutte contre la pauvrete, ces operations de branchements sociaux permettent(i) de reduire sensiblement les depenses d'eau des populations demunies qui, a travers les circuitsde revente d'eau, paient le metre cube a un prix nettement plus eleve que les usagers raccordes(realite tres paradoxale constatee a chaque fois que le nombre de branchements est insuffisant); (ii)d'arn6liorer sensiblement les conditions de sante et d'hygiene des populations pauvres; et, (iii)d'accroitre le chiffre d'affaire de la societe de distribution d'eau (plus d'eau vendue) etcorr6lativement permettre un retour rapide de la subvention initialement consentie.

7. Pour les branchements domestiques dans les quartiers p6ri-urbains, la consommation peutetre estimee a 38 litres par habitant et par jour en hivernage, et a 25 litres en saison seche. Ceschiffres sont faibles, parce que de nombreuses coupures d'eau intervenaient r6gulierement. Ilsdoivent etre revus a la hausse, du fait d'une amelioration dans la distribution de nombreuxquartiers. Une consommation moyenne de 50 litres par personne et par jour est consideree comme"normale" quand l'offre peut satisfaire la demande.

8. Pour les bornes fontaines, la consommation peut etre estimee a 29 litres par habitant et parjour en hivernage, et 19 litres en saison seche, chiffres qui restent sans doute similairesactuellement. On retiendra la norme de 25 litres en moyenne par personne et par jour dans desvilles obi n'existent pratiquement pas des sources d'eau alternatives (Dakar). Une borne-fontainepeut a elle seule assurer l'approvisionnement de 200 a 300 habitants environ.

9. Pour amidjorer l'acces a l'eau potable aux populations pauvres, le projet prevoit larealisation d'un programme de 34,000 branchements sociaux et 400 bornes-fontaines dans lesquartiers peri-urbaines. Sur la base d'un moyenne de 10 habitants par branchement et 300habitants par bornes-fontaines et tenant compte des consommations specifiques definies ci-dessus,environ 460,000 pauvres devraient ben6ficier de ce programme pour une consommation totale depres de 20,000 m3/j. Ainsi donc, grace au projet, l'acces permanent a l'eau potable sera garantiepour 31% de la population de la ville de Dakar ob le taux de pauvrete moyen est estim6 a 16%(voir Rapport No 12517-SE, Senegal, An assessment of living conditions (1995)) . Le debitresiduel de l'augmentation de production et de reduction des pertes, realise par le projet, c'est-a-dire environ 60,000 m3/j, permettra d'att&nuer les deficits d'alimentation en eau des autresquartiers et ameliorera sensiblement la qualite de l'eau par la reduction des interruptions dans lereseau de distribution.

63

SENEGAL Annex 4-3WATER SECTOR PROJECT Page 1 of 1

Institutional framework for urban water supply and wastewater sector

STATE OF SENEGAL

- ... .. . .. .. .. .. -C S E

| NAS ||SONES |

Relationships between stakeholders

STATE OF SENEGAL

/ A, \\Concession contrac t // K4Afermage Contract

6, Contrat plan \

Public Holding company Perfornance Contract Private Operating Compan

(SONES) SdE

+ Water supplyService

* Financial transfers C

The legal relations between the State (supervisory authority) and SONES will derive from the contract granting the concession to managethe urban water supply facilities and public works to be concluded between them. Under this contract, SONES will have the exclusiveright to acquire and construct works and facilities for production, transport, storage and distribution of drinking water in Senegal. Inreturn, the State in its capacity as party granting the concession will have a right of superviaion over SONES. This supervision, whichconstitutes a real obligation for the party granting the concession, will be exercised under the conditions specified by the concessioncontract and by pertinent specifications. The functional relations between the State and SONES will be determined by a contrat plan thatwill precisely define the parties' commitments. The legal relations between the State (supervisory authority) and the operating company(SdE) will be governed by the affermase contract and the pertinent specifications and annexes. SONES will cosign the affermage contract.This contract will entrust drinking water production and distribution to the SdE on an exclusive basis in the specifically designated urbansectors for a period of ten years with possibility of renewal. The SdE will also be required to renew the distribution network with acontractually specified length per year. On behalf of the State, the leasing authority (SONES) will oversee the SdE, its lessee. Thisoversight will be performed by SONES on the basis of performance criteria defined in the performance contract that will be concludedbetween SONES and the SdE. The lessee will be required to communicate various plans and financial reports and activity reports


SENEGALWATER SECTOR PROJECT

Matrix of Water Sector actors and responsibilities

No Functions of water supply Role Stakeholder1 Definition of the Sector policy Definition STATE2 Water Resource Management Of3 Elaboration of Legal Regulatory Framework Water Sector4 Determination and approbation of the Tariff system and the Price Strategy

of Water5 Management of the Assets (development, amortization, debt Management PUBLIC

service) of HOLDING6 Master Plan, Planning new investments and Search for Financing Means COMPANY7 Contracting Management Authority for Renovation Works of

Existing infrastructure8 Contracting Management Authority for Extension Works of

Infrastructure9 Information of public and Public Awareness10 Control of Quality of Operations / Maintenance Audit11 Operation and Maintenance of Infrastructure and of Operations Technical PRIVATE

Materials and OPERATING12 Renovation of Operation Materials, Connections and Meters Commercial COMPANY

Management13 Renovation and extension of Distribution network

(on the basis of a number equivalent 0 kilometers)14 Project Manager of Extensions of Distribution Network financed

by ESA's15 Studies and Justification of Necessity of Renovation Works of

Infrastructure16 Studies and Justification of Necessity of Extension Works of

Infrastructure17 Billing and Collection18 Public Relations with Consumers

Definitions

Infrastructure: Water supply infrastructure consists of all fixed assets and those moveable assets that are fixed by destination. The watersupply infrastructure is owned by the SONES.Operating equipnment: Operating equipment consists of all moveable assets that are necessary for efficient and effective operation of thesystem including domestic water meters. The operating equipment is owned by the SdE.Maintenance of water supplv infrastructure: Maintenance includes all supplies and works that are valuable or necessary for a reliablefunctioning of the water supply system. Reliable functioning is hereby defined as that all parts of the system, from water extactiondrinking water production and transportation, and water distribution including domestic water meters, contribute, without interuption, tothe supply of sufficient water at a suitable pressure and of good quality, that complies with the national prevailing drinking water standardsand guidelines. Maintenance should be performed in such a way, that any part of the water supply system will properly function at leastduring a period that is equal to the predefned depreciation period. All repairs of damages caused by whatever reason are to be consideredas maintenance.Renewal of water supply infrastructure: Investments for renewal include any studies, engineering designs, civil works, equipment andsupplies, that are required to replace or renovate any part of the water supply infirastructure, afler, as a minimum, the depreciation period ofthat part has passed, and provided that considerable technical arguments justify renewal. Renewal of any part of the water supplyinfrastructure for technical reasons is considered necessary only if the gained improvement can be demonstrated in technical as in financialterms. Therefore any decision for renewal of any part of the water supply infrastructure should be supported by a documented proposal bythe SdE.Extension of water supply infrastructure: Extension of water supply infrastructure include any studies, engineering designs, civil works,equipment and supplies, that are required (i) to extend the capacity of drinking water production, of water transportation or storage, and ofwater distribution (including house connections); or, (ii) to upgrade the technical condition of the existing facilities through increasedperformance, better quality of the product; or increased operations reliability.

65 Annex 4-5Page l of 6

SENEGAL


INSTITUTIONAL REFORM OF THE URBAN WATER SUBSECTOR:REMUNERATION ARRANGEMENTS, INCENTIVES TO REDUCE WATER LOSSES,

TARIFF INCREASES AND INDEXATION OF TARIFFS

I. REMUNERATION FORMULAS AND INCENTIVES TO REDUCE WATER LOSSES

A. Basic Principles

1. Amounts payable by subscribers for potable water supply are billed and collected by theoperating company (Societe d'Exploitation, SdE) for its own account.

2. The SdE will pay the public holding company, SONES, a fee based on the amount of waterproduced, adjusted to reflect targets for reducing water losses and for collecting water bills.

3. The operator's remuneration covers:- operating and maintenance expenses for production and distribution facilites, including

all operator charges stipulated in the leasing agreement;- general expenditure and profits of operation;- the cost of renewing the distribution system, as specified in the leasing and the

performance agreements; and- the cost of assisting SONES to procure and supervise rehabilitation works for the

distribution system, as stipulated in the leasing agreement (contrat d'affermage).

4. SONES's income covers:debt service for investments and rehabilitation,

* a contribution to the cost of new investments,* SONES's administrative costs.

5. The financial arrangements reflect the fact that the costs of the public holding company (i.e.,investment costs) are related to the capacity of the system, not to the operations. They also provide anincentive for the operator to limit wastage and water losses and to optimize the collection rate for waterbills. The remuneration formula which has been adopted links the remuneration of the public holdingcompany to the volume of water produced (adjusted to reflect the targets for water loss reductions andcollection of bills) rather than to the volume of water sold. The operator is rewarded for improvingperformance as regards these targets, and is penalized for failing to reach thern.

B. Definition ofAverage Tariff

6. The average tariff per m3 billed (net of taxes) each year is defined as the weighted average of alltariffs, including the market gardening tariff, and tariff brackets applied:

Tm= {(E Ti * Vi) + ( Tj * Vj)} / Vf (1)where:


Tm: average tariff billed, per m3 (CFAF/m3), including market gardening.Ti: tariff for tariff bracket i, per m3 (CFAF/m3) of the tariff schedule, excluding market

gardening during the year.Tj: tariff for tariff bracket j, per m3 (CFAF/m3) of the market gardening tariff schedule during

the year.Vi: volume of water billed during the year (m3/year) for tariff bracket i of the tariff schedule,

excluding market gardening.Vj: volume of water billed during the year (m3/year) for tariff bracket j of the market gardening

tariff schedule.V,: total volume of water billed during the year (m3/year):

Vf= Z V1+ Z Vj (m3/year) (2)

C. Productvity Ratios

7. The ratio of volume of water billed annually to volume of water produced annually, the system'stechnical output, is defined as ilf:

if = Vf Np (3)

where Vp is the volume of water produced (m3/year).

The indicator of water losses is thus:

1- Tif = 1- V,'Vp ()(4)

The commercial collection rate during the year in question, the percentage of total billings which isactually collected by May 15 following the year in which the water billed was consumed is defined as il,

The volume of water billed for which payment was collected by May 15 following the year in which thewater was consumed is thus:

Vp 'If nc (m3/year) (5)

and the actual amount collected by the operator, ME, is:

ME=TMVP Nf Tc (CFAF/year) (6)

D. Remuneration formulas

8. The operator is expected to reduce water losses to 0.15 Vp , corresponding to a technical outputof 0.85, by year 5 of the afferrnage contract. The target value for the water losses ratio in each year n isdefined as 1 - ilV, ,where ,the target technical output ratio, T1 f ,is defined as follows:

l's= (ff,0 + 0.01) for n = 1TVt = ('r(fO + 0.04) for n = 2;

Anne"467 Page 3 of6

rj', = (yf,O + 0.07) for n = 3;

= (-nf + 0.010) for n = 4;

rl'fi,= 0.85 for n = 5 and each year thereafter,

where n = 0 in 1995; n = 1 in 1996; n = 2 in 1997, etc.and

where 11io is defined as the actual technical output ratio achieved by SONEES in 1995. The water lossesratio SONEES expects to achieve in 1994 is 0.27. Thus, 'to = 0,73. This value is to be confined on thebasis of SONEES' 1994 annual report. It will be assumed that the 1995 value is equal to the achievedvalue in 1994. If the real tl,;is significantly different from 0.73, the requirement to achieve 0.85 by year5 may be reviewed.

The operator will maintain up-to-date statistics on the number of water leaks, for use as an indicator inmonitoring progress.

9. The target values for the collection rate, tVJ, for each year n in which the affermage is effectiveare established as follows:

11C,, = ilc,o + O for n = 1;r'l' C lc,o+0. 0 1 forn=2;1n = tlc,o + 0.02 for n = 3

' = 0.,97 for n = 4 and each year thereafter,

where n = 0 in 1995; n = 1 in 1996; etc., and

where Tib. is defined as the rate of cost recovery, achieved by SONEES in 1995. The collection rateSONEES expects to achieve in 1995 is 0.95 (n,0=0.95) This value is to be confinned on the basis ofSONEES' 1994 annual report. It will be assumed that the 1995 value is equal to the achieved value in1994. If the real no is significantly different from 0.95, the requirement to achieve 0.97 by year 3 can bereviewed.

10. The amount (Rp) to be paid to the public holding company SONES by the SdE during each yearn of the leasing agreement period is calculated as follows:

Rp = (T. -Pc) Vp tl'f 1%1Vc (CFAF) (7)

where Pe is the operator's bid price, as adjusted annually for inflation.

11. The amount collected is to be divided into two parts:

ME = Rp + Re (CFAF) (8)

where:Rp: remuneration of the public holding company SONES (CFAF/year)R,: remuneration of the operating company SdE (CFAF/year)

Annex 4-568 Page 4 of 6

It follows from (8) that

Re = ME - Rp (CFAF) (9)

Substituting for ME from formula (6), and for Rp from formula (7), the remuneration realized by theoperator is thus:

R. = Tm VpnfqC - [(Tm - Pe) (Vp ¶1'fn ',n)] (CFAF) (10)

Factoring and regrouping results in:

Re = P. (Vpn 'fs' ) + Tm[(Vp tf TI) - Vp 'f. T')] (CFAF) (11)

Thus the operator's remuneration consists of two parts. First, the bid price, P., is applied to the targetvolume to be sold and collected for, (Vp rl'f, T'.,n ). Then the full value of the average tariff, Tm is appliedto the difference between the operator's actual volume sold and collected for, (Vpnf Ir.) and the targetvolume. As a result, the operator realizes the full value of the gain or loss resulting from anyimprovement over, or failure to attain, the targets.

E. Monthly Payments to SONES and Annual Payment Adjustment

12. To expedite the process of monthly payments from the operator to SONES, monthly paymentswill be made on the basis of the actual amount collected from users during the month followinganrangements specified in the bidding documents. The operator will transfer to SONES an amount, RP m,defined as:

Rpum = ME. -P. (Vpm nf,n 1cx )- (CFAF) (12)

whereRp,: monthly payment to SONESMEEm: actual amount collected from users during the preceding calendar monthVp,: the volume of water produced during the preceding calendar month

At the end of each year, the annual revenue of SONES, Rp will be calculated on the basis of formula (7),and the operator will transfer any amount due to SONES for that year, by a specified date of thefollowing year. Any amount due the operator will be subtracted from payments due to SONES onaccount of the current month, and if necessary, subsequent months

F. Discussion

13. The operator's motivation to reduce losses stems from the fact that the rate of losses and the rateof recovery used to determine arnounts owing to SONES rise from year to year. This means that inorder to continue receiving the same proportion of total revenues, the operator must gradually reducelosses and increase the recovery rate. It also implies that if the operator succeeds into reducing losses orincreasing the recovery rate more rapidly than envisaged in the formula, the operator may keep anyadditional revenues.


14. In view of the above, only the operator has a direct financial interest in reducing losses. Theamounts received by SONES depend on the volume of water produced. SONES would not benefitdirectly from a more rapid reduction of losses than called for in the leasing agreement. In fact, it couldbe maintained, given the formula, that from a purely financial standpoint SONES has an interest inseeing the losses increase. In order to maintain the volume of water reaching the consumer, it will benecessary to increase the volume of water produced, augmenting the amounts owing to SONES. Therisk that SONES will actively seek to prevent losses from being reduced is negligible, however, since thecurrent water deficit is of such a magnitude that in the coming years the volume of water produced willassuredly remain close to the maximum, regardless of the amount of losses.

15. Nevertheless, it is essential that the party having a direct interest in reducing losses (i.e. theoperator, not SONES) be the one responsible for designing and executing works to reduce unaccounted-for water, i.e. works relating to system maintenance, repair, renewal and rehabilitation of the system.The documents included in the bidding documents are meant to ensure that this principle be adhered to asmuch as possible. The leasing agreement specifies, therefore, that maintenance and repair are theresponsibility of the operator, as are renewal of operating equipment, distribution lines and serviceconnections.

16. The performance agreement assigns responsibility to the operator for rehabilitation of thesystem and service connections. SONES must approve the renewal program and rehabilitation programof the distribution system, submitted by the operator; however, in the event of an impasse, the proceduredetailed in the leasing agreement for the settlement of disputes may be applied.

II. FORMULA FOR INDEXING OPERATOR'S PRICE Pe

17. To reflect changes in economic conditions, the operator's price P. is indexed. Price Pe will beadjusted at the beginning of each calendar year, beginning on the effective date of the leasing agreement,by application of an indexing coefficient defined in the bidding documents.

18. The operator may request SONES to review the indexing formula at the end of the first five-year period of execution of the leasing agreement. Such a request is to be submitted to SONES at leastsix months in advance, and must be justified by a discrepancy between the existing formula and actualtrends in prices.

m. INDEXING FORMULA FOR AVERAGE INVESTMENT PRICE Pp

19. To reflect changes in economic conditions, the average investment price Pp is indexed. Price Ppwill be adjusted at the beginning of each calendar year beginning on the effective date of the affermageagreement, by application of an indexing coefficient defined in the bidding documents.

IV. ANNUAL INCREASE IN WATER TARIFF IN REAL TERMS

20. To achieve the targeted financial equilibrium in the potable water sector, an annual increase bythe year 2003 of r percent, adjusted annually, is applied to the tariff schedule, excluding marketgardening. At the same time, given the action plan to reduce the use of potable water for marketgardening, the trend in the average market gardening tariff in real terms is projected as follows: duringthe period 1995-1997: CFAF 100; during the period 1998-2005 (implementation of the long-termsolution in ie. sustainable water supply from the Senegal river to the Dakar Region): CFAF 160. (cfAnnex 8)


The different average tariffs are linked by the following formulas:

The average tariff excluding market gardening, T,,:, and the average market gardening tariff, T., aredefined as follows:

T= (z Ti *Vi) / E Vi (13)T.t =t( T1 *V) / E V, (14)

When formulas (16) and (17) are introduced into formula (1), the following formnula is obtained:

T. * Vf = (T. * E V + (T. * E vj) (15)

The projected average water tariff for year n to achieve the targeted equilibrium is calculated by thefollowing formula:

T.w Vgf, = T,,, C VW + T,n (E Vy, (16)

with Tmc,nTmco * (1+r/1O0)n+l (17)

taking into account the application of the r percent increase. The annual increase of r percent will beadjusted annually.

T,.,n = 100 or 160 F.CFA (18)

T,.0 : average tarifif, excluding market gardening, for 1994T,,: average tariff, excluding market gardening, for year nT,: average narket gardening tariff for year nn: yearofaffermage agreement: n= 1 (1996);n= 2 (1997); ... ;n= 10 (2005)

V. AGREEMENT ON BASE YEAR INDICATORS AND MEiTHODOLOGIES

22. Prior to the effe tiveness of the affernage contract, the professional partner selected for the SdEand SONES will discuss the calculation of the base year (1994 or 1995 as appropriate) indicators. Theresults of this discussion will be recorded in a convention.

