Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 2377b-IN

STAFF APPRAISAL REPORT

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

April 17, 1979

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

CURRENCY EQUIVALENTS

US$1.00 Rs 8.6Rs 1.00 = US$0.12

MEASURES AND EQUIVALENTS

mm - millimeter (0.04 inches)

cm - centimeter (0.39 inches)

m - meter (39.37 inches or 3.28 ft)km - kilometer (0.62 miles)ha - hectare (10,000 square meters or 2.47 acres)sq.k - square kilometer (0.386 square miles)1 - liter (0.22 Imperial gallons or 0.264 US gallons)lcd - liters per capita per daycu.m - cubic meter (220 Imperial gallons or 264.2 US gallons)ml - million liters or 1,000 cubic metersmld - million liters per day (0.220 million Imperial gallons

per day or 0.264 million US gallons per day)

ABBREVIATIONS AND ACRONYMS

GOI - Government of India

GOM - Government of MaharashtraMWSSB - Maharashtra Water Supply and Sewerage BoardMIDC - Maharashtra Industrial Development CorporationBMC - Bombay Municipal CorporationBMR - Bombay Metropolitan RegionBMRDA - Bombay Metropolitan Region Development AuthorityWHO - World Health OrganizationENE - Environmental Engineering OrganizationIER - Internal Economic Rate of ReturnAIC - Average Incremental CostsEWS - Economically Weaker Section

FISCAL YEAR

April 1 - March 31

This report is based on the findings of an IDA mission consisting of Messrs.P.H. Ware, B.C. Davis, and Miss P. Stone who visited Bombay in November andDecember 1978.

FOR OFFICIAL USE ONLY

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.

1. WATER SUPPLY AND SEWERAGE SECTOR ....................... 1

National Sector Organization and Development .... ....... 1The State of Maharashtra ............................... 2Bombay Metropolitan Region ............................. 3The Project Area ....................................... 4Levels of Service ...................................... 4

II. POPULATION, WATER CONSUMPTION AND SEWERAGESERVICE DEMAND ........................................ 5

Agencies Supplying Water ............................... 5Existing Water Treatment Plants ........................ 6The Six Towns in the Project Area ...................... 6Existing Sewerage Systems .............................. 7Population Forecasts ................................... 8Water Demand and Consumption ........................... 9Demand for Access to Sewerage Services Within

the Project Area ..................................... 12

III. THE PROJECT ........... ................................. 12

Background . ............................................ 12Objectives of the Sector and the Project .... ........... 13Consideration of Technological Alternatives .... ........ 14Project Description .................................... 15

Water Supply - Northern Area ...................... 15Water Supply - Southern Area ...................... 16Sewerage - Northern Area .......................... 16Sewerage - Southern Area .......................... 16Other Items ....................................... 16

Property Connections to Water and Sewerage Systems 17Metering . .............................................. 18Cornplementary Works .................................... 18Cost Estimates ......................................... 19Financing . .............................................. 19Project Design, Construction and Supervision .... ....... 21

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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Table OF Contents (cont'd)

Page No.

Implementation Schedule ................................ 21Procurement .......... .................................. 21Land Acquisition ....................................... 22Disbursements ......... ................................. 22Environmental and Health Aspects ....................... 23

IV. FINANCIAL ANALYSIS ..................................... 23

Introduction ......................_. . . 23Past Financial Performance and Present Position .... .... 24

ENE (now MWSSB) ...................... 25Municipalities ...................... 26Villages ...................... 27

Transfer Arrangements ...................... 27Future Accounting Arrangements ...... ................... 27Financing Plan ............................... 30Tariffs ............................... 30

General ........ ....................... 30MWSSB ............................... 31Local Authorities ............................... 31

Future Finances .......... ..................... 33

V. THE IIPLEMENTING AGENCY ............................... 34

Lending Arrangements .................................. 34Organization ........ ....................... 34Management and Staffing ............................... 35Training ............................... 35Audit and Insurance ................................ 36Operating and Maintenance Responsibilities ..... ........ 36