SenegalWater Sector Project

Table 1.1. Drinking Water Production

Detailed Coasts(US$ Million)

Base Cost Totals Including Contingencies

1995 1996 1997 1998 1999 2000 Total 1995 1996 1997 1998 1999 2000 Total

I. Inves"tt Costs

A. Station de Ugnith

Station de Ngnith:traitement/pompage - 0.9 0.9 - - - 1.B - 1.1 1.1 - - - 2.2

Station de Ngnith:modernisation - 1.4 1.4 - - - 2.9 - 1.6 1.7 - - - 3.3

Subtotal Station de Egnith - 2.4 2.4 - - - 4.7 - 2.7 2.8 - - - 5.5

3. Poreres - Piesintres

Forages Littoral Nord - 1.1 1.1 - - - 2.1 - 1.2 1.3 - - - 2.5

Forages Littoral Nord - 2.5 2.5 - - - 5.0 - 2.9 3.0 - - - 5.8

Forages Thies - - - 0.6 0.2 - 0.8 - - - 0.7 0.2 - 0.9

Forages Thies - - - 0.7 0.2 - 1.0 - - - 0.9 0.3 - 1.2

Piezometres - 0.7 0.7 - - - 1.5 - 0.9 0.9 - - - 1.7

Subtotal 1bagus - Pisjzitres - 4.3 4.3 1.3 0.4 - 10.4 - 5.0 5.1 1.6 0.5 - 12.1

C. ?rsanSission jb.an

Conduite (103 Km) - DN 1000 - 40.8 40.8 - - - 81.5 - 46.8 47.8 - - - 94.6

Thies - Point B(55 km) - DN 1200 - 22.9 22.9 - - - 45.8 - 26.3 26.9 - - - 53.1

Thies - Point B(55 km) - DN 1200 - 4.6 4.6 - - - 9.1 - 5.2 5.3 - _ - 10.6

Subtotal Sr s niss±oa agin. - 68.2 68.2 - - - 136.4 - 78.2 80.0 - - - 158.3

D. Reservoir des Mamelles - - - 3.8 1.3 - 5.0 - - - 4.6 1.6 - 6.1

E. Telegestion - - - 4.2 1.4 - 5.7 - - - 5.1 1.7 - 6.8

F. Supply of goods/(groundwater monitoring equipment - 0.2 0.2 - - - 0.4 - 0.2 0.2 - - 0.4 e >

Sotal - 75.1 75.1 9.3 3.1 - 162.5 - 86.1 88.1 11.2 3.8 - 189.2

Fri Jun 09 11:03:01 1995 -

0-

0

Senegal . 0Water Sector Project

Table 1.2. Water Supply and Distribution fDetailed Costs(US5 Million)


1995 1996 1997 1998 1999 2000 Total 1995 1996 1997 1998 1999 2000 Total

I. Invest t CostsA. Rehabilitation Reseau Distribution- Phase 2 - 2.5 2.5 - - - 5.0 - 2.9 2.9 - - - 5.8

B. Rehabilitation Reseau Distribution - Phase 2 - - - 1.8 1.8 - 3.5 - - - 2.1 2.2 - 4.3

C. Rehabilitation Reseau Distribution - Phase 3 - - - - 0.5 1.1 1.5 - - - - 0.6 1.3 1.9

D. Extension Reseau Distribution Dakar - 2.6 2.6 - - - 5.2 - 3.0 3.0 - - - 6.0

E. Extension of Distribution Network - Phase 2 - - - 3.5 1.7 - 5.2 - - - 4.2 2.1 - 6.3

F. Extension of Distribution Network - Phase 3 - - - - 1.8 3.4 5.2 - - - - 2.2 4.3 6.5

G. Fourniture et pose compteurs generaux - 0.3 0.3 - - - 0.5 - 0.3 0.3 - - - 0.6

H. Fourniture et Pose Bornes Fontaines - Phase 2 - 0.2 092 - - - 0.5 - 03 0.3 - - - 0.6 CD

I. Fourniture et Pose Bornes Fontaines- Phase 2 - - _ 0.2 0.2 - 0.5 - - - 0.3 0.3 - o.e CD

J. Fourniture et pose branchements sociaux - Phase 1 - 1.0 1.0 - - - 2.1 - 1.2 1.2 - - - 2.4

K. Fourniture et pose Branchements Sociaux - Phase 2 - - - 1.0 1.0 - 2.1 - - - 1.2 1.3 - 2.5

L. Fourniture et pose Branchements Sociaux - Phase 3 - - - - 1.0 1.0 2.1 - - - - 1.3 1.3 2.6

M. Rehabilitation water distribution public houses - 0.2 0.2 - - - 0.4 - 0.2 0.2 _- - 0.5

Total - 6.8 6.8 6.5 8.0 5.5 33.7 - 7.8 8.0 1.8 9.9 6.9 40..

r'i Jun 09 11:03:04 1995

Senegal

Water Sector Project

Table 1.3. Infrastructure Support

Detailed Coats

(USS Million)

Base Cost Totals Including Contingencies1995 1996 1997 1998 1999 2000 Total 1999 1996 1997 1998 1999 2000 Total

I. Investment Costa

A. Surveillance Travaux, Production (consultant) - 2.7 2.7 - - - 5.4 - 3.1 3.2 - - - 6.4B. Eng. documents supervision rehab. pub. buildings - 0.1 0.1 - - - 0.1 - 0.1 0.1 - - - 0.1C. Engin., bidding documents, superv. Camberene project - 0.3 0.3 - - - 0.5 - 0.3 0.3 - - - 0.6

D. Engin., bidding documents, superv. peri-urban wastewater plants - 0.2 0.2 - - - 0.3 - 0.2 0.2 - - - 0.4

Z. Preparation - solution pour 10 long ternm

3. Etude Station Pilote - 0.3 0.3 - - - 0.6 - 0.3 0.3 - - - 0.6

2. Environmental Study - - - 0.8 0.3 - 1.0 - - - 0.9 0.3 - 1.2

subtotal Pr4paration - solution pour le long terme - 0.3 0.3 0).8 0.3 - 1.6 - 0.3 0.3 0.9 0.3 - 1.9F. Laboratory and computer equipment/software (SONES) - 0.2 0.2 - - - 0.4 - 0.2 0.2 - - 0. 5

G. Computer equipment/software (MH) - 0.1 - - - 0.1 - 0.1 0.1 - - - 0.:

H. New Office Building - - - 0.4 1.2 1.6 - - - - 0.5 1.5 2.0

I. Pilot Treatment plant (WS II Project) - 0.0 0.0 - - - 0.1 -_ 0.1 0.1 - - - 0.1Total - 3.8 3.8 0.8 0.6 1.2 10.2 - 4.4 41 5 0.9 0.8 1.5 12.1

Fri Jun 09 11:03:06 1995

Senegal

Water Sector Project

Table 2. Urban Sanitation

Detailed Costs

(USS Million)


1995 1996 1997 1998 1999 2000 Total 1995 1996 1997 1998 1999 2000 Tuo..

I. Invest nt CostsA. Rainwater sanitation project/St. Louis area (civil works) - - - 9.6 3.2 - 12.8 - - - 11.5 3.9 - 15.4B. Rainwater sanitation project/St. Louis area (engineering/consultant) - 0.1 0.1 - - - 0.3 - 0.2 0.2 - - - 0.3C. Rainwater sanitation project/St. Louis area (supervision/consultant) - - - 0.5 0.2 - 0.6 - - - 0.6 0.2 - 0.8D. Assainissement Rufisque - - - - 1.0 3.1 4.1 - - - - 1.3 3.9 5.1E. Engin. Bidding Documents - Rufisque project - - - 0.1 0.1 - 0.2 - - - 0.1 0.1 - 0.2F. Superv. Rufisque project - - - 0.1 0.1 - 0.2 - - - 0.1 0.1 - 0.2G. Densification of sewerage connections - Phase 1 - 1.0 1.0 - - - 2.0 - 1.1 1.2 - - - 2.3H. Densification of sewerage connections - Phase 2 - - - 1.5 0.5 - 2.0 - - - 1.8 0.6 - 2.4 D 5I. Civil Works - Densification of sewerage connections - Phase I - 0.1 0.1 - - - 0.2 - 0.1 0.1 - - - 0.2 tJ XJ. Reuse of peri-urban municipal waste water - 1.7 1.7 - - - 3.3 - 1.9 1.9 - - - 3.9 °K. Wastewater Reuse Camberene- Civil Works - 0.7 0.7 - - - 1.4 0.8 0. - - - 1.6L. Wastewater Reuse CambOrene- Goods - 1.0 1.0 - _ - 2.1 - 1.2 1.2 - - - 2.4

Total - 4.6 4.6 11.8 5.1 3.1 29.2 - 5.3 5.4 14.1 6.2 3.9 34.8

Fri Jun 09 11:03:08 1995

Senegal

Water Sector ProjectTable 3. Institution Building

DetaLiled Costs

(US$ Million)

Base Cost Totals Including Contingencies1995 1996 1997 1998 1999 2000 Total 1995 1996 1997 1998 1999 2000 Total

I. Inweastt Costsa. Water Resources

Hydrological Support Studies - 0.5 0.5 - - - 1.0 - 0.6 0.6 - - - 1.2

Bathymetric & Limnological Study of Lac de Guiers - 0.1 0.1 - - - 0.3 - 0.2 0.2 - - - 0.3Study of the Maestrichtian Deep Aquifer - 1.4 1.4 - - - 2.8 - 1.6 1.6 - - - 3.2

Water Resources Master Plan - 0.3 0.3 - - - 0.6 - 0.3 0.4 - - - 0.7

Revitalizing Vallees Fossiles - 0.2 0.2 - - - 0.4 - 0.2 0.2 - - - 0.4

Design Study/re-use of municipal wastewater - 0.1 0.1 - - - 0.2 - 0.1 0.1 - - - 0.3

Subtotal Water Resources - 2.7 2.7 - - - 5.3 - 3.0 3.1 - - - 6.1B. Urban Ssnitation

Institutional DavelolntInstitutional Strengthening of ONAS - 0.4 0.4 - - - 0.8 - 0.5 0.5 - - - 0.9

Sewerage MasterplansSecondary Towns - 0.7 0.7 - - - 1.5 - 0.8 0.9 - - - 1.7

Subtotal Urban SanitationInatitutional Devoloponnt - 1.1 1.1 - - - 2.3 - 1.3 1.3 - - - 2.6

C. Public Health & Demand Management - 0.4 0.4 - - - 0.7 - 0.4 0.4 - - - 0.9D. Capacity Building/Training:MH(DHA/SGPRE),SONES,ONAS - 0.1 0.1 - - - 0.3 - 0.2 0.2 - - - 0.3E. Capacity Building/Training: MH(DHA/SGPRE), SONES,ONAS - - - 0.2 0.1 - 0.3 - - - 0.2 0.1 - 0.3

F. Capacity Building/Training: MH(DHA/SGPRE), SONES, ONAS - - - - 0.1 0.2 0.3 - - - - 0.1 0.2 0.4G. Andits

Audits (financial, maintenance) - - 0.2 - - - 0.2 - - 0.2 - - - 0.2

Audits (financial, maintenance) - - - 0.2 0.1 - 0.2 - - - 0.2 0.1 - 0.3

Audits (financial maintenance) - - - - 0.1 0.1 0.2 - - - - 0.1 0.1 0.2

Cost Accounting SONES - 0.1 0.1 - - - 0.2 - 0.1 0.1 - - - 0.2

Total - 4.4 4.6 0.3 0.4 0.3 10.0 - 5.0 5.3 0.4 0.5 0.3 11.6

Fri Jun 09 11:03:10 1995

SenegalWater Sector Project

Table 4. 2PF Refinancing

Detailed Costs

(USS Million)


1995 1996 1997 1998 1999 2000 Total 1995 1996 1997 1998 1999 2000 Total

I. Invetment Costs a w

A. Consulting Services 1.7 - - - - - 1.7 1.7 - - - - - 1.7 uX

B. Capacity Building 0.3 - - - - - 0.3 0.3 - - - - - 0.3 O .C. Equipment/unallocated 0.0 - - - - 0.0 0.0 - - - - 0.0

Total 2.0 - - - - - 2.0 2.0 - - - - - 2.0

Fri Jun 09 11:03:12 1995

74

SENEGAL Annex 4-7WATER SECTOR PROJECT Page I of 1

Implementation Scheme & Financing Plan (Total Project Costs)US$ millions

Senegal Water Sector Projec - Phase ITotal Costs (contingenc TOT IDA CFD NDF BEI BOAD KFW BADEA AGCD SONES

219.90 63.00 65.70 3.30 13.00 11.90 25.50 4.60 4.10 18.0

Institutional Capacity Building WRM:.

WRM 6.20 3.90 1.90 0.40 (i) Support studies,Capacity B 2.30 1.40 0.90 (ii) Lac de Guiers;

(iii) Deep Aquifer.Urban Water Supply (iv) Vallees Fossiles

Production (v) Masterplan;Ngnith 5.50 5.50 (vi) monitoring equipment;

(vii) computer equipmentBoreholes 8.30 8.30 Capacity BuJiding:Piezometer 1.80 1.60 0.20 (i) public health educ. & demand management;

0 1000 94.50 48.40 18.00 25.50 2 60 (ii) communication unit MH;o 1200 63.70 47.80 15.90 (iii) strengLhening institutional reform ONAS;

jstribution (iv) capacity building MH(DHA). SONES, ONASRehabilitat 5.80 5.80 Water supply loglstics:Large wate 0.60 0.60 (i) pilot plant;Low-incom 2.40 2.40 (ii) laboratory & computer equipment;Stand-pipe 1.00 0.90 0.10 (iii) supervision of works - production;

Extension 6.00 6.00 (iv) supervision rehab. distribution in public buildings;Logistics 8.20 1.20 3.20 3.80 (v) audits (financial & maintenance);

Urban Sanitation (vi) cost accountingWastewate 7.80 2.40 1.60 3.80 Wamtewater reuse:Sewerage 2.70 2.70 Camberene wastewawer treatment and

Logistics 3.10 1.10 1.70 0.30 peri-urbanwastewatertreatmentplantsSewerage:

Total 219.90 63.00 65.70 8.30 18.00 11.90 25.50 4.60 4.10 18.80 densificationofsewerageconnectionsSanitation logistics:(i) eng. & supervision of ww reuse projects;(ii) study re-use of municipal ww;(iii) sewerage masterplans;(iv) eng. St. Louis rainwater sanitation.

Senegal Water Sector Project. Phase 2Total Costs (contingenc TOT IDA CFD NDF BEI BOAD KFW BADEA AGCD OTHER

47 90 24.20 - 2.00 - - - 6.30 - 15.40

Intitutional Capacity BuildingCapacity B 0.30 0.30

Urban Water Supply Capacity Building:Production capacity building MH(DHiA). SONES, ONAS

Boreholes 1.95 1.95 Water supply logistics:Reservoir 5.55 5.55 (i) preparation water sector long term solution

Remote co 6.70 6.70 / environmental impact study- drinking water production;

istribution (ii) audit (financial and maintenance);

Rehabilitat 3.80 3.80 Sewerage:

Low-incom 2.40 2.40 densification of sewerage connections

Stand-pipe 0.60 0.60 St Louis:Extension 6.30 6.30 rainwater sanitation in St. Louis area

Logistics 1.50 0.30 1.20 Sanitation logistics:

Urban Sanitation (i) supervision St. Louis rainwater sanitation;

Sewerage 2.40 2.40 (ii) engineering Rufisque sanitation

St Louis 15.40 15.40Logistics 1.00 0.20 0.80

Total 47.90 24.20 - 2.00 - - - 6.30 - 15.40

Senegal Water Sector Project - Phase 3Total Costs (contingenc TOT IDA CFD NDF BEI BOAD KFW BADEA AGCD OTHER

15.90 10.20 - - - - - - - 5.10

Institutional Capsacty Building Capacity Building:Capacity B 0.40 0 40 capacity building NHf(DHA). SONES, ONAS

Urban Water Supply Water supply logistics:

istribution (i) rehabilitation of office facilities for SONES;Rehabilitat 1.90 1.70 (ii) audits (finance and maintenance)Low-incom 2.60 2.50 Ruflsque:Extension 6.40 5.80 Rufisque sanitation

Logistics 2.20 0.20 Sanitation logistics:

Urban Sanitation supervision Rufisque sanitation

Rufisque 5.10 5.10

Logistics 0.20 0.20

Total 18.80 10.80 - - - - - - - 5.10

A D £ F J K L II N I0 r1 it I s I T I u V WvI ~~~~ ~~~1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2003 2006 2007SEA3l4 comFTEDORzsLTAT FUEVISONNsL I0ypt&BIA- 5% Schu.M; A.VwWaltI. lurff mayem (ma %) : 2.4%1 SEA I T." lDA: 7.S F.ll. USEA PRODOJrISEA

I2 SEA ChilYrs d'affaires 19.751 20.348 21.393 23.143 32.000 35.189 37,175 38,092 39.015 39,971 40.010 41.314 41,314 41,314I SEA Aulrn peeduits denplwlation 1.000 1.000 3 ,00 1.000 1.000 1.000 1.000 1,000 1.000 1.000 l.000 1.000 1.000 3.000I SEA TnlslproduaLs dexpboililion 20,751 21.348 22.393 24.143 33.000 36,189 38,375 39,032 40.015 40,971 41,010 42.314 42.314 42,314I SEA RISEA COUWSSEA

I SEA COUIS,a.-lbkle12 SEA Eaeegie tlmsique -4.041 -4.084 4.094 4,133 .5,114 .3,237 .3.274 -3,278 .5,283 .5.288 -3,293 -5,299 5.,299 -5.299I SEA Diesel .592 .398 -60D -605 -749 .676 -773 ,773 .774 -775 .775 .776 -776 .776SEA Prod.is lindnques -428 -428 -428 -428 .1.086 -1.086 -1,086 -1,086 .1.086 1.1086 -1.086 -1.086 -1.006 -1.08624SEA Maniere a foneeism-e -1,361 -1,376 -1.379 -1.392 .1.722 -1,764 .1.776 -3,778 -3,700 -1.781 .170 .783 .13705 -1 3,5-1705 T1 SEA Au sudtes maiel fosniliizc ,'2.9 2.13-2138 -2,139 -2.646 -2.710 -2,729 .2,731 -2,734 .2,736 -2.739 .2.742 -2.742 -2.74214SEA Transprtsmproduirsclrmscqoes 0 0 0 0 0 0 0 0 0 0 0 0 0 0 )082 SEA Asues flcr,sicoamW.WaMu -2,303 -2.328 -2.333 -2.333 -2.914 -2.984 -3,005 -3,008 -3.011 -3.014 -3,017 -3.020 -3.020 .3.020 0128SEA T.We Os .raai.bles -10.816 -10.927 -10.951 .11.052 .14.231 -14.548 -14.642 -14.654 -14.667 -14.680 -34,693 .14,709 .14,709 -14,709122SEA

12 SEA CoiaS floes d'er]"a1110,112 SEA Frail de U.sqpon -172 -372 -172 -372 -172 .172 -372 -172 -372 -372 -172 .172 -172 -372 12 SEA Fenis d.Mo pnosael -4.453 -4.675 -4,996 -3,096 .3,198 -5.302 -3,408 -5,516 -3,626 .5,739 .5,739 -5,739 .3,739 5.3739 C32 SE M cut saOl,calculds -5.260 -3,360 46,769 -30.383 -10.489 -10.938 .11.235 -13.235 -33,233 -11.235 -10.391 -6.235 -5.576 -4.918 '* 12 =E Am.alissernents rit,alies 0 -2,062 -2,062 -2,062 -2,062 -2,062 .2.062 .2.062 -2.062 -2,062 -2.062 -2.062 0 0 ~ 32s SEA Perels mlr cedances Sen rcouwcrrdse % du CA -980 -1.017 -3,070 -926 -960 -1.036 -3.335 -3,342 -1.170 -1.199 -3,200 -3.239 -3.239 .1,2390 P15SEA lu,p6ts et lases (patenle ea., imp foneicmn, vignette. asrarunse) -333 -3351 3 .3 33 33 .3 33 -513 .513 .513 513 .513 .5133I32 SEA To")3 coOt. fists d'exploianiros -11.386 -14.000 -15,582 -18.950 -19.393 -20.043 -20.305 -20,640 -20,779 -20.920 -20.077 -13.960 -13,239 -12,581

32-SEA Total Charges deipkloiutio -22.202 -24,927 -26.533 -30,002 -33.624 -34.390 -35.347 -35.295 -35,446 -35.600 .34,770 -30,669 -27.948 -27.289 ~ 12SEA52 SEA Excid.at barut d'-ploStatim 31.451 -3,580 -4.141 -5.859 -624 1.599 3,028 3.787 4.369 5.370 6.240 33,645 14.366 15.02412 SEA

C12 SEA Chuageshors exploiunOs 0 0 0 0 0 0 0 0 0 0 0 0 0 0I2SEA PIOs/oi- v.lucs / sub-ve ioso 0 0 0 0 0 0 0 0 0 0 0 0 0 0o12 SE Peres clseedalms es devaseS -3,469 -1.392 -1.472 -1.367 .3.568 -3.327 -930 -862 -662 -862 -803 -503 .503 .503328 SE Rers aossssea ap-oisioss 0 2.062 2.062 2.062 2.062 2.062 2.062 2,062 2.062 2.062 2,062 2.062 0 0127W SEA Total Chargesea Produas hoes enP3lr-uiion -.1469 670 590 495 494 935 1.332 3,203 3.203 3,203 3,257 1.559 -503 -5031271 SEA - -1272 SEA Rksanha de-sploltallo.a.-2,939 -2,909 -3.530 -5.364 -330 2.534 4,340 4,988 5.769 6,573 7.497 33.204 133.863 14.521-732 SEA1274 SEA Produl iaslnaniEes 0 0 0 0 0 0 0 0 0 0 0 0 0 01275 SEA Charges finaaaares 31.856 31,937 -2.618 -4.256 -5.183 35.128 -5.035 -4.643 .4.389 .3,741 -3.283 -2.750 -2,423 -2.0961276 SEA R66ilul financier -1 -,056 -1.937 -2.638 -4.256 -5.303 -5.328 -3.035 -4,643 -4.189 -3,741 -3,2ES -2,730 -2,423 -2,0961277 SEA3278 SEA Rksultat aval hmphia .4,776 4.846 -6.169 -9,639 -5.313 -2.594 -875 345 3.500 2.830 4.212 30,453 13,440 32.4251279 SEA3280 SEA lmpEls/rhkant 0 0 0 0 0 0 0 -323 -553 -993 -3,474 -3.639 -46004 -4,3491283 SEA

4N SEA W.N.1 pri!. Lpb4s-4,776 -4.846 -6.369 -9.639 -5.313 -2.594 .875 224 1.027 1.040 2.738 6.795 7,436 8,076 -C4MSEA

3286 SEA Rimial SA mie rerva-e -4.776 .4,046 -6.169 -9.639 -5,333 -2.394 .875 224 3.027 3,840 2,730 6,793 7,436 8.076 , 3.207 SEA

SENEGAL - Peoja SerMoidcl 46 Es - PEOjesaa anaaate - I/5- MOD_SONC.XLS 619/9 9.34 AM

I A I D | F I K I L I PA 4 0 N | Q P I | A I 7 I T I3) V I w IxI_ FA IAN NM 3994 3995 3996 3997 1998 1999 2000 2003 2002 2003 2004 2005 2006 2007

I SEA3 SEA ACIFi3 SEA

S38 A Imaobihomt brts 9047 99.466 354,666 233,749 225,127 232,335 236,094 236,094 236,094 236,094 236,094 236.094 236.094 236,094SEA an t

aku mobitis brue A 36389 36,389 36.89 36,189 36.1S9 36,189 36,19 36,389 36,139 36,369 36.19 36.189 36.389 36,191 5AD8pca 33762 39,323 46.092 56,273 66,762 77,700 88,935 300,370 111,405 122.640 333,032 139,267 144,.43 349,763SEA Ecan sor _iu amets 33 3s05 33567 37,629 39,693 21,754 23,836 25,378 27,940 30,02 32.064 34,327 36.189 36.389 36.1891338 a ImSEobiniisomtnis a 79393 80,765 2.33 373,973 172.800 366,O30 157,470 144,172 330,875 117,578 105.125 96f,27 93,253 86,333sEA Ea vai Del 1 85454 17,062 35,90 34,023 32,435 33,328 10,378 9,517 8.655 7,794 6,989 6.486 5,983 5,4103SE s ia tocks 2,469 2,543 2.674 2,893 4,000 4,399 4,647 4,760 4,877 4,996 5,003 5,364 5.364 5,16439 SEA Cliss 7,320 7.060 5,635 6,081 8,211 9,035 9,517 9,749 9,988 30.232 30.242 30,576 30,576 10.57639 SEA Awers Ddbnrsi 2,469 2,543 2.674 2,893 4,000 4,399 4,647 4,760 4.877 4,996 5.003 5.164 5,64 5,16433 SEA Tr3srere (+1-) 2 ,390 13.036 -30383 -36,323 .5,832 -33,528 .5,627 -397 3,680 9,002 15.114 23.345 33.205 43.392S39 sA ToualAcif - 307536 306,938 343,322 383.335 385.654 384,421 131,032 172,362 362.953 354,598 347,472 147,362 353,343 356.30913 SEA 139 SEA PASSW

13 SEA Capil a se 8 599 8.599 19,575 29.993 33.836 36,700 38,348 38,348 38,348 38.348 33.348 38,348 38,348 38.348SEA Subvensions d'1quss OeMt5t5 32,253 36,812 40,230 42.837 44,322 44,322 44,322 44,322 44,322 44,322 44,.22 44.322 44.322 44.32230 SEA Ecrsderevakuuion iinaosi 22,64 20,622 38,559 36,497 14.435 12.373 30,333 8,249 6,386 4.124 2.062 0 0 0 0%S EA Report I no,vesu s551 *2,225 -7,071 -33,240 -22,859 -28,372 30,766 -33,643 -33,296 -29,735 -26.885 -22,673 -32,239 779SA Rasut, detn a 3.w -4776 -4.846 -6.169 -9,639 -5.333 -2,594 -875 345 3,580 2,830 4,232 30,455 13.440 12,425SEA Dttos A LT 34,216 35,734 68,821 304,353 108,393 307,700 302,033 92,631 83,231 73.944 65,260 57.603 49,942 42.283340 SEA Daeus I CT 2,937 2.937 2,937 3,786 3.928 4,027 7,017 9,400 9,400 9,287 8.683 7,659 7.659 7.659SE oui. cr 6,584 6,783 3,565 3.337) 5,333 5,865 6,396 6,347 6,502 6,662 6,668 6,886 6,886 6.9663 SEA Auars Cgddiser 2.469 2,543 2,674 2,893 4.000 4,399 4,647 4,760 4,877 4.996 5,001 5,364 5,364 5,3643 SEA tcouvnbr bancrc 0 0 0 0 0 0 0 0 0 0 0 0 0 014 SEA TotalPassif 107,536 306,938 L43,322 t18,335 1S.654 I8,428 191,032 372,562 162,953 154,598 347,472 347,562 151.343 356.30

SENEGAL- - P-a* sOmW a r'M Proj-Ce &Uire . 4 5.5 - SODD SONC.XLS 6lsM 9:54 AM i it

IA I ) £ K L N I0 1P I 1R I S T I U I V I w IX

sEA IcA?AcrnE DAtJ2'FINANCO4F2T I 19 3995 1996 1997 199 Mg9 2000 2001 2002 2003 2004 2000 2006 2001

023SEA ESsiukne ad i ueracke, -4 776 -4.8146 .6,169 -9.619 -5.313 -2.594 -875 545 1.560 2.130 4.212 20.455 11.440 122425322SEA DogtShorn mamonafimtmt at proYltOfl -5,260 -7.622 -8,832 122.243 _12.551 -13.OD0 -13,297 -13.297 -13.297 -13.297 -12,453 -11,297 -5.576 -4.91819SEA Reputs iW SU noMUseeMs & PeoVisorI 0 2.062 2.062 2.062 2,062 2.062 2.062 2.062 2.062 2.062 2,062 2.062 0 032 SEA Auuvsdaalsi am d6heassabics .1.469 -1.392 -1.472 -1.567 -1,565 -1.127 .950 -62 .862 -862 405 403 .503 -503U9SEA Ausm prduUms nod6caLsoblns 0 0 0 0 0 0 0 0 0 0 0 0 0 032 SEA Ca9ncitEd'wto iaEa t, 1.53 2.206 2.073 2.129 6.744 9.472 12,510 122.442 i3.677 14.927 13,408 27,293 17.519 27,84612 SEA22 SEA IFONDS D£ ROULDUNTFI lIE 22 SEA8 SEA Food de es23 XhE Reotumes tnaables 98,463 97.611 2346,88 174.585 176.321 174.157 270,289 161.434 152.572 142.940 135.603 135.512 139.293 144.059832SEA Aaii i,i,-bilis6. 97,847 97,837 142.723 185.996 1185.255 178.236 167.&48 153.689 239,530 2253172 1122113 103.313 97,234 92.823ujSEA Foods de, roukaern 626 -225 -53.41 .21.422 -8.934 -3.979 2,341 7,766 122,042 17,569 23.689 32.299 42.059 52,246I SEA235SEA Desol.n faae" de roulane,S SEA Ar,if d'CotlonaiooalthoeS -Ploinif 122058 122147 10,9813 11.867 16.211 17.813 298,12 29,270 19.742 20.225 20,245 20.904 20,904 20.904237SEA Dettes dctxpIottiWOetirbuts expioiSlo 9,053 9,326 6.240 6.750 9,333 10.264 20,843 31L.107 12,379 211658 32,610 12.050 12.050 12,050336SEA Bsoi, en foods de rouknoti 300D5 2.821 4.744 5,127 6,878 7.549 7.968 8.162 8,362 8.567 9.575 8,854 8.854 3.6513 SEA21563

132SEA Tr2a4e3954039-3,036 -10.583 .16.528 -15,812 -22,528 -3.627 -397 3.680 9.002 25,124 23.345 33.205 43.392S33EA 0 0 0 0 0 0 0 0 0 0 0 0 0 0233SEA rT~AKEAV JMPLOIS &k RESSOURCES1323 SEA138SEA EPL~p5OI Toaut135SEA Vamnuo, n J.BFR -270 -185 1.923 373 1.760 672 419 294 200 205 a 279 0 0I32SEA Inoetiousenhrs 153.436 8.1 ,994 55.200 57.083 133378 7,009 3,959 0 0 0 0 0 0 0237SEA Rboseeocpnns20422,502 2.937 2,931 2.937 3,786 3.928 4,021 7,021 9.400 9.400 9.287 8.663 7,659 7.6539335Se. Ttiu1 Eoplo.s 283,877 20,046 22,746 60.060 60.393 18.924 11.608 8,405 7.211 9.600 9.605 9.293 8.963 7.639 7,63922SEA SLSSEOUSClEs332 SEA CnPKca,kd'fulol'inawolmls, 417.486 1,953 2,206 2,073 2,329 6,744 9,472 22.310 22,442 23,677124,927 25,408 17.193 17.519 27,846231SEA AugmesnWatlode capital 46,686 5.068 4.559 24.394 13.004 5.230 2.884 2,648 0 0 0 0 0 0 013 SEA AuowmntatiOSdes mpmWits 93.125.7 4,435 36,043 39,328 7.766 3.536 2,348 0 0 0 0 0 0 083 SEA Total Rerource,s 557,898 8,299 22.200 52.512 54.450 19.640 25.892 14.306 i22.442 23,677 14.927 15.408 17.293 17.519 27,84632SEA

12SEA Ezeddeut no Innuthnnce ile reowm,u di, Secleur22SEA SoIde anoncl 267.800 2390 -647 .7.549 -5.943 726 4.284 5.901 5,230 4,077 5.322 6.113 8.230 9,860 10.18832 EA~ Si,Ii,iiiiiid 2.154.639 2,390 -3.036 -20,585 -16.528 .25.822 -12.528 -5.627 -397 3,680 9.002 15.114 23.345 33.205 43.39282SEA12SEA Inui,4u cumuls du pitt 3junm It d4rwes dc, le4soeie 0 -720 .2,086 -3.445 -4,4412 -5.079 -5.354 -5.413 .5.413 .5.413 .5.413 -5,413 -5.42323 sEA IRFSOERSE CUMULU APDES2NSET -2,390 -3,036 -112.50 -38.624 -19.256 -15.970 -10,705 -5.751 -1.733 3.589 9,701 17.932 27.792 37.979,

SENEGAL - baja ucuei an IOu.%- Peojeasefm llinnoit .2 )5- 8400SOh4C.XLS 689)99:54 AMd

78

Annex 5-2Pag I of 6


Asamptions used in the financial prjections

BASIC ASSUrMIONS

Volmes poduced by the Water Sector Rojct for Dakar (PAD)- 21.9 million m3 fwawtr for the Ngnith she and the Littoral Nord saing 1991;- 1.4 million m3 ofwater for the This site, starxing 1999;There is no pmgressve inease in productio and any producvity gains are rlected in prodution and distribti

eiency.

PWSTMENTrThePADprojctstars onFdruauy 1.1996 and wilUbe completedbyDecember31,2000. The impacton theyear 1996

is prorated by a actr of 11/12. T investmen cover all eenditus under the Segl Water Sector Ptojed, incudingexpediture in water ply but not nitatioln They do not inud the renewal inestmen that ae to be made and financby the peoator ( SdE) and inchided in bis pice Investment costs are fiee of duties and direc and indirct taxa Corporatetaxes are tk ito account i the mode.

CHOICE OF SCENARIOhe folowi g scenanos were nm during project preparaion. Scenario 6 is the Base case for the financial prjections.:

Scenario No. 1: no PAD, no instiutional reform, no ff inreasScenario No. 2: scenario No. 1 but an equibium prie is setScenario No. 3: PAD, but no institutonal reform or tariff increaseScenario No. 4: Scenario No. 3, bt an equilbrium price is setScenario No. 5: PAD and instituonal rm, but no tariff icrease

- Scenario No. 6: scenario No. 5, but an equirium prie is setEnty of a scenario nm into the choe-of-scenario cel has the bllowing impacts:

-coice of 1 or 2: the -i Stamet Wodng Capital (WC), Working Capital REjiremen (WCR),Sources and Applications Statemen, and the Ba Shee in the PAD modue have all their financal infou autondeleed. Te Water Sector (WS) module becomes the exact rlection of the sctor witt the project (SW/oP) module;

-choice of 1, 3 or 5: the avea tariff is no longer increased by the anma rate of increase entered duing thetariff anabsis;

- hdoice of 5 or 6: as desied below, the pamers impacted by the instiuional refm are alvwys reportedon to lines: one line without impact of the reform and one line with the impact When the chosen scenano is No S or 6, themodel aomcaDly records the data appearing on the with impact line. Otherwise the modd autmaally records the dataappeaing on the witxxt impact" lines.

SECONDARY ASSUMPTIONSIMPACTS OF INSTrT=lONAL REFORMP~o n anddislibution efficency ratosProducfion fic:

A production efficieny ratio is defined for the PAD and another for the SW/oP. It is noted that the institu l refrmhas no impact on production efficiency.

- PAD production efficiency ratio (source, consultant (BRL) report of November 1994) is 980% at project stat-up;

- the production efficiency ratio of the present SONEES is 95% for the entire life of the mode.Dilqnbuton diinv

With respect to diribuon, it is assumed that the water deriving from the PAD has the same prodcion efficiec asthe netwvk as a whole. On the other hand, the reform has an impact on distnbution eficency;

The distibuion effic y ratio without impact of the reform is a uniform 730/, whih corresponds to the 1994 raio,according to information obtainod from SONEES;

The efficiny ratio with impact of the reform develops as follows:

79

Annex 5-2Page 2 of 6

Year befDre 1996 1996 1997 1998 1999 2000 and beyondRatio 73% 74% 770/o 800/% 83% 85%

ILosses on bad deWs on bad debts are measured as a percentage of turnover.

Withot the impact of the reform, losses on bad debts are 5% rate for te entre li of the modeL Tbis rate onrspondsto SONEES' present losses With the refom the losses are assumed to be 5% trugh 1996, then decrse to 4%/. in 1997, andfirom 1998 are assumed to be 3%.

Without the reform, ocstomer credit, expressed in unover month is 6 months for Govmnt osomers and 4months for other acuomem

With impact of the retrm, the rates evolv duing the fis years of the reform Tbe Steering Committee has adaptedthe following credits: (i) Govrment acsmers: in 1994: 6 months; in 1995: 5 months; and 1996 onwauds: 4 months Forprivak cusomers: in 1994 and 1995: 4 months and from 1996 onwards: 3 monthsSimplier credit

Without the impact of the reormn, four months of tunover are asumed. With the reorm, SdE is asked to improe thistim period and bring it down to 2 mn by 1996.Mscellareo receivables and aabl and stockatios

Expressed in months of tunover, these atios are 1.5 months with or without reform.

MACROECONOMIC DATAhe convesaonrates usod inthe n are: - US$1 =CFAF 535; FF1 = CFAF 100.

The modd makes no provision for possible inflation nor for VAT.

VOLUME OF WATER PRODUCEDThe volume of water produced before new imvestments is 94 million m3, uoespn hng to SONEES' production in

1993.The volumes of pratowduced the supplementarvoje provided by SONEES.

Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Before new 95.5 95.5 95.5 95.5 95.5 95.5 95.5 95.5 95.5 95.5 95.5 95.5investments

Projt 8 centres 1.02 1.24 1.47 1.72 2.00 2.30 2.30 2.30 2.30 2.30 2.30

Pro,et Pedite 0.70 0.85 1.03 1.46 1.53 1.61 1.69 1.77 1.86Cots

Projet 6 centres 0.87 1.86 2.00 2.04 2.08 2.12 2.16 2.21fluviaux

VOLUMES OF WATER SOLDThe volums sold by the PAD and SW/oP are calblated by multiplying the volumes produed in each modul by the

gbal rates (production and distruion) in each modble.

TURNOVERA separat unover has been caated for the 'market gardenig tariff category, the public administration category,

and an overall tunvr for all other catgories The tr for the water sector is the sum of the these three catgorie

The average tariff is basod on the SONEES' description of amounts and volumes of sales by production regim fh theyear 1994.

The totals in volume and in CFAF were adjusted for the following fctors:- convmon of total billing inclusrve of all taxes into total billing net of tax (VAT is 10%);

80

Ane -2Psgc 3 of£6

ulmination of the w tax incudo in the baling amo- ldimination of the volume and amot biLed to the market gardening tariff category, baswd on budgtay data

3% of invoicing for 11% ofvolume billed.Following thee adjusents, the average tariff was obtained by dividing amnt billed by volume biled, yilding an

ave triff of CFAF 331Im3.

It is assumed that the average tariff will be increased by 1.5% as of July 1, 1995 and 2.4%/. fomm 1996 thmugh 2003which is the year the acbives cash flow eq xlibrum.Volume sold to market eardening tariffcate2orv

Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Volume sold to madkt 24.0 24.0 22.5 22.0 18.0 14.0 14.0 14.0 14.0 14.0 14.0 0

(m3 per day)

Tariff- martgardeming 83 100 100 100 160 160 160 160 160 160 160 Ave_ge

The volume sold to ma gardeners reflects losses due to the estimated producion effiency raio for the volume ofwater produced by the PAD. The volume remaining available before distibution dficiency impact for otba tariff caegories isthus equal to:

-ttal volume of watr produced- lb6ses due to pmduction effincy ratios

volume of production intended fDr m gardeners

Volume sold to ublic adminition cao

Year 1994 1995 199 1997 1998 1999 2000 2001 2002 2003 2004 2005

Vohme sold to public 29.6 30.0 30.0 30.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

(m3 per day)

The volume sold to the public administation category in 1998 is reduced by 10,000 cubic meters per day which is due to thecampaign to reduce laks and losses in public builings

If after 2004 (date of enty into effect of the long terme CANAL DU CAYOR), M a Gader are stilusing potable water to irrigate tbeir cmps they will pay fDr the water at a tariffequal to the opporumty cost ofpoable water.

FINANCING OF THE PADThe PAD is finnced partly out of loans from donors and partly from self-financing genrted by water setor activity or

from financing of the temporary cash shorfoll by commercial atnal sources. An interst rate of 10% has been assumed for thelans obtained at the commercial banks .

Donor financingCalculation of finann in relation to investnents

Ivstment financing under the PAD is deamed to be paid on the first day of the corrsponding investment phaseInterest is calulated on the increase in lending bdween the begunning and the end of the year.Financingt rm by donor

The following interest rate and tems were used in the projections:

81

Annex 5-2Pa 4 of 6

IDA CFD CFD (PM NFD KfW BADEA BOAD EI

Interestrate 7.1% 2% 9.41 5% 5% 5% 5% 3%

Start of principal 2001 2002 1999 2001 2001 2001 2001 2001repwynt

Term of prinipul 15 11 7 15 15 15 15 15repayment -

Inbter is calaclated by the oound method the amount of interest in year N is equal to the intmrt rate applied tothe toal ddet (long and short term) reported at the end of year N.