VI. ECONOMIC AND SOCIAL JUSTIFICATION ......... ............. 37

General ............................... 37Population Served ................................ 38Impact on Poverty Groups ............................... 38Impact on Health ............ ................... 39Return on Investment ................................ 40Marginal Cost and Tariffs .............................. 41Ability to Pay ............................... 41

VII. SUMMARY OF AGREEMENTS ............................... 42

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Table of Contents (cont'd)

ANNEXES

1. Project Description2. Detailed Project Cost Estimates3. Population and Water Consumption4. Engineering Design and Construction Schedule5. Schedule of Estimated Disbursements6. Summary Income Statement (1974/75 through 1978/79)7. Water Supply Tariff Structure8. MWSSB: Income Statement (1979/80 through 1986/87)9. MWSSB: Cash Flow Statement (1979/80 through 1986/87)10. MWSSB: Balance Sheet (1979/80 through 1986/87)11. Municipalities: Income Statement (1979/80 through 1986/87)12. Municipalities: Cash Flow Statement (1979/80 through 1986/87)13. Municipalities: Balance Sheet (1979/80 through 1986/87)14. Typical Village Income Statement (1983/84)15. Notes on Financial Projections16. Monitoring Indicators17. Organization Chart of MWSSB18. Average Incremental Costs and Internal Economic

Rates of Return19. Justification for Metering20. Related Documents and Data Available in the

Project File

MAPS

IBRD 14109 - Bombay Metropolitan Region and the Project AreaIBRD 14110 - Water Resources, Treatment and Transmission FacilitiesIBRD 14111 - Main Components of Water Distribution Systems and

Locations of Slum Areas in Six TownsIBRD 14112 - Sewage Collection and Disposal Systems in Six Towns

INDIA

STAFF APPRAISAL REPORT

THE MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

I. THE WATER SUPPLY AND SEWERAGE SECTOR

National Sector Organization and Development

1.01 1hile the Central Government exercises considerable influence inthe sector, State Governments in India have primary responsibility for devel-opment of water supply and sewerage facilities. They execute their respon-sibilities through various departments of government and agencies which, inturn, may delegate part or all of their duties to local authorities. Incertain cases, legislation has been enacted to permit municipal authorities,or other agencies, to assume the entire responsibility for planning, design,construction, operation and maintenance of water supply and sewerage serviceswithin their jurisdictions.

1.02 Since the early 1950s, State Governments have endeavored to meetthe increasing sector demands caused by rapidly expanding populations andunprecedented rates of urban growth. However, competing demands for re-sources by other sectors, lack of management and planning skills, shortagesof key materials and equipment, as well as foreign exchange constraints, haveresulted in only 1 to 2% of public expenditures being invested in the sector.This had led to inadequate levels of water supply and sewerage services. In1975, it was estimated 1/ that in India only 193 million people, or 31% of thetotal population of 620 million, had access to reasonably safe drinking waterand that only 125 million (20%) had acceptable means of disposing of sewage.These levels are lower than average levels for all developing countries, inwhich water and waste disposal services reach 38% and 33% of the populationrespectively. In these countries, it now appears that, in the period 1971to 1976, global progress in the sector kept pace with population growth andduring the same period, access to water and sewerage services slightlyimproved. In India, while some improvement in the water supply service wasachieved, the percentage of the population receiving waste disposal servicesactually declined.

1.03 It is estimated 2/ that investments in developing countries on theorder of four times the 1971 to 1975 levels (in 1977 US$) will be necessaryif the target, for developing countries, to serve 100% of the population by

1/ World Health Organization, Community Supply and Wastewater Disposal,Mid-Decade Progress Report, May 1976.

2/ Report on Community Water Supplies, United Nations Water Conference,Mar del Plata, Argentina, March 14-25, 1977.

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1990 is to be achieved. For urban water supply and sewerage in India, theinvestment target in the period 1974/75 through 1978/79 was some Rs 1,100million (US$128 million) per year, about 1.5% of the total Plan investment;investment in the rural water sector in the same period was Rs 750 million(US$87 million) which was 1.0% of the total Plan investment. Much higherinvestment levels will be necessary if significant progress towards 1990 UNtargets is to be seriously attempted. Rapid urbanization in India's fourlargest metropolitan areas -- Bombay, Calcutta, Delhi and Madras -- hascreated a particularly urgent need to strengthen the water supply and sewer-age systems serving these areas. Existing organizational and technicalresources would permit much higher levels of investment to hasten the pro-vision of services to larger populations. However, efficient operation andeffective maintenance of urban water and sewerage systems presents a moreserious challenge to Central, State and local government institutions.