For the IDA credit it is assumed that 45%o f the amount will be in the form of a loan onlent to SONES and 55% will bein the form of an eqty contibuti For the KIW loan, it was assumed that 50°/. of the loan would be onlent to SONEES in theform ofa loan and 50% equity conributionFinancing by the water sector

The portion of the PAD financed by the water sector, referred to as 'self-financing" corresponds to the total amount ofinvestment less donor-financed investments.

FINANCING OF SECTOR WTOUT PROJECTInformation on SW/oP financing is taken from SONEES' December 31, 1993 consolidated debt table. Information on

investmnt, and hence on new disbursemens, was made available by SONEES' Sudiecs and Planning DepartncLFinacial terms of supplementary projects in 1994 and in ensuing years (CFAF millions):

Emergency phase Interim phase AEP Petite CMte AEP 6 centres KfWKfWNo. 857 CFDNo. 506 CFD:No. 516

LoaninteAstrate 70/o 5% 5% 5%

Start ofprcipal e 19930 1997 1997 1999

Term of principal repyment 15 15 15 15

Investmen in supplementary projects in 1994 and in engiing years (CFAF millions):

Total 1994 1995 1996 1997 1998

Emegency phase - KfW No. 857 7643

Interim phase - CFD No. 506 4568 1621

AEP Petite COte - CFD No. 516 6319 4393 854

AE!P 6 centres Kf1W 10880 300 200 6900 3480

AEP 8 centres -JICA 13328 2680 3000

OPERATING COSTSThe eslimates of variable operating costs for 1994 supplied by SONEES' Financial Deparnmet are used to determine an

average unit cost per m3 of water produced. Earlier, those estimated costs were adjusted for sewerage costs amounting to CFAF988 million. The oveall sewage cost has been eliminated from each cost item concened pro rata to the level of costs in eachcase.

82Amnex 5-2

Page S of 6Variable operating costs dbtaned (CFAIF per m3)

Total variable costs Variable costs afler Cost per m3

Eletric poser 4364 4041 42.90

Fuel and othe motive power requreuments 592 592 6.28

Chemicals 462 428 30.50

Matials and supplies 1470 1361 14.45

Other maeials and supples 2258 2091 22.20

Other srvices consmmed 2303 2303 24.45

Tota variable coss 140.34

BALANCE SHEET AND INCOM E STATEMTe 1993 SW/oP balance sheet and incom tatment correspond to the financisal sMaemnts certified by SONEES'

auditor. Th figures used for 1994 are based on the unaudted acouts for 1994.

FIXED ASSETS AND DEPRECIATIONDue to the devaluation of the CFA Franc, fixed assls awe rvaued by applying a rauaon rte (40%) to ther vale at

December 31, 1994. The sa applies to the depreciation amnt malued at December 31, 1994. A net fixed asset revuationgap (equivalent to the gross fixed asset realuation gap less depreciation revaluation gap) is posted on the liabilities side of thebalance sheet at December 31, 1994. Te revalued amount is t deprndiated over 10 years which we assune to be the avuageremaining economic lIfe of the assets. A deprcatio amount is posted each year, and at the same time a revse depreciationently reduces the revaluation adjustment in the liabilities.

REVALUATION OF DEBTA mechanisn identical to fixed asset revaluation, but in the opposite direction, is applied to SONEES' debts at

December31, 1994.All of SONEES' debts were multiplied by two at December 31, 1993.

INCREASE IN STAFF COSTSProvision is made for two incrases in staff costs, representig salay adjustmes to oiset the consquences of

devaluation:- increasein 1994: 15%- increase in 1995: 10°/.- increase staring in 1996: 2/. This increase does not catch up with inflatn, but simply represels a

"normal" increase in the wage bill due to promotions, seniority bonuses, etc. This increase stops in 2001.

DEPRECIATION AND PROVISIONS FOR BAD DEBTS

These two items are included under operating costs

Annex 5-2

83 Page 6 of 6

Tariffs

Investment Volumes~~~~~~~~stteens

impact~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~etprodctio Inputs fian_n

( and distribution ) i.,7( staternents (excluding )

DWS Project water sector

Dakar (excluding project)

Water

sector

Holding ~~~~~~~~~~~~~~~cornpanyCompany

cas shortW \ Remnuncratiom)

ma o o r '

Annex 5-384 Page 1 of 1

SENEGAL


Financing of the Temporary Cash Shortfall

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1 3-I IMM 1 I O f-1 E I I :-Il N NI IO

85 Annex 54Page 1 of 2


Financing of The Temporary Cash Shortfall (explanatory note)

Commercial loans by banks and insurance companies1. Two local commercial banks have expressed an interest in principle in providing 7 to 8 yearloans to SONES for a total principal amount of up to CFA franc 15,000 million at an interest rate ofapproximately 10% p.a. plus the 17% tax on banking transactions. The terms of the loans are: (i) interestrate of 10% p.a. plus tax; (ii) final term not to exceed 8 years; (iii) equal semi-annual repayments; (iv)front-end fee of 1 to 2% flat.

2. The banks have requested that the financing be structured in such a way as to provide comfort tothe lenders over and above the debt repayment capacity and the balance sheet of the SONES. Specifically,SONES would be required to provide irrevocable instructions to SdE to transfer a certain percentage of thepayments due to SONES directly to an escrow account secured in favor of the lenders. The paymentsmade to the escrow account would be used to make the debt service payment on the secured commnercialloans. After full repayment of the commercial loan, any fund remaining in the escrow account wouldrevert to SONES, and the account would be closed.

Rescheduling of part of the existing sector debt3. This concerns the existing loans from Kf(W in German Mark for which 50% of the outstandingamounts has been canceled by Kf(W. The cancellation of 50% of the Kf(W loans has not been passed. Arestructuring by the Government of the principal and interest amounts canceled by KfW would reduce thecash disbursements of the sector to the Government by CFA franc 4,342 million for the principal andinterest for the period from 1994 to 2000. The payment of these amounts would be differed until the year2001 and repaid in approximately equal installments over a 5 year period thereafter.

Sale of certain operating assets of SONEES to SdE4. As a condition of negotiations, it has been requested to make a valuation of certain, operatingassets which would be sold to SdE as the future operator of the water system. The valuation is now beingmade. It is estimated that the sale of these assets would bring at least CFA 2,000 million to SONES.

55% of IDA credit to the project to fund an equity injection5. the impact of transfer of 55% of the investment portion of the IDA credit to the sector in the formof equity is limited since during the period 1995-2000: (i) there is no principal repayment on the IDAcredit the debt repayment schedule does not call for any reimbursement of principal amounts on the lDAcredit; and (ii) the interest payments would be be made on that part of the IDA credit during that periodamount to CFA franc 9,639 million. Accordingly, the impact of that measure on the cash shortfall willbe only CFA franc 5,301 million.

50% of KfW loan to the project to fund an equity injection6. The impact of the transfer of 50% of the investment portion of the KfNW loan to the sector in theform of equity is also limited for the same reasons as in the above paragraph. The 5% interest paymentswhich would be be made on that part of the KfW loan during that period amount to CFA franc 2,592million. Accordingly, the impact of that measure on the cash shortfall will be only CFA franc 1,296million.

Other options examined and rejected6. In the study which was conducted at the request of IDA, several additional options wereexamined and subsequently rejected for specific reasons. A summary of these options can be found on thefollowing pages.

Financing of Temporary Cash ShortfallOther Options Examined

(CFAF million)

No. Option Impact Reason for Rejection

1 3 year 5% temporary tariff surcharge 4,950' Socially unacceptable.

2 Private sector financing of Ngith treatment 4,000 Rejected by the Government as too complicated at thisplant in the form of a project financing stage.

3 Differed interest payment on new IDA 1,2842 1) Especially favorable treatment to water sector;financing 2) Negative impact on Government budget.

4 Reduction in electricity rates. 1453 No significant impact.

005 Loan from SdE to S.N.P. No estimate Not acceptable to any private operator because of risk ostoo high.

6 Reduction in operating costs of the sector No estimate Will be the result of optimum competitive bidding asplanned.

7 Impact of new phasing of the investments. Not No significant impact.significant

CSorel:19 May, 1995 09:57 AMSENEGAL\SAR\SHRTFALL.DOC

Over a three year period.2 Over the period from 1996 to 2000. This amount corresponds to interest payments on the part of the IDA credit which would not be passed on to the sector in cothe form of an equity injection. 0Per year as of year 2000.

SENEGAL Water Sector Project Iplementadc Scheme

Water Resources Management Urban & eri-urban Water Supply Urban & Peri-urban Sanitation

Impleaenting agency MH (SOPRE) SONES/SdE ONAS

yea Studies § Studies & Investments Studies & Investments

1995 project preparation project prepartion tai 64i prject prparation

1Fb 1996 t effiven,6

(Feb. 96 - 97) development of strategy development of strategy

(Jar '98 -lu~~~~~~~~~~~~~~~~~~~~~n.c9 .wtr rsucs=easing production i -,* V _ densifcationofsewr ShydroloJir-al studies capacity connections

a decentralized, smallU ' ' increasing accessibility treatment plants for

~~~~~~~~~. ~~~~~~~~to safe. drinking water ,,,wastewaLer reuse ~seerage master plans ~ z

Dec 97 intermediate ~~~~~~~~~~~~~~~Projc evaluation t

Project Phasez 2 ae resources Ku edQown4 reduction of leakages $Jitats& -densification of sewer0

*me&in~pum imei. increasing production 'Mhgikmoef~~~~ ~~~long-term solution t4`w; .;;;,.:. capacity and potable t$~''SL Louis sanitiation

increasing accessibility

Jun-99 ~~~~~~~~~~~~~~~intemediate jetevaluation

Project Phase 3 4~4 Iz~*htire1eti'' redurtion of leakages * fbnphilnt Rufisque sanitation

* i6~slpkpekmlbn,increasing accessibility ""'.''Slpgpafanmzl'to safe drinking water tra

ad4w~,csp*cty bnlag -

T..Wag~~~~~~~~~~o ~

88

SENEGAL Annex 6-2WATER SECTOR PROJECT Page I of I

IMPLEMENTATION SCHEDULE1995 1996 11997 1998 1999 2000Sem. 2 Sem. I Sem. 2 Sem. 1 |Sem. 2 Sem.1 |Sem. 2 |Sem. I Sem 2 iSem I iSem. 2

PHASE I PHASE 11 PHASE III

1. Intitutional building- MH SGPRE (Water Resource Management)

- Launching workshop- Capacity building- Hydrological support studies i -: m- Supply of goods (groundwater monitoring)- Bathymetric studies of flesh water lakes- Study of Maestnchtian deep aaquifer- Revitalizing Program of the vallees fossiles- Reuse of wastewater- Water Resource Management master plan

- SONES- Capacity building- Public health and demand management- Audits (financial, maintenance) f l- Cost accountng -- Public health and demand management- Supply of goods (laboratory equipment)

- ONAS- Launching workshop- Strengthening Institutionnal reform .

II. Urban water supply- Production

- Ntth treatment works (civ. wrks, equipment) j.- Boreholes Littoral nord (civ. wrks, equipment) ..

- Boreholes Thies: (civ. wrks, equipment)- Piezometers- Transmission Ngnith-Thi6s (103 km-DN 1000)- Transmission Thies-PointB (55km-DN 1200)- Reservoir at Mamelles- Remote control and management system

- Distribution- Rehabilitation of distribution network- Extension of distribution network- Large water meters 17 .- Low income house connections- Installation of public standpipes

- Engineering, studies, supervision- Supervision of works (production)- Engineering studies and works documents- Supervision of works (distribution)- Pilot plant study- Environmental impact study- Rehabilitation of office facilities .

III. Urban sanitation- Densification of sewerage connections- Cambrine waste water treatment plant - p -- Small scale treatment of pen-urban waste water- Sewerage masterplans- Rainwater sanitation project St-Louis area

- Engineering- supervision- Civil works

- Rufisque sewerage project

_ Works, studies, and goods m Engineering and bidding documents - Supervision

89Annex 6-3

SENEGAL Page 1 of 1


PERFORMANCE INDICATORS FOR PROJECT PHASES

Projea Phase 1 Project Phase 2 Project Phase 3

Indicator 1996 1997 1998 1999 2000 2001 2002 2003

avenge vohme wa ter production sold to S 22500 522000 5 18000 514000 514000 514000 514000 S 14000market gardening sector (expresed ascubic neter per day. yearly average)

aveage tariff for arket gardening 100 100 160 160 160 160 160 160(CFAFIn3) in real terms (CFAF of 1995)

% annual increase on average tariffin real termu (without market gardening) tariff tariff tariff tariff tariff tariff tariff tariffadjusted on the basis of financial model adjusted adjusted adjusted adjusted adjusted adjusted adjusted adjusted(yr of targeted subsector equilibrium: 2003)

Government accounts receivable period 5 4 5 4 S 4 S 4 S 4 S 4 S 4 S 4water bills (expressed in months)

ratio net revenues SONES on a 0.8 2 0.9 2 1.3 a 1.4 1.4 ; 1.4 1.4 a 1.4maximtun anmual debt service

personnel expenses of SONES in real 500 510 520 530 540 550 560 570terms (CFAF of 1995)(expressed in CFAF million)


SENEGAL

WATER SUPPLY PROJECT

SECTOR LEVEL INDICATORS

OBJECTIVE WATER Base Values WASTEWATER Base V1994' 1 9 9 4M )

SERVICE % of Population served % of Population served <30COVERAGE Piped oonnection (%/6) 60

Piped discharge N/APublic taps(%) 35 On site solutions N/A

Other N/AWATER QO ity P rcent of sewage discharges thd are treated (in N/AQUALITY ' Bacteriological tests takel/year 4,000 % volume)

* Bactariological test failures/year (degree of treatment)* % E-coli (% of sunples with E.coli colony count 93.5

per 100 ml> WHO target value)

SECTOR PERFORMANCE INDICATORS

OBJECTIVE WATER Bae Values WASTEWATER Ba1 Vals1994 1994

1. EFFICIENCY ' Water distrlbutlon * SewerageOF OPERATIONS - Length of waLer distribution pipe systen 4,023 - Length of stwerage distribution system

(kin) per population served in the Dakar area 1.3- Number of connections 224,901 (meter/person served)- Clean water stoage per production - Length of sewerage system in the Dakar

(m'/m3) area per number of connections 15(meters/connections)

* Water losse* Unaccounted - For - Water (UFW): total 25.4

annual production - (total annualmetered consumption + etimnated annualnonmetered consumption) Mm'

- Percent UFW: UFW per Volume ofwate produced 27

* Personnel- Employees per 1000 connections 7.1 Personntel- Mm' produced per Employee 16.6 - Employees per 1000 sewerage 2- Employee costs per cash operating costa 0.26 connections.- Expatriate costa per Employee costs N/A- Number of expatriates 1


SENEGAL


SECTOR LEVEL INDICATORS

OBJECTIVE WATER Base Values WASTEWATER Ban Values1994 & 1 9 9 4w

1. EFFICIENCY OF 'Opeating revenueOPERATIONS - Annual operating revenue per annual total 223

water producedAnnual operating revenue per annual total 320water billed

Operating costs 'Operating oosts service connection N/A- Operating costs per m3 produced 170

- Operating costs per m3 billed 245

- Operating costs per m3 paid N/A _

2. SERVICE ReDabity ReLabhtyQUALITY Average hours of service per day (Dakar region) 15

Average hours of service per day (Secondary 24Centers)

* Percent of metered connections 100 * Percent of population or area of citysubjected to periodic flooding or back-ups N/A

Consumer relations* Consumer complaints, per 1000 connctions, per 0.006

year

3. MAINTENANCE * Pipe breaks/I00krmlyear (per pipe material) N/A * Number of stoppages/100 kn/year N/A* Percent of meters replaced per year N/A * Percent of pipes replaced per year N/A* Percent of connections replaced per year N/A* Percent of pipes replaced per year N/A* Percent of consumers metm out of order 2

4. FINANCIAL * Working Ratio (in percent) 0.82* Operating margin/total revenues* Avrage tariff per m3 billed (with market

garderiing) 298* Average tariff per m3 billed (without marketgardening) 331

5. COST * Billing ratio 73RECOVERY * Cost recovery effciency 95

* Accounts receivable collection period (private 4clients) (in months)

* Accounts receivable collection period N/A(Government Agencies) (in months) _

i to be completed on the basis of audited annual report 1994 of SONEES

N/A: non available

SENEGAL Annex 6-4Page 3 of 4


Monitoring Indicators

[ 3< < j glt 333 33 3 3. 4X0S.j ................. ............ ........... .. ... ............ . ... .. .. ..... .. ... . .. .

Physicalpopulation Dakar Region (million of inhabitants) 2,04 2,11 2,19 2,28 2,36 2,45numnber ofconnetions (BP) -Dakar 135,414 141,414 149,414 157,414 165,414 173,414numnber of public standpipes (BE) - Dakar 940 1,040 1,140 1,240 1,340 1,340total population served (BP + BE) (million of inhabitants) 1.63 1.73 1.84 1.95 2.06 2.14population served (%) 80.3 81.7 83.7 85.5 87 87.1

Operationalefficiency of distribution network (1) (2) 73 74 77 80 83 85cost recovery efficiency (2) 95 95 95 95 95 95volume produced in the sector (m3 / day) (2) 264,438 265,041 267,589 271,068 275,041 277,425pipes replaced (km / year) 17 17 17 17 17pipes rehabilitated (km / year) 20 20 20 20connections replaced (nb / year) 6,000 6,000 6,000 6,000 6,000Bacteriological tests taken (/year) 4,000 7,280 7,280 7,280 7,280 7,280

Financialannual operating revenue (constant FCAF Francs million 1995) (2) 21,348 22,393 24,143 33,000 36,189 38,175working ratio - WR (%) (2) 81 79 74 64 60 57operating ratio - OR (/O) (2) 117 118 124 102 96 92

........ .

nb of existing sewerage connections - Dakar region 40,794 42,790 46,790 50,790 50,790 50,790volume of collected wastewater (m3/day) - Dakar region NA 0 0 8,000 9,000 10,000

(1) ratio of volume of water billed to volume of water produced(2) estimated using the financial model, developed to simnulate sector performance

Annex 6-4Page 4 of 4

SENEGAL


GRILLE D'EVALUATION DE LA SOCIETE D'EXPLOITATION: INDICATEURS DE PERFORMANCE

No Indicateur Unite Cxitere CrIt&re Realisatton Ecart Ponderation Resulat(%) (%)

A Aspects Techniques 5A.1 Rend. Stat Traitement: VsNVa % 95 95 1A2 Nombre d'obsarvations no./an 260 100 5A.3 Pertes d'eau % 26 26 1A4 Nombre de fuites no./an 33660 100

B Qumie de reau 10B.1 Qualite bact6riologique: dchantillons conformes % 96 96 1B.2 Nombre d'echantillons contr6les no./an 7280 100 5B.3 Qualite physico-chiniique: 6chantillons confomies % 95 95 1B.4 Nombre d'6clantillons contr6les no./an 2316 100

C Qute du service IC.1 Interventions < I heure (% r le nombre total) % 100 100 IC.2 Remise en service < 12 heures (% sur le nonbre total) % 100 100 IC.3 Factures consomnimation non estim6e % 98 98 1C.4 Readions plaintes < 24 hues % 100 100 1C.5 Nomnbre de plaintes en diminution no./an 100

D Renouvelenment rsauD.1 KfL 6quivalent diametre reseau de distribution km/an 17 100 3D.2 Nombre de branchemants no./an 6000 100 3D.3 Nomnbre de cofpteas d'eau no./an 14000 100 3

E Aspects ffnanciersE. 1 Transfeul redevance SONES mensuelle % 100 100E.2 Recouvement des factu % 95

La grille d'evaluation de l'exploitation est reniplie annuellement par 1'exploitant avec les donnees de l'annee ecoul&e. La colonne Critere donne pour les diff6rents indicateuvs le chiffre qui figure dans lecontrat d'affenrage. Pour les critdres d'6valuations qui ne sont pas repris conune indicateurs darns le contrat, le nornbre repris donne la situation de la SONEES pendant l'ann6e 1994. La colonne Critre (%/6)reprend les chiffr qui sont exprimes en % danm la prenuere colonne et indique un % 6gal a 100 pour les indicateurs exprim6s en nombre. La colorme realisation est exprim6e en % par rapport a la colonmecritere. La colonne Ponderation donne 1'ecnelle d'importance aitribuec s chaque critere. Le chiffre inscrit est a multiplier pour chaque critere par ce nombre pour obtenir le r6sultat Les resultats sontadditionnes par groupes A, B, C, D, E et repris dans le tableau recapitulatif. Si, pour l'ensemble des critres, 1'exploitant respecte les obligations, le r6sultat fmnal est zero. S'il fait mieux que l'obligationimpos6e, le total eat un chiffre positif. S'il fait moins bien, le resultat est un chiffre n6gatif. La grille permettra a la SONES d'avoir un apercu de la qualite de l'exploitation, ce qui constitue une indicationgan6rale mais ne dispense en ricn l'exploitant de respecter toutes les autres obligations pr6vues dans le contrat. La grille est reffplie par 1'exploitant sur la base des chiffres qu'il a fournis pendant l'ann6e dansles rapports a la SONES. L'exploitant doit transmettre des grilles a la SONES avant Ic 30 janvier de l'ann6e suivant 1'exercice.

sr~117 'i

g t > : :~~~~~. i . ::: ,- ::,: . iE::.E:. i EE., :.: i , , E. ... . . .... .. . .. . .......

.......... r........li.-!i3islX trM lS 1 1

li i -i:-AtS2 ag 0-i]W} -- 0i0000§i;:.... .....

.......... .-ji

s s :i:03-C O ' Xt-j 0Xt 0;i 0 - OW2rCf ; i i NqY 0093 i!

§~ ~ ~ ~~~~~~ ......: . ...... .. -:- ...0 .......} g9-0$ 00 C l t tj :000 ;00. .00; 5.....f : t gg -;tl:gig:0;00~~~.;-... .-0-70--~S .X .: .:tt- : S t .tD .S0 0 ..'.? 000 ..... fi.. ; ... ;.- S.0... .