The State of Maharashtra

1.04 The project, described in this report, serves part of the BombayMetropolitan Region (BMR) in the State of MIaharashtra. Maharashtra is thethird largest State in India, having an area of about 308,000 square kilo-meters and an estimated (1977) population of some 59.3 million, which isalmost 10% of India's total population. Bombay is the state capital andthe nation's largest industrial center. The 1977 urban population of theState, excluding Bombay's 7.6 million, was 11.3 million located in some 226urban communities; the rural population was 40.4 million.

1.05 Historically, except for the larger municipal corporations, thedevelopment of community water supply and sewerage services has been theresponsibility of the State Government. Maharashtra established an Environ-mental Engineering Organization (ENE) in 1975 with the declared objectiveof providing safe drinking water and waste disposal services to achieveand maintain a cleaner environment. It undertook planning and implementa-tion of most rural water supply projects as well as planning and implemen-tation of municipal water supply and sewerage projects, which are partlyfinanced by municipalities and partly by Government. Such projects arenormally operated and maintained by the local authorities concerned, althoughthe State Government sometimes performs these tasks at the request of localauthorities. The Municipal Corporation of Greater Bombay (BIIC) and severalother large municipal corporations are responsible for planning, implementa-tion, operation and maintenance of water and sewerage services within theirjurisdictions.

1.06 Iii January 1977, the Maharashtra Water Supply and Sewerage Board(MWSSB) was formed by the Government of Maharashtra (GOM) as a further stepto "provide rapid development and proper regulation of water supply andsewerage services in the State of lMaharashtra." Initially, MWSSB's role wasprimarily that of a financing channel, raising funds by borrowing from localfinancing institutions and on the open market. Recently, its functions havebeen expanded to include project preparation, execution, operation andmaintenance. The staff of the ENE will be transferred to MWSSB during 1979.

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1.07 GOM estimates that (excluding Bombay) 10.5 million people in about

190 urban communities have access to piped water, although many of the sup-plies are inadequate and of questionable quality. The present populationwith access to sewerage services in urban communities is less than the pop-

ulation wich piped water. Only 11 communities (excluding Bombay) have water-borne sanitation serving about 4 million people; however, under currentGOM proposals 0.5 million more urban people should have access to acceptableforms of sanitation by the year 1980. The remainder of the populationdepends on wells for water supply and conservancy systems for waste collectionand disposal.

1.08 Some 27 million people or 67% of the rural population in the Statehave access to wholesome water. By 1980, GOM proposes to provide pipedwater to some 1,000 additional villages having a total population of aboutfour million. Most of these will be from ground water sources. This is anambitious target which would result in increasing the rural population providedwith piped water to some 77% of the total. As yet, there are no specificproposals for a sanitation program in these villages.

1.09 Investment in the State water supply and sewerage program (exclud-ing invest,nent in the BMC systems), amounted to about Rs 75 million (US$8.8million) in each of the financial years 1976/77 and 1977/78, which was lessthan 2% of the State's total budget. Some Rs 39 million and 1.7 million(US$4.5 and US$0.2 million) were allocated to urban and rural areas, respec-tively, and about Rs 35 million (US$4.1 million) to continuing constructionof the Bhatsai dam which will be used for supplying water to Bombay and forirrigat ion.

Bombay Metropolitan Region

1.10 The Bombay Metropolitan Regional Development Authority (BMRDA)was established by the Government of Maharashtra in 1975 to coordinate theactivities of local authorities within BMR and to promote regional investmentplanning in such sectors as urban renewal, transportation, communicationsand water resources management. BMR comprises an area of 4,350 square kilo-meters (1,700 square miles, about one-sixth of the area of the State ofMaryland) and includes the Municipal Corporation of Greater Bombay, 13Municipal Councils and some 1,500 villages. The 1971 census population ofBMR was 7.8 million, of which 6.7 million was designated as urban.