~~~ ' .A~~~~~~~~ .b... .. .

-ff w of,;0 -. Ue! i,0 i. ft ;! ;A ; ::;if: :; 0 A f

:S.:.,;-, f. ..... - ;- . - t.:00 . .. -f- l -:i':':'R': ............ : :!-y. .,.

i ::: ::: ~~ ~ ~~~~~~~~~~~~~.: .. f. . . . . . 7Ei E....7.f EE -!

.... .s . .... ... .. . .. ........wM ° 080Ei ° O § >0 0 i;a4g $ E

-o f--:-:fif.if ff .,f,,5-,!-,! , fSt4 0V*'d f, - -

8 !9 S~~~

. .. .. .. . . . . . . .. .. . . .... .. .. . ...

........ .... O. . H. .. .3.........ij-;0:g::03: . .. . .. .

I. . ..:. . . . . . .. . . . X.UI .. ...

. . . .~ . .. . . . . . .- @ ....... ... ..... .. . .......

X X X X V : : : . . . . . . . . . . . . . . . . .

....... lD lr 21 .O ;)I ..:1 L

...... ........ . ........

l~~~~~~~~~~~~... .. ..... ...S-9 ... ..u .. .. .. b.6... .

Seega . Water Seter Pect: Prorem nt Arrangements and PhaingComponents: caaed eos (cont dat i rmdiing contingencies) 8-Jun-95

NCBdisbursxnent atesory Projer Phase Fject cqonm total OTH no. of remrrks

paynma NBP cotracuI II 1 .l (a) (b)I NVpith trsvAm pat ciil wanks

civil works I Bkeboks L;la Nord (ruction)& pipe constntcrion 2 Boes Thia (cmmucm) 0.0 ICB I

I t PICanISkrA 1.60 ICB II Tussnsisor ma_in (103 km) boeholes Litoral Nord DN 1000

rwsmiswin nuain (55 km) bITus-Point B: DN 1200 47.80 ICB 12 Resrvoir at Mansies 5.55 ICB I

1 2 3 Ret ld tion of disribution wok Dakwr 5.50 S/NCB 9 NCB: contract under S0.5; 20% procured by NCB (eslinate)1 2 3 tension of distribution network Dakar 5.80 I/NCB 12 NCB: contracts under $0.5; 20% procured by NCB (estimte)1 2 Inalion of pubic Masdpipes 1.10 NCB 2 NCB: contracts under $0.5

Rebbilab tins of watr disibution in pubtic buildings 0.40 NCB I NCB: contracts under $0.53 Relsbukatil n of otcec faclkies for SONES

WaNsewaer reuse Camberene watewater uraiest plant2 Rainwavter stion projet Sl. Louis area

3 Ruaupe aewge pojetI Reuse of pir-rwban umnicipel waste water

- Densificstion of sege r 0.20 NCB I NCB: contrats under $0.5goods I Ngnith 1e5 btp eqsupnMent

I RoreBols Ussoil Nord (equipnent) 32 Boredokes ibis (eqsipat) 1.15 ICB I

I ilotd tresment pint (Water Setor Long-tenn Project) 0.10 NCB I NCR: conuts under $0.1 =2 Resote corl md nunagene system 610 IQC i

1 2 3 Supply nd inuallatki of low-income house connections 4.90 VNCB 13 NCB: contracts under 0. 1; 10% procured by NCB (estinute) ZSupply and inalltion of large water meters n 'sLaboratory and computer equipmen & software (SONES) 0.50 ICB 3 0 0Coiputer equipenAse & sofware (MH) 0.20 ICB 2 iGroundwa rondtoring equippnnrWastewater reuse Canbereue wassewaer treaYnent plant 2.40 ICB I

I 2 Deasification of seterage connections 4.70 ICa 4 Oconsultant ervices I Supervision of works (production) -3

2 Enginsering. bidding documents supervision Rufisque project 0.40 011H I tEng. bidding docuwents supervision rehab. public buildings 0.10 OTH I

I EnkSieering. bidding documents, supervision Camberene projec 0.60 OTH II n., bidding doc.. supervision pei-wuban wsewaser plams 0.40 OTH I

I Engineering stdiex and bidding documents (SL Louis) 0.30 0TH 12 Superviuio1 of works (St Lois)

Pil plant O tudy (Water Seao Long-tenn Project)2 Wam. Sect L. Pro. IEnv. mpa ctr ew trenm wrkL

I ew maeo atuplu for 6 riprian ownsI Sewcap rn4ma plan for 13 scoondwy owssI otady tnhe rn-ue dof ranipal wase waas

I ydaficl -pp-t iA-lathymewic& Uaoloi heldyof Lac de Guiers 0.30 0TH 2

1 S fay h Mae Matrimitas deep aquifer 3.20 0TH IRc z progrm of te VAs Posile 0.40 0TH I

1 2 3 C:9n ba1n and tr_mm MH(DHAJSGPRE). SONES, ONAS 1.00 OTH 3 -I WStesrran ma r en_ ruer pbo

IatMit.i inagthenssng of ONASc health education & denud mr _enaast program 0.90 OTH I

1 2 3 Asdita(fluciakl maimenue) 0.70 OTH 6I _ Cod accountig SONES & ONAS 0.20 OTH1 I

(a): in nillion USS;USS=-5 5(b) NBF: Non Buik-Fuaswed


SENEGAL


Estimated Disbursements of IDA Credit by Semester (in USS million)

Bank FY and Div peder semster CunmnldveSemester Dlsbunements

Phase 1 Phse 2 Phase 3

1996iJt semeste 2.0 .. 2.0

2nd senester 15.5 . . 17.5

1997Istasmester 15.5 . . 33.02nd saneter 16.0 49.0

1992Ist senester 16.0 - 65.02nd seneste - 8.0 . 73.0

1999Ist santer . 8.0 81.02nd seetr 4.1 1.7 86.8

2000lstsemeter . 4.1** 1.7 92.62nd sanester 3.8 96.4

20011st smester 3.6 100.0

* Cot are net of duties, direc and indiret t .00 Payment for works completed durng Phae n.

Disbursement Profile

100

... ~~~~~~~c. ~~~Project Profile60 2 3 4 Water Supply In

40 -- Country Profile.0


SENEGAL


SuRehision Plan

Approx. Activity Expected Skill Staff InputDate I RcqRuiements (staff-weeks)

02/1996 Proicct Launch Workshop: San. Eng. - TM 10Objectives: Procurement1) Explain project objectives to Disbumrsemnt

beneficiaries, stakeholders, and LawyarGovernmmnt Auditor

2) Procurement and disbursements Fin. Analist3) Review effectiveness: Env. Spec.

i) Achievement of credit effectveness GREAii) ManaRement and accountin_

06/1996 Sunervision Mission: San. Eng. - TM 7Review: Fin. Analist1) Audit 1995 Env. Spec.2) Taziffs and budgets for 1997 GREA3) Performance of SGPRE, SONES, SdE

and SONAS4) Monitoring indicators5) Application of action plans6) Project progress7) Outstanding issuesDiscussion mission findingswith cofinanciers

12/1996 Review 2)-7) as above San. Eng. - TM 7Discussion mission findings Fin. Analistwith cofinanciers Env. Spec.

=_____ ___________________________ GREA06/1997 as 12/1996 San. Eng. - TM 7

Review Audit 1996 Fin. AnalistEnv. Spec.GREA_____

12/1997 as 121996 San. Eng. - TM 14Project Phase I Review Fin. Analist.I) Conditions of disbursements Phase 2 Env. Spec.2) Update percent tariff increase Inst. Spec.3) Institutional an-angerrents Wat Res. Spec.4) Projecfs overall impact GREA

06/1998 as 06/1997 San. Eng. - TM 7Fin. AnalistEnv. Spec.GREA


06/1999 as 12/1997 San. Eng. - TM 14Project Phase 2 Review Fin. AnalistI) Conditions of disbursements Phase 3 Env. Spec.2) Update peroent tariff increase InsL Spec.3) Institutional arrangements WaL Res. Spec.4) Project's overall i mact GREA



12/2000 as 12/1997 San. Eng. - TM 14Project Phase 3 Review Fin. AnalistI) Discussions with Govemrnment Env. Spec.2) Preparations for drafting ICR InsL Spec.

Wat Res. Spec.GREA

Assumes a Board approval n June 1995

Staff inputs in staff weeks (sw) to supervise including field visits are as follows: 24 sw for FY96,21 sw for FY97, 14 sw for FY98, 21 sw for FY99, 21 sw for FY00


SENEGAL


Economic Evaluation

The EIRR of the proposed water supply project was calculated for the stream of netincremental benefits resulting from the project. Incremental net benefits are defined as thedifference between the net benefits of water services in the scenario in which both the project andthe institutional reform program are implemented, and the net benefits of water services in thescenario in which neither the project nor the reform is implemented.

Costs. The incremental costs of the project include the fixed and variable operating costsfor water supply as well as the cost of water supply investments. For the purpose of the economnicevaluation, incremental financial operating costs were adjusted to eliminate taxes, interest and thedepreciation allowance. Adjusting for the shadow wage rate for skilled and unskilled labor in theDakar area resulted in no change in incremental costs because the project will be implementedwithout any increase in staff. The exchange rate was assumed to be in equilibrium as a result ofthe 1994 devaluation.

Benefits. Incremental revenues from the sale of water were taken as a proxy for direct usebenefits. In addition, consumer surplus due to the increase in the volume of water consumed wasestimated based on an assumed price elasticity of -.2 and a linear demand curve in the relevantrange of the incremental volume consumed with the project.

Economic Internal Rate of Retuirn. The EIRR of the water supply project as a whole is14.1 percent. Sensitivity analyses yielded the following results:

Assumption EIRR

A 10 percent increase in operating costs 13.8 %A 10 percent increase in investment costs 12.7 %A 10 percent increase in total costs 12.5 %A 15 percent increase in operating costs 13.7 %A 15 percent increase in investment costs 12.1 %A 15 percent increase in total costs 11.8 %

EIRR of the Prod2uction Component. The investments in water supply production capacitywere evaluated separately. The EIRR of this component is 17.0 percent.

Average Incremental Cost. AIC/m3 was calculated by dividing the present value of thestream of incremental costs by the present value of the stream of the incremental volume of watersold, using a discount rate of 10 percent. AIC is estimated at CFAF 550/m3.

Details of the economic analysis are shown in the following table.

Economic AnalysisIncremental costs, benefits and volume sold of the

Water Supply Components

EIRR 4.08%AIC (with 10% discount rate) 550

.:.!E,:iSEE;~~ ~~~ ~~~~ .,^. .... .. ......... ... ... ..... - " '1''' "'' ''''"'"' ' ' Y.-. -. .. -. ;. .. . . .- : .:

'iVeaf ::C sns .... e .......,::,-.: ..:: .....::::-..: .:::'.:.':, ,.,,,::::,::::::::::: .::-:::-:::.:,,::.:::,:: .:.:.::.::,-:.: : -::,: :

1996- 51,146 - 16 - 51,162 316 11 327 - 50,835 0.92-1997- 50,183 166 - 50,017 1,307 170 1,477 - 48,540 3.711-998 - 9,898 - 2,829 - 12,726 8,567 5,507 14,074 1,348 23.751i-999 -7,009 - 3,023 - 10,031 10,542 7,662 18,204 8,173 28.542000- 3,959 - 3,042 - 7,001 11,727 8,979 20,706 13,705 31.002001 - - 3,038 - 3,038 12,013 9,194 21,207 18,169 31.022002 - - 3,065 - 3,065 12,914 9,414 22,328 19,263 31.032003 - - 3,092 - 3,092 13,838 9,639 23,477 20,385 31.042004 - - 3,091 - 3,091 13,845 9,638 23,483 20,392 31.062005 - - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.072006 - - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.072007 - - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.07_200 - - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.07

2009 - - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.072010 - - 3,071 3,071 13,949 9,638 23,587 20,517 31.072011 3,071 - 3,071 13,949 9,638 23,587 20,517 31.072120- - 3,071 3,071 13,949 9,638 23,587 20,517 31.072013 3,071 - 3,071 13,949 9,638 23,587 20,517 31.07

-20 - - 3,071 3,071 13,949 9,638 23,587 20,517 31.07.2015 3,071 3,071 13,949 9,638 23,587 20,517 31.072016 - - 3,071 3,071 13,949 9,638 23,587 20,517 31.07.2017 - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.07

201g - - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.07M20Y - - 3,071 - 3,071 13,949 9,638 23,587 20,517 31.07 0

f2020 _ -3,071 - 3,071 13,949 9,638 23,587 20,517 31.07 >520n _ -3,071 3,071 13,949 9,638 23,587 20,517 31.07

100 Annex 7-2Page 1 of S

SENEGAL


Environmental Assessment and Mitigation Plan

Background

The proposed project was placed in environmental screening category B as consistent withthe provisions of the Operational Directive 4.01, Annex E: Environmental Assessment. A detailedenvironmental analysis (see Project File) showed that the project would affect the environmentpositively, particularly in the area of public health. The environmental impact assessment studywas carried out in August 1990, updated in 1995, and has been made available to the public and toall parties concerned.

The survey of the impacts of the 3rd water project upon the environment was camiedduring two missions to Dakar, from June 13 to 24, 1994 and from February 8 to 24, 1995respectively. The key ministries and institutions involved in utilization of water resources in theCap Vert region were approached, especially the Ministry of Hydraulics, SONEES, and the CayorCanal mission. The consultants also made field visits to the most significant wellfields,construction sites and pipeline routes of the proposed project.

The environmnental analysis includes the following two main aspects: (i) impacts of theintermediate exploitation of the pertinent groundwater resources, (ii) consequences of theconstruction activities. As a third aspect (iii) the sanitary and health impacts of the project havebeen addressed as the human living conditions also are important environmental aspects of theproject. Environmental impacts are not necessarily negative, and the analysis also emphasispositive effects, as well as appropriate measures to deal with the unfavorable effects of the project.A summary of the main environmental impacts and proposed abatement measures are summarzedin a table at the end of this Appendix.

Impacts on Groundwater Resources

North Coastal Aquifer

In 1992 a simulation of the changes in groundwater regimes in the North Coastal Aquiferbased on BRGM's groundwater model was carried out. This simulation demonstrated that theamount of groundwater abstracted for from the additional boreholes (35,000 m3/day) will notaffect the north-south piezometric dome which protects the North Coastal ground-water tableagainst the invasion of salt water. The effect of the new boreholes will only be felt on the Gueoul-Thies line i.e. near the layout zone, where the induced drop should be around 2.5 to 5 meters over15 years, which is considered acceptable taking into account the depth of the aquifer. As aconclusiol the impact of the planned additional abstraction from the North Coastal Aquifer of35,000 m /day will be moderate. However, it should be pointed out that under the current climaticconditions, the resource of the North Coast is not perennial and the implementation of a long-termsupply project, like the Cayor canal, should make it possible to reduce the water drawn off.

101 ~~~~~~~~Annex 7-2101 Page 2 of 5

The Groundwater Resources in the Cap Vert Region

The groundwater resources in the Cap Vert region are a justified subject of concern, sincea considerable drop in the water level of some of the aquifers has been observed. This depletion isclaimed to be a result from the current groundwater exploitation at the peninsula, and from thelimestone aquifers of Pout and Sebikotane. The amount of water pumped out of these groundwatersystems exceeds by far the rates of natural recharge. Hence, additional abstraction of water fromthese sources must be accompanied by an intensive monitoring program including piezometric andwater quality changes. It will be possible to maintain this amount of abstraction in the interimphase as long as piezometric evolution are followed up regularly and critically together with thechlorine contents, sign of a possible intrusion by salt water. The above stated facts underscores theimportance of only allowing abstraction of water from these sources as a provisional solution, andit would be totally unacceptable to tap these water resources beyond a period of 10 or 20 years.

As a result of the above mentioned concerns the project has to be accompanied by a seriesof mitigation measures (included in the proposed project), such as: (i) creation of 21 supplementarypiezometers; (ii) strengthening of SGPRE, so as to follow up on a monthly basis 101 piezometricmeasuring stations including the 21 new piezometers; (iii) establish a forecast model for thegroundwater regime of the North Coastal Aquifer, in order to monitor changes compared to theforecasts, which will be the responsibility of the SGPRE; (iv) institutionalization of a system formonitoring the real groundwater abstraction by the various users, and develop regulations forrestricting the quotas.

To some extent the recommendations and compensatory measures is proposed to include:(i) establishment of routine cleaning of the Panthior Dam to improve the recharge of the Sebikotaneground-water table; (ii) a preliminary survey to develop other groundwater recharge measures; (iii)a budget provision to enable compensation for declined groundwater levels of several village wellsnear the new wellfields on the North Coast. Alternative measures would be deepening of the wellsor connection to the piped water systems.

Impacts of Construction Activities

The environmental problems that may occur during the construction period can beminimized through careful management of operation of equipment and handling of materials,especially waste materials. It should be noted that some temporary effects can have more severelasting effects, such as contamination of soil and water, if care is not taken. The appropriate actionand responsibilities which be undertaken during project implementation are included.

For all the mitigating measures related to the drilling of boreholes and construction of thepumping stations, transmission pipelines, storage basins, access roads, and distribution systems,the emphasis will be on a systematic consultation with local communities and users groups in orderto develop a participatory approach and raise the environmental awareness through the educationalprogram, which will be developed as part of the project.

Three particular impacts that are worth mentioning at this stage are: (i) the crossing of thePikine - Dagoudane - Thiaroye built-up area will require particular attention concerning the workon the site in order to minimize the effects of nuisance upon the populations; (ii) the construction of


the Mamelles reservoir is in a sensitive area; (iii) crossing a number of the "market gardening"properties may interrupt the horticulture production.

The main recommendations made in this study concern: (i) the need to establish particulartechnical arrangements on the site for contractor; (ii) consulting when crossing dense urban zonesis involved, such as rapid backfilling of trenches, maintained access to homes, and other safetyprecautions to protect the people concerned; (iii) the need to pay attention to the localization of theManelles reservoir to fit the natural topology of the site; (iv) the need to provide for financialcompensation in the event of temporary market garden production loss; (v) the need to ensurerepair of the sites for crossing the registered forest of Pout and the reforestation of the perimeter ofMbaw.

Sanitary Impacts

Today's maximum supply capacity (202,000 m3/day) is rarely obtained and does not, inany case, meet the current demand. Water shortages in the Dakar region are chronic, leading todegradation of the environment and health risks associated with an intermittent drinking watersupply. A 34 percent increase in supply, as a result of the proposed project, will notably improvethe supply of safe drinking water to the people living in the city of Dakar, as well as those living inthe peri-urban areas, where water bome diseases are endemic. The project will serve districtswhere inhabitants do not have access to adequate water supply today, hence the impacts for thepopulations concemed will be positive. However, some shortage of water will continue and the gapbetween demand and supply will continue to broaden during the interim phase.

Unless proper measures are being taken, there is a risk of increased pollution of nitratesand bacteria in the groundwater of Thiaroye caused by the rapidly increasing urbanization. Thecurrent nitrate concentrations are already very high (150 to 300 mgll) and therefore, it is advisableto: (i) maintain the current device to dilute the local drinking water to reduce the nitrateconcentration before it supplied to the consumers by connection to ALG 1; (ii) carefully monitor thenitrate contents and their bacteriological levels.

The proposed 34 percent increase in water supplied to Dakar would also increase theamount of wastewater which will require treatment and disposal. The disposal and treatment ofwastewater should, therefor, be considered at the same time as the supply of potable water. Theincreased amount of water supplied by the project will mainly go to areas with low populationdensity, where the soil conditions are favorable for infiltration of wastewater via septic tanks orseepage pits. The densely populated areas of Dakar are furmished with sewerage systems connectedto a sewage treatment plant with over-capacity compared to the current amounts of sewage. Thisspare capacity can be utilized to treat additional sewage resulting from increased water supplycapacity. Hence, there should be no notable risk of increased pollution caused by discharge ofsewage in the sea. In addition small-scale municipal wastewater plants will be built forpretreatment of sewage used for irrigation purposes.

In the secondary urban centers emphasizes is placed on coordination of water supply andwastewater disposal measures. Therefore the Water Sector Project includes preparation ofsewerage master plans for 19 centers recently provided with new water supplies. This also includeinformation programs the enhance people's awareness about wastewater disposal problems and theneed for keeping water, sewage and drainage works in good condition.


Summary of environmental impacts and mitigation measures

.t~m~F E~NVONM~NTAL ~PCTS MmGATIW M~ASU~..............SiS ' mi. .....

General Long term * Environmental impact study - long MH 1.0term

North Coastal Positive impacts: * Introduction of a penalty to SONES 1.5Aquifers: * Enhanced awareness of the incitate the private operator to useTemporary need of groundwater the Ngnith treatment plant insteadover- management of north coastal aquifersexploitation of * Increased water monitoring * Abstraction of water from thesethe aquifers in services sources must be accompanied by athe Geoul - follow-up strategy based on an MHKebemer area. Negative impacts: intensive monitoring program

* The risk of intrusion of including water level and watersaline water into the aquifer quality changes.due to the project is * Only allowing abstraction of water SONES 1.0assessed to be moderate. from these sources as a provisional

* Deprivation of shallow solution during a limited period.wells for villages * Enforce water demand

management, such as renovation of SONES 0.24piping, re-use of water, pricingmechanisms, wastage control, andregulatory measures

* Compensation measures foraffected villages must be cateredfor in the plans and budgets.

Groundwater Positive impacts: * Abstraction of water from these SGPRE Included

in the Cap * Enhanced awareness of the sources must be accompanied by a above

Vert Region: need of groundwater follow-up strategy based on anmanagement intensive monitoring program

Temporary * Increased monitoring including water level and waterover- * services quality changes.exploitation of * Only allowing abstraction of water MHthe Negative impacts: from these sources as a provisionalgroundwater * There is a risk of intrusion solution during a limited period. Included

resources in of saline water into the * Enforce water demand SONES above

the Cap Vert aquifer due to extensive management, such as renovation ofregion pumping by many users of pipig, re-use of water, pricing

these aquifers mechanisms, wastage control,* There is a risk of regulatory measures

deprivation of shallow * Compensation measures for SONES incluaewells in some villages in affected villages must be catered above

the new wellfields for in the plans and budgets I_I


Impacts of Positive impacts: * Systematic consultation with local SONESConstnrction * Creation of new communities and property owners / SdEactivities employment opportunities concerning potentially

* Increase in business for controversial site activitieslocal contractors, suppliers, * Eliminate neglectful disposal of 0.01and services solid and liquid wastes Con-

e Establish particular regulations for tractorNeptive impacts: site operations of the contractors SONES* Impacts upon the * Pay attention to the localization of

environment and the Mamelles reservoir to fit the SONEScommunities affected by the natural topology of the siteconstruction activities are * Prepare for financial compensation 0.02in general very limited in the event of temporary SONES

* Pollution of water and soil production loss* Garbage causing aesthetic * Ensure repair of the sites for 0.02

degradation crossing the forest of Pout and SONES* construction of the replanting in the perimeter of

Mamelles reservoir is in a Mbaw.sensitive area

* crossing of horticultureproperties may interrupttheir production.

* Impacts on the forest ofPout

Sanitary Positive impacts: * Sewerage and urban drainage ONAS 4.1impacts * A population of about 1.5 Rufisque

million will benefit from * Construction of latrines and ONASreduced water deficits and promote better hygiene behaviormore equitable and reliable * Provide social house connections SONES 7.1distribution. * Connect individual sewage ONAS 4.0

* Improved sanitary situation disposal systems to the sewagefor about 735,000 people networks, in order to stop pollution

* Improved hygiene behavior of local water resources.* Decentralized systems for ONAS 3.6

Negative impacts: treatment of sewage used for* No notable negative impact irrigation

provided appropriate * Rehabilitate and extend urban ONAS part ofmitigation measures will be drainage systems. sewerefficiently implemented. * Sewage master plans for 19 ONAS 1.5

riparian and secondary towns

Annex 8105 Page I of 19

LETTRE DE POLITIQUE SECTORIELLEDE L'HYDRAULIQUE URBAINE ET DE L'ASSAINISSEMENT

REPUBLIQUE DU SENEGAL(un Peuple - un But - une Foi)

Ministere de I'Economie Ministere de l'Hydrauliquedes Finances et du Plan

Les Ministres,

A/ Monsieur James WOLFENSOHN,President de la Banque Mondiale

1818, H Street N.WWashington.

Monsieur le President,

Suite aux negociations du Projet Sectoriel Eau du Senegal en vue de sa presentation au Conseild'Administration de l'IDA en Juin 1995, nous voudrions par la presente lettre vous reaffirmer lesgrandes lignes de la politique sectorielle du Gouvernement pour l'hydraulique urbaine etl'assainissement. Ce secteur auquel le Senegal attache une grande priorite, joue un r6le importantdans le developpement economique et social de notre pays. La lettre presente la situation actuelledu secteur ainsi que les strategies adoptees pour la realisation des objectifs du Projet Sectoriel Eaufinance par l'IDA et d'autres partenaires au developpement.

1. INTRODUCTION

La maitrise des ressources en eau, la preservation de la Sante des populations ainsi que laprotection de l'environnement, constituent des objectifs majeurs que le Senegal s'est assignb dans lecadre de sa politique de d6veloppement economique et social. Pour les atteindre des actionsimportantes ont e realisees au cours des dernieres decennies. Toutefois, des besoins importantsrestent a couvrir dans les domaines de la gestion de la ressource, de l'approvisionnement en eaupotable et de l'assainissement.

2. SITUATION ACTUELLE DU SECTEUR

Les elements caracteristiques de la situation actuelle du secteur de i'hydraulique se presententcomme suit:

2.1. Gestion des Ressources en Eau

Plusieurs etudes ont e menees au cours des dernieres annees en vue d'une meilleure connaissancedes ressources en eau et de la definition d'une strategie adequate pour la gestion de celles-ci. Cesetudes ont et accompagnees de la mise en place de reseaux de surveillance comprenant

Annex 8106 Page2 of 19

aujourd'hui, 450 piezometres couvrant la quasi totalite des principaux aquiferes et 72 stationshydrometriques installees sur les differents cours d'eau du pays.

En outre, des efforts importants de modernisation des outils de gestion des ressources ont eentrepris avec notamment la mise en oeuvre du Projet de Planification des Ressources en Eaufinancd par le PNUD.

2.2. Hydraulipue Urbaine

Les caracteristiques essentielles du sous-secteur de l'hydraulique urbaine se presentent conume suit

. nombre de centres geres: 48

. population totale concernee: 3.200.000 hbts

. capacite totale de production: 96 millions m3/an

. volume totale des ventes: 67,1 millions m3/an

. rendement technique moyen des reseaux: 73 %

. nombre d'abonnes: 220.000.

Il faut signaler que le sous - secteur de l'hydraulique urbaine se caracterise par une situationd6ficitaire dans l'agglomeration dakaroise. En effet pour une demande en eau de l'ordre de 300.000M3/j la production au profit de Dakar toume autour de 200.000 m3/j. En ce qui concerne les centresde l'interieur, la production couvre entierement les besoins.

2.3. Assainissement

Le sous-secteur de l'assainissement n'a pas connu le meme developpement que celui del'approvisionnement en eau potable. Ce retard se situe aussi bien au niveau du cadre institutionnelqu'a celui de la satisfaction des besoins d'investissement. Par ailleurs plusieurs organismesparticipent actuellement a la gestion des activites relevant de l'assainissement.

Actuellement, seules six (6) villes du pays disposent de systemes acceptables d'assainissement.Dakar, Saint-Louis, Thies, Kaolack, Louga et Saly Portudal. II convient de noter que cesinstallations, qui offrent une capacite globale de traitement de pres de 15.000 m3/j, demeurent sous-utilisees a cause du faible taux de raccordement des particuliers resultant du cout 6leve desbranchements individuels a l'egout. Le nombre total des abonnes raccordes au reseaud'assainissement n'atteint pas 50.000 dans l'ensemble des villes assainies.

3. STRATEGIE DE DEVELOPPEMENT DU SECTEUR DE L'HYDRAULIOUE

La strategie elaboree pour le developpement du secteur de l'hydraulique urbaine et del'assainissement repose sur une triple preoccupation, a savoir, (i) parvenir a l'equilibre financier dusecteur en vue d'assurer sa perennite, (ii) impliquer le secteur prive dans la gestion du servicepublic de l'eau, (iii) limiter l'incidence des mesures a portee 6conomique sur les revenus desmenages. Elle avait recueilli l'aval des partenaires au developpement du Sendgal lors de la reuniondes bailleurs de fonds tenue a Dakar en Juin 1990 qui etait le cadre de reaffirmation des optionsfondamentales prises pour le secteur de l'Hydraulique.

Annex 8107 Page 3 of 19

Cette strategie devrait permettre d'ici a la fin de la decennie, (i) de parvenir a une gestionrationnelle et a une protection efficace des ressources en eau, (ii) de renforcer les systemesd'alimentation en eau potable et d'assainissement, (iii) d'ameliorer le cadre de vie des populations.De facon specifique, cette strategie se resume comme suit:

a /- En ce qui concerne la gestion des ressources en eau, les axes retenus s'articulent autour d'unemeilleure connaissance et d'une protection efficace des ressources en eau, et de la mise en placed'un cadre institutionnel approprie de concertation et de prise de decision garantissant une gestionglobale et coherente des ressources.

b/ - Dans le domaine de l'hydraulique urbaine, la strategie definie vise a la fois: (i) I'ameliorationde la maintenance et de l'entretien des 6quipements, (ii) I'augmentation de la production d'eaupotable pour la region de Dakar, (iii) le renforcement institutionnel et financier du secteur en vue deretablir son equilibre.

c/ - Pour le sous-secteur de l'assainissement, les actions strategiques ci-apres sont privilegiees:

la poursuite de l'equipement des centres urbains en infrastructures d'assainissement surla base de plans strategiques bien definis, tenant compte de toutes les optionsenvisageables, la rentabilisation, la rehabilitation et le renforcement des installations;le traitement et la reutilisation des eaux usees;I'accroissement des branchements domiciliaires a l'egout et la promotion del'assainissement autonome chaque fois qu'il peut apporter une solution acceptable.

Enfin, pour atteindre les objectifs qu'il s'est fixe dans le secteur de l'Hydraulique et del'Assainissement le Gouvernement du Senegal a initie en etroite collaboration avec ses partenairesau developpement un vaste programme d'investissements dont la piece maitresse est le "ProjetSectoriel Eau".

4. PROJET SECTORIEL EAU.

4.1. Obiectifs du Proeet Sectoriel Eau.

Le Projet Sectoriel Eau s'inscrit parfaitement dans la politique de developpement economique etsocial du pays, et vise notamment les objectifs suivants:

a/ - Ameliorer la gestion du secteur de l'eau, en particulier le recouvrement des couits relatifs ausous-secteur de l'Hydraulique Urbaine et reduire sa d6pendance vis- a -vis du Budget de l'Etat afind'assurer sa viabilite financiere;

b/ - Reduire le deficit de l'alimentation en eau de la Region de Dakar et ameliorer l'acces a l'eaupotable et a l'assainissement dans les zones defavorisees des centres urbains;

c/ - Assurer une meilleure adequation entre besoins et ressources en eau. et definir une strategieglobale et coherente de gestion de ces ressources;


d/ - Renforcer le sous-secteur de I'assainissement urbain en vue de combler son retard par rapportau sous-secteur de I'hydraulique urbaine.

4.2. Description du Proiet Sectoriel Eau.

Le Projet Sectoriel Eau s'articule autour des composantes principales suivantes: (i) hydrauliqueUrbaine, (ii) assainissement Urbain, (iii) renforcement du cadre institutionnel et reglementaire.

4.2.1. Hvdraulique Urbaine.

Le projet retenu dans ce sous-secteur concerne exclusivement la phase interimaire de l'alimentationen eau de la Region de Dakar. II vise a augmenter la production d'eau destinee a la Region deDakar, a assurer son transport et a ameliorer la distribution de l'eau potable dans cette zone. IIcomporte les volets suivants:

a) - Production d'eau potable pour la Region de Dakar.Augmentation de la capacite actuelle de la station de traitement de NGNITH de 40.000m3Ij a 64.000 m3 /j;Construction et equipement de onze (11) forages dans la zone du Littoral Nord et 2forages a Thies et raccordement de ces ouvrages de production au systeme d'adductiond'eau existant;Installation de piezometres pour le suivi de l'evolution des ressources en eausouterraine;Pose d'une conduite de transport de diametre 1000 mim sur 103 km entre GNITH etTIES;Pose d'une conduite de transport de diametre 1200 mm sur 54,6 km entre THIES etPOINT B;Construction d'un reservoir de capacite 25.000 m3 aux Mamelles, pour porter lacapacite de stockage de 10.000 m3 a 35.000 in3 ;Installation d'un dispositif de controle et de telegestion du systeme d'adduction d'eaumis en place.

b)- Distribution d'eau a Dakar. Cette rubrique couvre les aspects suivants: (i) rehabilitation durEseau de distribution d'eau de Dakar, (ii) renovation et renforcement du reseau de distributiont'eau de Dakar, tenant compte du programme de nutrition communautaire, (iii) acquisition etinstallation de gros compteurs, (iv) realisation de branchements sociaux et de bomes-fontaines surla base des recomniandations de l'etude sur la volonte et la capacite des populations a payer 1'eauqui sera menee en 1995.

4. 2. 2. Assainissement Urbain

Cette composante couvre les projets suivants:

* drainage des eaux pluviales de Saint-Louis;

Annex 8109 Page S of 19

assainissement de la Ville de Rufisque (collecte, evacuation traitement des eaux us6es,drainage des eaux pluviales);traitement a petite echelle des eaux usees de la commune de Dakar et reutilisationdecentralisee des eaux epurees;la realisation des plans directeurs d'assainissement de centres secondaires (6 centresfluviaux, 13 centres secondaires);densification des branchements domiciliaires a 1'egout, tenant compte de 1'enqu&e surla volonte et la capacite des populations a payer le service ainsi que des contraintesd'environnement des sites;reutilisation des eaux usees epurees;vulgarisation de nouvelles technologies en matiere d'assainissement autonome.

4.2.3. Reformes institutionnelles et mesures d'accompagnement

a) Reforme du sous-secteur de l'hydrauligue urbaine

La reforme du sous-secteur de l'Hydraulique Urbaine vise la mise en place d'un cadre institutionnelapproprie garantissant la viabilite financiere dudit sous-secteur. Elle s'articule autour de troisacteurs dont les attributions sont les suivantes:

I'Etat dont les principales missions dans le sous-secteur de I'Hydraulique Urbaine se presententcomme suit:

- la definition de la politique sectorielle;- la gestion des ressources en eau et la police des eaux;- I'elaboration d'un cadre legislatif et reglementaire;- I'approbation du systeme de tarification.

Une Societe Nationale de Patrimoine (SONES, creee en Avril 1995) chargee de:

- la gestion du patrimoine : mise en valeur, amortissernent et service de la dette;- la programmation des investissements et la recherche de financement;- la mailtrise d'ouvrage des travaux de renouvellement de l'infrastructure;- la maitrise d'ouvrage des travaux de rehabilitation de reseau;- la maitrise d'ouvrage des travaux d'extension de l'infrastructure;- la sensibilisation du public;- le contr6le de la qualite de l'exploitation.

Une Societe Privee d'Exploitation (SdE) chargee:

- de l'exploitation et l'entretien de l'infrastructure et du materiel d'exploitation;- du renouvellement du materiel d'exploitation et des compteurs;- du renouvellement du reseau et des branchements;- de l'extension des reseaux financee par des tiers;- de l'etude et la justification de la necessite de renouvellement et d'extension de

l'infrastructure;


- du recouvrement des factures d'eau potable et de la redevance assainissement;- de la communication et des relations avec la clientele.

L'appel d'offres de la SdE sera lance avant la fin du mois de Juin 1995, en vue de l'etablissementde la societe au plus tard a la fin de l'annee 1995.

b) Reforme du sous-secteur de l'assainissement

La reforme institutionnelle du sous-secteur de l'assainissement urbain vise la reorganisation ducadre institutionnel et la mise en place d'un Office National de l'Assainissement (ONAS) autonomeayant l'entiere responsabilite de gestion des activites liees a l'assainissement (eaux usees). Cesactivites seront financees par la surtaxe d'assainissement collectee par la SdE sur les facturesd'eau et reversee a l'ONAS. La reforme du sous-secteur de l'assainissement sera mise en place enmeme temps que celle de l'hydraulique urbaine.

c) Mesures d'accompagnement

Gestion des ressources en eau: Le Projet Sectoriel Eau comporte un important volet visantl'elaboration d'un plan strategique national de gestion des ressources en eau. Ce plan sera axed'une part, sur une meilleure connaissance des ressources, une protection efficace de celles-ci etd'autre part, sur la mise en place d'un cadre institutionnel approprie de concertation et de prise dedecision. II contribuera a la preparation de la solution a long terme pour l'approvisionnement eneau potable de la region de Dakar. Le plan strategique permettra egalement la realisation d'etudes,notamment:

- etudes hydrologiques et hydrogeologiques (en complement du projet PNUD en cours);- etude institutionnelle relative au programme de revitalisation des "Vallees Fossiles";- etude de preconception sur la r6utilisation des eaux usees en zone urbaine;

Plans d'actions: Pour garantir la reussite des reformes et assurer la viabilite financiere del'hydraulique urbaine et de l'assainissement, plusieurs mesures administratives et financieres ontete retenues.

* Pour la reduction de l'usage de l'eau potable a des fins agricoles (annexe 1): (i)I'application des Juillet 1995 d'une nouvelle grille tarifaire aux maraichers, baseesur un prix moyen de 100 FCFA par m3, (ii) I'application du cofit marginal apartir de 1998 et du tarif plein a l'an 2005. La mise en oeuvre de cette dernieremesure suppose la disponibilite de ressources alternatives (eaux usees recycleespour 1998 et disponibilite d'eau apres la realisation de la solution a long termepour l'AEP de Dakar a l'horizon 2005), (iii) a partir du 30 juin 1995, lasuppression de l'octroi de nouveaux quotas d'eau potable aux maraichers, (iv)elaboration et mise en oeuvre d'une campagne de promotion et de vulgarisationde techniques d'irrigation plus efficaces permettant d'economiser l'eau. Bienentendu, les maraichers restent dans le droit commun seront traites comme toutautre abonnes par la SdE (coupures en cas d'arrieres de paiement). Laproblenatique du maraichage sera reexaminee en 1998 au cours de l'evaluation


de la premiere phase du projet. Cette revue se fera sur la base d'une approchemultisectorielle tenant compte des resultats de deux annees d'application du pland'actions.

* Pour la reduction des consommations d'eau des Administrations Publiques etdes etablissements a caractere administratif (annexe 2a): (i) la mise a jour etla centralisation du fichier des abonnes administratifs, (ii) I'elaboration desbudgets sur la base de pr6visions realistes des consommnations, (iii) lerenouvellement des reseaux d'eau interieurs, des branchements et descompteurs des services de l'Administration Publique. Ce plan d'action vise areduire de 70% des pertes d'eau dues aux fuites et au gaspillage, pourdegager un gain de 10 000 m3/j. Compte tenu de ces economiessubstantielles d'eau et de leur impact sur les quantit6s qui seront ainsidisponibles pour d'autres consommateurs, la mise en oeuvre rapide du planest d'une importance primordiale. C'est pourquoi il est prevu sur le PPF duprojet, un financement destine aux mesures preparatoires (diagnostic desreseaux internes des Administrations, appui logistique pour la centralisationdes fichiers de consommations, etc). Les travaux de rehabilitation de r6seauxconstituent 6galement une composante specifique de la premiere phase duprojet.

* Concernant le paiement a bonne date des factures d'eau des administrationspubliques et des etablissements a caractere administratif (annexe 2b), lesprocedures de certification et de liquidation seront limitees a deux (2) mois. Cequi avec une facturation bimestrielle, permet d'atteindre l'objectif d'un creditclient ne depassant pas 4 mois des 1996.

Plan de suivi environnemental, le Projet Sectoriel Eau prevoit le renforcement des moyens desurveillance et de suivi des nappes et des eaux de surface. Toutes les mesures d'attenuation desimnpacts negatifs, recommandees par les etudes environnementales, ont ete retenues. En ce quiconceme particulierement les aquiferes du littoral nord il est prevu: (i) l'arret des pr6levementssupplementaires d'eau des 2005, (ii) la densification du reseau piezometrique de surveillance, (iii)I'application d'une penalite a la SdE pour l'inciter a exploiter l'usine de Ngnith a sa capacitemaximale et le littoral nord au debit autoris, (iv) le raccordement aux conduites d'eau, des villagesdont les puits sont susceptibles d'etre affectes par les nouveaux prelevements.

Equilibre financier du secteur: Le Gouvemement du Senegal s'engage a assurer l'equilibrefinancier du sous-secteur de l'eau potable en 2003. A cet egard, des augmentations tarifairesannuelles en termes reels sont prevues. Le premier ajustement interviendra des le ler Juillet 1995.La grille tarifaire sera r6vis6e en 1998 en tenant compte des indications pertinentes fournies parl'etude sur la structure de la demande a mener par la SONES au cours de la premiere phase duprojet.


Annexe 2 de la Lettre de Politique SectoriellePLANS D'ACTIONS: REDUCTION DE L'USAGE D'EAU POTABLE POUR

L'IIRRIGATION

Considerations Preliminaires

1. Ce plan d'action s'inscrit dans le cadre des deux etudes effectuees l'une en niai et l'autreen septembre 1994 sur la fourniture d'une eau potable pour l'irrigation des cultures horticoles(maraichage, arboriculture et floriculture) dans la region des Niayes entre Thies et Dakar. II vise aassurer a terme la fin de la distribution par la SdE de 1'eau potable au secteur horticole pour ladestiner en priorite a l'alimentation de la region de Dakar. II preconise differentes mesures etaleesdans le temps pour reajuster immediatement le tarif, ameliorer rapidement les systemes d'irrigationet appliquer, au moyen terme un tarif base sur le couit marginal de production de 1'eau et a pluslong terme (horizon 2005) un tarif maraicher base sur le cout d'opportunite de l'eau potable. Leplan d'actions conine tous les autres el6ments du projet sectoriel eau fera l'objet d'une revue en1998. Cette revue permettra de redefinir selon une approche multisectorielle, la problematique dumaraichage dans la region des Niayes.

2. Le plan d'action etablit une nouvelle grille tarifaire applicable aux maralchers, a compterdu Ier Juillet 1995. Tl prevoit des mesures tendant:

* A l'application d'un tarif maraicher egal au cout d'opportunite de l'eau, lie a lafourniture alternative et plus appropriee d'eau;

* au paiement a bonne date des factures d'eau avec un taux de recouvrement analoguea celui atteint aupres des consommateurs autres que les producteurs horticoles ; et

- a la rationalisation des techniques d'irrigation en vue de reduire les pertes et lesgaspillages d'eau par la mise en oeuvre rapide et progressive d'un programme.

3. Toute politique de l'eau dans les Niayes doit etre la recherche des moyens les plusrationnels d'utilisation de la ressource en vue du maintien de l'activite economique dans la region.Elle devra se fonder sur:

* l'acquisition de donnees fiables et;

* la mise en place d'un mecanisme de suivi et d'evaluation, permettant d'apprecier lanecessite d'une reorientation des actions entreprises.

Actions et Proeramme

Application de la nouvelle grille tarifaire et recouvrement des factures d'eau

4. L'application de la nouvelle grille tarifaire (copie ci-joint) des le 15 Juin 1995 et lerecouvrement efficace des factures d'eau se fera selon le schema ci-dessous:

ChiWfe d'affaireAnnie Consommation Prix Moyen Taux de en mons de FCFA

en m1 par varlatlon a mUllons de en FCFA par palementjour partMr de ml par an m3 facture paye

19951995 24.000 8,76 100 0,90 821,3 788,41996 22.500 -6,2% 8,21 100 0,96 821,3 788,41998 18.000 -25,0% 8,57 160 0,97 1.051,2 1.019,71999 14.000 -41,7% 5,11 160 0,97 817,6 793,12000 14.000 -41,7% 5,11 160 0,97 817,6 793,12001 14.000 41,7% 5,11 160 0,97 817,6 793,12002 14.000 -41,7% 5,11 160 0,97 817,6 793,12003 14.000 -41,7% 5,11 160 0,97 817,6 793,12004 14.000 -41,7% 5,11 160 0,97 817,6 793,1

113 Annex 8Page 9 of l9

5. L'application de la nouvelle grille devrait en principe dans un premier temps r6duire lespertes supportees actuellement par la SONEES pour chaque metre cube d'eau produite et ficturieaux maraichers. Cette augmentation du tarif devrait 6galement sensibiliser les utilisateurs i uncmeilleure gestion de l'eau qui est une ressource rare et chere.

6. Un tarif plus r6aliste compte tenu de l'eventail des charges de production et desopportunites de vente sur le marche int6rieur ou a 1'exportation a e propose. 11 comporte unetranche basse qui concerne les petits maraichers et une tranche nonnale pour les gros maraichers(voir grille en annexe). L'application de ce nouveau tarif des le 15 juin 1995 pernettra de poser lesnouvelles regles de facturation avant le commencement de la prochaine campagne de productionpour l'exportation qui devrait commencer apres la fin de la saison des pluies. Le respect de cettedate est donc imperatif pour clarifier la nouvelle donne avant la mise en place de la prochainecampagne.

7. Le meilleur recouvrement des factures d'eau des maraichers programnim a partir de 1996par la SdE traduit une volont6 de l'Etat de faire respecter la politique tarifaire et donc de permettrea la SdE d'appliquer les sanctions prevues pour penaliser les mauvais payeurs. Le systeme defacturation actuel par bimestre n'est pas remis en cause. Cette disposition sera incluse dans lecontrat d'affermage.

8. A partir de 1998, il sera applique aux maraichers un tarif base sur le couit marginal deproduction d'eau potable.

9. En 2005, le couit d'opportunite de l'eau sera applique. La mise en oeuvre de ces deuxdernieres mesures est liee a la solution long terme et a la disponibilit de ressources alternatives.

Rationalisation des Praticues d'Irrization

10. La reduction progressive de la part de consommation d'eau potable vendue auxproducteurs horticoles en general, et maraichers en particulier, doit egalement resulter d'uneadoption de techniques d'irrigation amrliorees.

1l. Le plan d'actions envisage s'articule autour de deux axes: (i) la prevulgarisation desnouvelles techniques, (ii) diffusion des pratiques appropriees d'irrigation et formation desmaraichers.

Prevulgarisation

12. Elle vise les objectifs suivants:

* tester de maniere pragmatique et effective, sur le terrain, des equipements et despratiques d'irrigation avec un bon potentiel d'appropriation par les producteurslocaux;

* cerner les divers problemes susceptibles de se poser dans l'application des m6thodeset proposer des solutions realistes;

* choisir finalement les techniques appropriees apres une analyse consequente desreactions des producteurs face aux innovations propos6es;

* definir le dispositif final a envisager pour la mise en place d'une operation dediffusion effective des pratiques dans la region des Niayes en consideration.


13. L'opCration de vulgarisation sera conque et appliquee par le Ministere de l'Agricultureavec la collaboration etroite de la SONES et la SdE. Le plan d'action propose les activitessuivantes avec les modalites organisationnelles de leur execution:

* conception de l'operation de prevulgarisation par collaboration etroite entre leGouvemement senegalais (Services du Ministere de l'Hydraulique et del'Agriculture), la SONES, la SdE et les maraichers. Les bailleurs de fonds mettrontA disposition l'expertise necessaire devant assister l'operation;

* selection de producteurs quotataires pour la mise en oeuvre de I'operation. Cesproducteurs doivent ere representatifs des divers types d'exploitations quotataires etavoir un potentiel propre a assurer la reussite de la diffusion de l'equipement et despratiques d'irrigation appropries;

* en collaboration avec la SdE, la SONES fournira la liste exhaustive actualisee desproducteurs quotataires avec la taille et la localisation des diverses exploitations.(disposition A inclure dans le contrat d'affermage). Cette operation vise egalement Ala constitution d'un systeme d'information geographique operationnel relatif al'activite horticole dans la region des Niayes. La realisation pratique de ce systemed'information geographique peut etre confiee au Ministere de l'Hydraulique quidispose d'un service competent en la matiere, la SGPRE en l'occurrence. Etantdonne la proportion importante des exploitations traditionnelles fnailiales, il estsouhaitable de considerer au moins un nombre egal au 2/3 des producteursselectionnes pour l'operation de pr6vulgarisation pour ce type d'exploitation. Lerestant est A repartir entre les exploitations moyennes et industrielles quotataires.

* choix des systemes d'irrigation appropries. Compte tenu des criteres de taille etd'organisation des diverses exploitations quotataires, et du degr6 de technicite duproducteur et des parametres de culture et de qualite d'eau, il sera considere lessystemes d'irrigation suivants:

a) le bassin d'arrosage en vue d'ameliorer le systeme d'irrigation l'arrosoir;

b) l'irrigation localisee (goute A goute, etc.).

14. Le projet prevoit le financement de missions d'expertise pour la dsfinition et le choix desystemes d'irrigation appropriees et d'actions d'accompagnement (formation).

15. Les organisations des producteurs assureront I'encadrement commercial et de gestion avecsi necessaire l'appui des ONG et/ou de l'Etat.

Diffusion des nratiaues a3proprikes d'irriaation et formation

16. L'analyse des resultats de l'operation de prevulgarisation doit permettre de lever lescontraintes majeures pour autoriser la diffusion progressive des pratiques d'irrigation efficaces eteffectives en mati6re de reduction des pertes et du gaspillage d'eau des la campagne horticolesuivante.

17. L'operation de diffusion sera menee par le Ministere de l'Agriculture a partird'exploitations bien ciblees. le systeme d'inforiation geographique requis au cours de l'op6rationde prevulgarisation fournira un excellent outil d'aide a la decision en la matiere. L'effort dediffusion doit etre maintenu jusqu'A l'atteinte de l'autonomie en matiere d'approvisionnement eneau d'irrigation.


18. La diffusion des nouvelles pratiques d'irrigation sera accompagne d'un programme deformation a mener par les services competents en la matiere du Ministere de l'Agriculture.

Mobilisation de ressources suuDlementaires A Dartir des eaux usees traitees

19. La mobilisation des ressources supplementaires a partir des eaux usees traitees est unobjectif a court terme du Projet Sectoriel Eau. Les couts et les benefices y afferents seront evalueset un tarif acceptable pour toutes les parties sera d&termin6 dans le cadre de 1'etude sur lareutilisation des eaux usees pr6vue a cet effet.

Affectation de 1'eau de la nappe de Thiarove a I'activite aericole

20. L'eau du centre de captage est tres chargee en fer et requiert un traitement avant d'etredistribuee. De plus elle est de plus en plus polluee suite a la pression exercee par lesagglomerations de Thiaroye et de Pikine. Cette eau est, comme telle, impropre a la consommationhumaine A cause de sa teneur elevee en nitrates. Elle constitue cependant une reelle plus-value pourl'agriculture.

21. L'arrivee A la region de Dakar de l'eau de la solution a long terme entrainera certainementla suppression des pompages du Thiaroye. Cependant, si les pompages sont arretes, on assistera ane remontee de la nappe qui pourrait atteindre un niveau ruinant les nombreuses maisonsconstruites dans les zones de bas-fonds. II est donc indispensable de continuer A deprimer la nappede Thiaroye au profit des maraichers, pour maintenir sa surface phreatique a un niveau inferieuraux c6tes les plus basses du terrain naturel.

22. La solution du centre de pompage de Thiaroye devrait de s'inspirer de l'expdeience encours avec le centre de captage de Berr thialane. Cette eau pourrait etre transferee A l'utilisationagricole. Un volume d'eau potable equivalent sera recupere des maraichers quotataires localisesdans un rayon qui rendrait l'operation de transfert viable. II suffirait de trouver une superficied'une centaine d'hectares de cultures maralch6res pour resoudre ce probleme.

Annexe I de la Lettre de Polilique Sectorielle

GRILLE TARIFAIRE MARAICHERE

Applicables aux abonnes des ca(tgories: "U" - Petils maraitchers T.R. Tarifrrduit = 105,81 F/m3

"K" - Maraichers industriels T.I. Tarifiniermddiaire = 149,35 F/mr3

- Parcs et jardins T.P. Tarif plein = 519,93 F/n3 , villes assainies= 490,22 F/m3, villes non assainies

FACTURATION PAR QUOTA ET TRANCIIES

VILLES ASSAINIES COMPOSANTE DETTE RENOUVEL CROIS- ECONOMIE TOTAL TVA IIYDRAULI. TAXE MUNI- TOTALEXPLOITATION -LEMENT SANCE D'EAU H.T. 10% RURALE CIPALE T.T.C.La paut de consonumation infericurc auquota cst r6partie selon les tranchessuivantes:T.R = de 0 i 3000 m'/bimestre 94,42 94,42 9,44 1,95 105,51TI. - de 3001 i 20000 m3

/bimestre 134,00 134,00 13.40 1,95 149.35 0%La parl de consomnmation supeieure auquota est factur6c au tarifplcin: 260,44 73;07 75,32 59,11 467,94 46,79 1,95 3,25 519.93

VILLES NON ASSAINIES COM POSANT'E DETTE IIENO UVEIl CR()IS- ECONOMI E 'I'OTAL TVA IIYDRAULI. TAXE MIUNI- TOTALEXPLOITATION -LEMENT SANCE D'EAU IIT. 10% RURALE CIPALE T.T.C.La part de consomrmation inferieure auquota est reparlie scion les tranchessuivantes;T. R. = de 0 i 3000 mhbimestre 94,42 94,42 9,44 1,95 105,X1T1I. - de 3001 i 20000 m

3/binestre 134,00 134,00 13,40 1,95 149,35La part de consomratioii supeicure au

quota esaictur6c au larifplein: 233,43 73,07 75,32 59,11 440,93 44,09 1,95 3,25 490,22

soo

117 Annex 8Page 13 of 19Annexe 2 de la Lettre de Politique Sectorielle

REPUBLIQUE DU SENEGALMINISTERE DE L'ECONOMIE DES FINANCES ET DU PLAN

PLAN D'ACTIONS SECTEUR EAU: REDUCTIONS DES CONSMOMMATIONSD'EAU DES ADMINISTRATIONS PUBLIQUES ET PAIEMENT A BONNE

DATE DES FACTURES D'EAU

Depuis quelques annees, l'etat s'est engage dans une politique d'ajustement en coursd'execution qui vise particulierement, a retablir les grands equilibres et a assurer la relancede l'economie. La reussite d'une telle politique passe necessairement par la reduction desgaspillages de tout genre et surtout par la maitrise des couts des facteurs de production.

A cet effet, le present plan d'action a pour objectif essentiel d'identifier les mesures a mettreen oeuvre pour reduire les consommations d'eau de l'etat et permettre de ce fait, unemeilleure allocation des ressources au secteur productif. Les pertes d'eau au niveau desservices publics sont dues essentiellement a:

Niveau technique: (i) l1'tat des branchements, (ii) l'etat des compteur, (iii)1'etat tres obsolete des reseaux, (iv) l'etat de l'appareillage sanitaire et de larobinetterie;

Niveau institutionnel (i) nianque de sensibilisation des utilisateurs, (ii)gratuite de l'eau non contr6l6e pour certains agents de I'etat, (iii) absencede personnes responsabilisees pour le maintien ou la surveillance desreseaux;

Niveau service rendu par la SONEES actuelle.

En plus de quelques points lies aux aspects techniques, la SONEES est responsable des autrespoints suivants: (i) les fichiers abonnes qui ne sont pas mis a jour, (ii) la releve descompteurs n'est pas reguliere dans certains cas.Le plan d' action comprend essentiellement des mesures d' ordre institutionnel etorganisationnel et des mesures d'ordre technique. Cette r6flexion n'est pas nouvelle et a faitl'objet de plusieurs etudes dont celle de Barry-SAFEGE qui est la plus recente et qui date de1991.

Si certaines constatations techniques telles que celles sur les r6seaux, les compteurs et lesappareillages faites en 1991 ne sont plus d'actualite, les reconunandations y afferentes restentvalables. En effet, ces aspects cites ci-dessus ont connu un niveau de degradation plus poussedu fait du manque d'entretien et de la non application des recommandations issues du rapportBarry-SAFEGE. Compte tenu de ces considerations, les recommandations de Barry-SAFEGEont ete toutes reconduites y compris la privatisation des bornes-fontaines publiques.

I. Mesures d'ordre institutionnel et organisationnel

I.1. GENERALITES

Le contr6le des consommations d'eau de I'Etat, le suivi des facturations et des reglements, etla definition des modalites d'une reduction des impayes de l'Etat ne peuvent etre mis en

118 Annex 8118 Page 14 of 19

oeuvre de maniere efficace, que dans le cadre d'une structure permanente de concertationentre I'Etat et la SdE. Des procedures particulieres seront mises en place et une structureunique de l'Etat designee pour le traitement des relations avec la SdE.Les reamenagements a apporter dans les relations Etat-SdE concerneront, d'amont en aval,les procedures suivantes gui seront precisees dans le contrat d'afferrnage:

- ream6nagement des relations "Etat-SdE (Societe d'Exploitation)- prise d'abonnements, mise a jour de l'etat des prises administratives- elaboration des budgets des services de I'Etat et responsabilisation des

gestionnaires;- mesures d'ordre technique liees A la maintenance des r6seaux, a la

reduction des fuites et au changement des compteurs et branchements par laSdE.

I.2. Mesures prealables: mise en place d'une structure unique de l'Etat chargee du suivides relations avec la SdE

Le nombre et la dispersion des services de 1'Etat qui seront en relation directe avec la SdEpourraient poser en pratique de nombreux problemes de suivi et de contr6le, tant a l'Etat qu'ala SdE. Les inter-relations "Etat-SdE" seront plus souples et le contr6le de l'Etat facilite, sila SdE n'a en face d'elle qu'une seule structure chargee du suivi du fichier des prisesadministratives et du contr6le des consonmnations en eau des services de l'Etat. Cettestructure sera log6e au sein de la Direction Generale du Patrimoine Bati (DGPB).

RWam6naeement des relations de l'Etat et la societ d'Exploitation "Etat-SdE"

La structure de 1'Etat chargee des relations avec la SdE aura pour taches essentielles

- la tenue et la mise a jour du fichier des abonnes administratifs de la SdE etsa mise en concordance permanente avec le fichier de la SdE;

- le suivi des "Budgets/Consommations Eau" des services de l'Etat et la prisede mesures conservatoires avec les services concernes ou la SdE. Lorsqueles consommations atteignent des niveaux excessifs par rapport auxmontants budgetises, ces mesures pourraient etre les suivantes: (i)demandes adressees aux responsables des services concern6s pourl'identification rapide des causes de ces sur-consommations, (ii) demandesd'intervention adressees aux services de la SdE pour l 'identification desproblemes qui se posent au niveau de ces services et I'etablissement d'unrapport succinct proposant les solutions A court terme.

Cette gestion en "pool" des problemes (Services Consonumateurs - Structure Unique de l'Etat- SdE) permettra d'introduire une dynamique dans les relations entre I'Etat et la SdE et dereduire, si les procedures sont correctement appliquees, de part et d'autre, les consommationsdes services de 1'Etat, de maniere significative.

I.3 Souscription des abonnements, mise a jour des prises administratives

L'Etat disposera d'un fichier des prises administratives facturees par la SdE et proceder A samise a jour reguliere au fur et a mesure de l'acquisition de nouveaux locaux administratifs(ou de la liberation d'anciens locaux). A ces rims:

- il sera indique a la SdE, le niveau hierarchique du responsable habilite asouscrire des abonnements au nom de l'Etat;


- chaque nouveau abonnement sera communique par les services de la SdE ala structure ci-dessus designee, pour mise a jour du fichier des abonnesadminiistratifs tous les mouvements (occupation par I'Etat de nouveauxlocaux ou liberation d'anciens locaux) seront signales a la structure del'Etat ci-dessus designee, aux fins de mise a jour du fichier des abonnesadministratifs. Periodiquement (chaque annee), la structure conmmuniqueraaux services de la SdE une liste mise a jour des prises qu'elle admet commeetant des prises admninistratives.

Dans cet ordre d'idee, il appartient a la SdE en rapport avec la structure de suivi d'apporterune solution technique (notanunent, par la mise en place de compteurs divisionnaires) auprobleme pose par les logements occupes de maniere mixte par des agents de 1'Administrationet par des particuliers, de maniere a ne pas faire supporter la totalite de la facturation a l'Etat.Ceci sera pr6cise dans le contrat d'affermage.

1.4. Elaboration des budgets, responsabilisation des gestionnaires

Une nouvelle philosophie sera adoptee pour la confection des budget de consommation d'eaudes services de 1'Etat et au contr6le des consommations effectives.

a) les budgets ne peuvent continuer a etre etablis avec la seule preoccupationdes restrictions budgetaires a instaurer a tout prix, sans prise en compte desconsonumations des services fixees a un niveau raisonnable.

b) La SdE etablira les previsions de consommation d'eau de l'annee a venirpour chaque administration publique, au plus tard 3 mois avant la fin del'annee. Le Gouvernement etablira son budget sur la base de cesprevisions. Toutefois, en attendant la remise en etat des r6seaux interieuresdes services administratifs programmee dans la premiere annee du Projetsectoriel, les budgets de 1996 et 1997 seront etablis sur la based'estimations de consommations normales a determiner avec la SdE.

c) les services de I'Etat ne peuvent continuer a faire supporter a celui-ci desniveaux de consommations excessifs, sans engagement de leursresponsabilites.

Les procedures a ce niveau seront reamenagees de la maniere suivante

- etablissement des budgets des services de l'Etat concemes par concertationentre la SdE et la structure designee a cet effet sur la base, non pas desconsommations anterieures qui comportent une bonne part de "fuites dansle reseau" mais de consommations fixees a un nombre de cubage normal, adeterminer en collaboration avec la SdE;

- responsabilisation des gestionnaires concernes sur le respect des budgetsainsi elabores: a ce niveau, il est claire que les responsables des servicesconcem6s doivent se sentir personnellement concernms par les sur-consommations d'eau de leurs services.

1.5. Mise en place de mesures de maintenance des reseaux, de reduction des fuites et dechangements des compteurs par la SdE

Les mesures techniques propres a assurer une reduction des consommations d'eau de l'Etatsont explicitees au paragraphe 11. 1 du present rapport.


En ce qui concerne plus specifiquement les compteurs inaccessibles, cass6s ou bloques quidonnent lieu a une facturation estimee ( pouvant etre, dans certains cas, superieure a lafacturation normale), il appartient a la SdE, de prendre toutes les dispositions pour permettreleur accessibilite ou leur changement.

La structure a creer selectionnera des entreprises de petite taille chargees des r6parations surles reseaux administratifs. A cet effet, il sera inscrit au budget, un article pour la refectiondes reseaux d'eau des administrations.

1.6. Amelioration par la SdE du service rendu par I'ancienne SONEES

L'amelioration par la SdE du service assure par la SONEES est necessaire au niveaude la mise a jour des fichiers et de la gestion des compteurs et des branchements.

Creation d'une cellule de suivi des gros consommateurs au sein de la SdE

La SONEES avait cree, pour pallier les difficultes rencontrees, une cellule de suivi des grosconsommateurs. il importe que cette cellule soit dynarnisee et dotee des moyens necessairespar la SdE. Les gros consomnuateurs sont: les Ministeres de la Sante, de la Justice, deI'Interieur, de I'Education Nationale, des Forces Armees etc... Son programme de travail doitetre defini de fagon precise en tenant compte des conclusions des audits effectues en 1989 et1991 notamment:

- suivi des releves et des consommations des gros consornmateurs- remise en etat des regards et dispositifs de mesures- verification des gros compteurs in situ;- assistance aux abonnes;- tenue de dossiers techniques sur les gros consommateurs administratifs- verification de la mise a jour des fichiers;- etablissement de devis a la demande des gros consommateurs pour

intervention sur leurs installations interieures (avec concours eventuel dubureau d'etudes SdE).

1.7. Reduction de depenses de I'Admirnistration par transfert de charge aux ayants-droits

L' Administration doit dans la mesure du possible transferer certaines de ses charges deconsommation d'eau aux beneficiaires. Ce probleme se pose au niveau des agents dont elleaccepte de prendre en charge la consommation. II s'agit du probleme des "ayants-droits" a lagratuite, habitant le plus souvent dans les logements de fonction de l'Etat et dont laconsommation d'eau est prise en charge par l'Etat. Le probleme pose est celui du bien fondedu droit a la gratuite qui souvent se transmet d'office d'un occupant a un autre. L' Etatprendra les dispositions necessaires pour que les personnes visees paient leurs consommationsd'eau.

II. Mesures d'ordre technique

11.1. Evaluation et reparation des fuites sur les reseaux interieurs

Le premier stade est de reduire le gaspillage et les fuites sur les appareils d'utilisation(robinetterie, toilettes, etc.) ce qui permettra une evaluation correcte des fuites invisibles surles reseaux proprement dits et d'apprecier la nature des travaux a effectuer. Le deuxiemestade sera la remise en etat des reseaux interieurs apres etude diagnostic et etablissement d'undevis par des entreprises specialisees. II faut signaler que la plupart des fuites sont dues a unecorrosion importante des reseaux galvanises anciens; la corrosion est a la fois interne et


externe. Il faudra egalement prevoir le renouvellement, des reseaux galvanises anciens et leurremplacement par des conduites en PVC ou en polyethylene.

Selon une etude realisee en 1991, les pertes par fuites et par gaspillage etaient estimees A47,2% de la quantit6 totale d'eau facturee A I'administration Independamment de leur impactfinancier pour l'administration, ces pertes apres compteurs ont aussi un impact techniqueimportant. Ramen6es a 1'ensemble des consomnmations administratives, elles pourraientrepresenter jusqu'A 15.000m3/j sur Dakar. Si l'on pouvait reduire ces pertes de 70% par lesmesures visees dans le present plan d'action, on disposerait ainsi sur Dakar de 1O.OOOm3/jsupplementaires qui pourraient etre vendus aux autres consommateurs. Ceci viendraits'ajouter des la 1lre phase A la production supplementaire attendue du projet sectoriel eau.

La SdE devra proceder des sa creation au renouvellement de tous les branchements etcompteurs defectueux des abonnes administratifs. Elle dotera tous les compteurs desadministrations d'un regard special muni d'un systeme de fermeture A clef. La clef seraitdetenue au Service concerne par une personne designee par le SAGE ou la DAGE dudepartement. Ladite personne detiendra une fiche de contr6le etablie par la SdE et qui seraremplie en sa presence par le releveur apres verification contradictoire de l'index ducompteur. Ce systeme A I'avantage de faciliter la certification des factures SdE recues par lastructure centrale creee a la DAGE du Ministere de l'Economie des Finances et du Plan.

Il est important de noter qu'une premiere estimation du couit des travaux d'urgence a realisera 6te effectuee dans l'etude diagnostic menee par BETURE-SETAME pour la SONEES en1989 chez 17 gros abonnes administratifs. Compte tenu de l'importance du volumeeconomisable, la conclusion de cette etude est que les investissements recommandes sontamortis en moyenne en 39 jours, ce qui constitue un temps de retour particulierementattractif. A cet egard une composante de US$ 400 000 est prevu dans la premiere phase duProjet Sectoriel Eau, pour le diagnostic et la rehabilitation des reseaux d'eau desAdministrations. Cette op6ration sera realisee par la SONES (a inclure au contrat-plan).


PAIEMENT A BONNE DATE DES FACTURESD'EAU DES ADMINISTRATIONS PUBLIQUES

(Annexe 2b)

L'objectif du Gouvernement est un assainissement adequat de ses relations financieres avecles societes nationales de facon generale et particulierement celles avec la SONEES ou lafuture societe d'exploitation (SdE). Pour cela il faut trouver les procedures appropriees pourun reglement a bonne date de leurs dettes reciproques par des moyens orthodoxes.

Le plan d'action visant la reduction des consommations d'eau des administrations publiqueselabore est un des elements dont I' application urgente est indispensable pour la reussite desmesures visees ci dessous. En effet, ce plan permettra de ramener les consommations d'eaudes administrations publiques au niveau des possibilites budgetaires de I'Etat. Le deuxiemeelement est que, I'Etat traite les societes nationales et la future SdE, comnme tous les autresdebiteurs du Tresor en leur appliquant une politique de recouvrement rigoureuse.

Les procedures qui sont listees ci-dessous sont une suite consequente de I'application detoutes les mesures visees dans le plan d'action pour la reduction des consommations desadministrations publiques.

Les procedures peuvent etre resumees comme suit

* Etablir des previsions budgetaires (MEFP) qui prennent en compte lesdonnees de la SdE relatives aux consommations anterieures des services del'Etat;

* Responsabiliser la structure (proposee dans le plan d'action pour lareduction des consommations) pour 1'execution du budget eau et reparationdes reseaux administratifs;

* Mise en oeuvre de la procedure elaboree par la SONEES et la Direction duBudget a savoir:

depot des factures par la SdE aupres des services quinze (15) joursapres leur sortie;

- certification et transmission a la structure centrale par les servicesquinze (15) jours apres reception des factures;

- engagement et liquidation par la structure centrale en rapport avec laDirection du Budget vingt (20) jours apres reception des facturescertifiees.

En tout etat de cause a partir de Janvier 1996, le delai de recouvrement des factures echuesne devra pas exceder 4 mois. La facturation des consommations d'eau de l'Administration sefera sur une base bimestrielle.

ACTION A MENER RESPONSABLE CALENDRIER D'EXECUTION OBSERVATIONS

1. MESURES D'ORDRE INSTITUTIONNEL ETORGANISATIONNEL

- creation d'une structure a la DGPB interlocutrice de la SdE MEFP et DGPB au plus tard aodt 1995 Voir definition dc ses taches A la page 4(obligation Etag dans le contrat d'affernage)- mise & jour des fichiers abonn6s administratifs SONEES-DGPB a finaliser avant septembre 1995 Ce nouveau fichier sera confirmm par la ssructure cr66e plushaug apres certification par Ies services concem6s(obligation de la SONES et DGPB).

- elaboration des budgets eau des services de l'Etat MEFP-DOPB-SdE prochain budget (1996) Methodologic d6crite voir au (1-4) du rapport(obligation SdE dans le contrat d'affermage)

- suppression de la gratuiti de l'eau pour les agents de I'Etat MEFP-DGPB au plus tard decembre 1995 Voir (I-6) du rapport

11. MESURES D'ORDRE TECHNIQUE

- renouvellement des conipteurs et des branchements SdE des sa premiare anine de mise en place Cette mesure conceme la SdE. 11 est dit dans le conirat deperfomance que la SdE doit renouveler 14.000 compteurset 6.000 branchements par an A ses frais. La priorite seradonnec dans cette rubrique A l'Administration (obligationSdE dans contrat de performance).

- diagnostic des rtseaux intiereurs et ttablissement d'un DGPB de aoOt A novembre 1995programme de rAhabilitation Cette 6tude scra menee par un bureau d'6tudes. Son

financement sera imput6 au PPF- renouvellement des appareils d'utilisation (robinetteries, DGPB avant septembre 1995

toilenes ...) Cette rnesure doit faire l'objet d'une evaluation dans lecadre de letude ci-dessus

- ex6cution du programme de rEhabilitation des reseaux DGPB-SONES de fevrier A dEcembre 1996intErieurs des Administrations publiques Cette mesure CSt une composante de la lIre phase du projet

sectoriel Eau (obligation de la SONES dans Ie Contrat-Plan)

0f


SENEGAL


LIST OF DOCUMENTS IN PROJECT FILES

1. CFD/WB: Etude sur l'impact de la devaluation du Franc CFA sur les soci6tes de servicepublic, Etude de cas: la SONEES (Rapport interimaire, Sep. 1994)

2. Reducing Regulatory Barriers to Private-Sector Participation in Latin America's Water andSanitation Services (B. Richard and T. Triche) TWUWS Policy Research Working Paper1322 (July 1994)

3. Report and Recommendation of the President of the International Development Association tothe Executive Directors on a Proposed Economic Recovery Credit of SDR 18.2 million to theRepublic of Senegal - Report No. P-6273-SE (Feb. 1994)

4. Senegal (Ministere du developpement rural et de l'hydraulique & Ministere de l'industrie et del'artisanat): Rapport sectonrel sur l'hydraulique (Mai 1990) - Resume et plan d'action (Mai1990) / (Ministry of Rural Development and Hydraulics & Ministry of Industry and Crafts):Sector Report on Hydraulics (May 1990)

5. Senegal (Ministere du developpement rural et de l'hydraulique): Rapport sectoriel surl'hydraulique (Mars 1988)

6. Senegal (Comite de pilotage de l'etude institutionnelle de la SONEES): Memorandum del'etude de l'efficacite de la SONEES, du cadre institutionnel et du d6veloppement du secteur del'hydraulique (mai 1993)

7. Senegal (MEACC): Reserve d'eau brute et station de traitement (Avant projet detaill /Volume I: Memoire descriptif) (mai 1991)

8. Senegal (Ministere de l'Economie, des Finances et du Plan, Cellule du Secteur Parapublic):Etude sur la Consommation d'Eau de l'Etat (SAFEGE/Barry - Juin 1991)

9. Senegal (Ministere de l'Hydraulique): Institutional Reform of the Urban Water Sector: Vol. I,Main Report: Functional relations; Vol. II, Case Report: The Gambia; Vol. III, Case Report:Guinea;Vol. IV, Case Report: Ivory Coast (AQUANET, Aug. 1994)

10. Senegal (Ministere de l'Hydraulique): The Study on Urban Drainage and Wastewater Systemsin Dakar City and its Surroundings - Interim Report JICA (Dec. 1993) & Main Report (Draft)JICA (July 1994)

11. Senegal (Ministere du Developpement Rural et de l'Hydraulique / Ministere Delegue charge del'Hydraulique): Etude d'optimisation de la phase interimaire de renforcement de I'A.E.P. deDakar (Juin & Nov. 1991)


12. Senegal (Ministere du Developpement Rural et de l'Hydraulique / Minist&e Delegue chargc del'Hvdraulique): Etude d'optimisation de la phase interimaire de renforcement de l'AEP deDakar. (Juin 1991) - Etude complementaire (Nov. 1991)

13. Senegal (Ministere du Developpement Rural et de I'Hydraulique / Ministere Delegue chargd deIlHydraulique): Planification des ressources en eau (Projet PNUD / DDES - SEN/87/006)[Etat d'Avancement du projet au 30 Juin 1993/ Previsions jusqu'au 31 Juin 1994; Consultationen hNdrologie (Premiere note d'avancement (Juin 1993); Seconde note d'avancement (Oct.1993); Troisieme note d'avancement (F6v. 1994)]

14. Senegal (Ministere du Developpement Rural et de l'Hvdraulique / Ministere Deleguc charge del'Hvdraulique): Ve Programme par pays du PNUD - Sous-Programme IB (Preservation del'Environnement pour un developpement durable): Proposition pour le regrouppement desactivites concemant le secteur de 1'eau dans le sous-programme. (Mai 1993)

15. Senegal (Ministcre du Developpement Rural et de I'Hydraulique): Rapport final de l'Etude dercevaluation des ressources en eau du Littoral Nord (BRGM - Mai 1992)

16. Senegal: An Assessment of Living Conditions / Evaluation des conditions de vie (draft -confidential) Report No. 12517 SE (Feb. 1994)

17. Senlegal: Countryv Policies and Bank Assistance Strategy (draft - confidential) (Sep. 1994)

18. Senegal: Initiating Memorandum - Private Sector Adjustment and Competitiveness Credit(draft - confidential) (Aug. 1994)

19. SONEES: Deuxilne Contrat-Plan SONEES/Etat (1990-1994)

20. SONEES: Deuxiemc Contrat-Plan SONEES/Etat (1990-1994): Rapport d'Execution - Annee1991

21. SONEES: Etude de tarification dc l'eau potable au Sdnegal - DWc. 1993

22. SONEES: Plan de Maintenance Vol. 1,2 & 3 (Dec. 1989)

23. SONEES: Previsions budg6taires 1990, 1991 et 1992

24. SONEES: Rapport Annuel 1990 et 1993

25. SONEES: Rapport d'Audit des Comptes de l'annee 1993 et Tableau de Calcul du Taux deRentabilitc des limmobilisations aii 31 Dccembre 1993

26 SONEES: Rapports Financiers - Exercice Clos au 31 Decembre 1990, 1991 ct 1993

27. SONEES: Renforcement de l'Approvisionncment en Eau de la Region de Dakar - AnalyseEconomique ct Financiere de la Phase Interimaire (Rapport definitif) (BRL, Sep./Nov. 1994)

28. SONEES: Renforcement dc l'Approvisionnement en Eau de la Region de Dakar - PhaseInterimairc (Mission 0 modifiec) (Rapport provisoire & Rapport definitif) (BETURE/BRL,Avril & Dec. 1993)


29. SONEES: Renforcement de l'Approvisionncment en Eau de la Rcgion de Dakar 1988-2020 -Phase Int6rimaire (Rapport definitif) (BETURE, Oct. 1988)

30. the World Bank - AF51N: Etude de la Fourniture d'une Eau d'Irrigation a l'Activite Agricole(Juin/Octobre 1994)

31. the World Bank - UNDP - BAD - Ministere Francais de la Cooperation: EvaluationHydrologique de l'Afrique Sub-Saharienne - Pays de l'Afrique de l'Ouest: Rapport de pays:Senegal (Juillet 1992)

32. the World Bank: Irrigation Sector Project Development Project - Concept Note (Sep. 1994)

33. the World Bank: Project Completion Report - Eleveni Ccnters Water Supply Project (credit1554-SE) (Jan. 1993)

34. Financial simulations - 5 scenarios

35. Complete set of financial projections for the period 1994-2021.

36. SONEES - Ernst & Young - Simulation de l'cquilibre financier du secteur de l'eau potable,version novembre 2, 1994.

37. Etude de faisabilite des differentes mesures envisagees pour financer le deficit du secteur del'eau pendant les premieres annees de la r6forme institutionnelle - mars 1995 - Enist & Young

38. Dossier d'Appel d'Offres pour la reprise de l'exploitation de la SONEES (Mai 1995)

scnsara&

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Report No: 14008 SEType: SAR