1.11 BMRDA has completed a comprehensive water resources study for theRegion and has also been the principal agency in preparing this project.The water resources study shows that water availability is not as criticalas it originally appeared to be, and that there may be a moderate water sur-plus in the area, at least to the year 2000. As well as investigating thewater supply and demand relationship, the study indicates economical methods

and sequences for development of the resources. The project is consistentwith recommendations resulting from the study.

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The Project Area

1.12 The project area is located to the north and northeast of Bombay(Map IBRD 14109) and is divided into two parts (referred to as the northernand southern areas) by the Ulhas River. The northern area includes the townsof Thane and Bhiwandi and 55 villages; the southern area includes four townsKalyan, Domnbivli, Ulhasnagar and Ambernath -- and 49 villages. There arenine villages in the project area which have been excluded from the projectbecause they are small (total 1971 population 4,737) and remote from the pro-posed water transmission network. These villages will continue to obtainwater from wells and local surface water sources.

1.13 The area is well linked by roads and a suburban railway system toBombay, the second largest city in India (population 7.6 million) and thelargest port and industrial center, accounting for some 30% of India's in-dustrial production. Parts of the project area are clearly influenced by theclose proximity of this huge metropolis and provide space for the spilloverof industry and commerce, as well as dormitory areas for daily commuters tothe city and suburbs. The selection of the project area was influenced bythe priority given by BMRDA to providing essential services to these rapidlydeveloping urban and rural communities.

Levels of Service

1.14 The project forms part of a sector development plan for BMR whichwas prepared by the Water Resources Management Board of BMRDA. For planningpurposes, BMR is divided into six zones (Map IBRD 14109). There are 13 townsand 1,300 villages in these six zones. Of these, water supply to communitiesin Zones I, III and most of IV are included in the project. In the otherzones, projects are under implementation and include BMC's two IDA assistedwater supply and sewerage projects in Zone VI. 1/

1.15 T'he BMRDA plan also includes water-borne sewerage systems for eightof the thirteen towns in Zones I through V; six of these systems are part ofthe project. Sewerage systems for the towns of Panvel (Zone IV) and Khopoli(Zone V) are to be included in India's Sixth Plan, at an estimated cost ofRs 22 million (US$2.6 million). As yet, there are no firm proposals to pro-vide sewerage systems for the remaining five towns.

1.16 although GOI is now placing considerable emphasis on the need forimproved water supplies in rural areas, specific projects have yet to bedeveloped t-or most of the rural areas in BMR. BMRDA in conjunction withMWSSB, has determined that almost 700 of the 1,300 villages in BMR urgentlyrequire new piped water systems to replace existing inadequate wells. Pipedwater supplies for 82 of these villages will be provided under the project,and a further 115 villages will receive piped water under a Rs 60 million(US$7 million) program proposed by the Water Resources Management Board

1/ The First and Second Bombay Water Supply and Sewerage Projects, Credits390 and 842-IN.

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later in the Sixth Plan period. There are no specific plans at present toprovide piped water to the remaining 500 or so villages.

1.17 Within the project area, all of the six towns and 22 of the 113villages have piped water, although the supply is inadequate and distributionsystems have not been extended to more recently developed areas. It isestimated that within the project area, the quantity of piped water avail-able to the total 1978 population of 1.3 million is about 105 million litersper day (mid), of which a net quantity of 65 mld is available for domesticconsumption (paragraph 2.20). Based on the normally accepted standards inIndia of 120 and 50 liters per capita per day (lcd) for urban consumerssupplied through connections and standpipes respectively, and of 70 and 40lcd for similar categories in rural communities, the estimated domestic waterdemand in the project area is 160 mld or about 1.6 times the present supplylevel. By 1984, if the project is not implemented, this excess demand willincrease to about 2.2 times the available supply, based on an average popula-tion growth rate of about 5% in the project area (paragraphs 2.18 and 2.20).

1.18 Sewerage systems for the towns of Thane, Kalyan and Bhiwandi arepartially constructed, and will be completed under the project; seweragesystems for the towns of Dombivli, Ulhasnagar and Ambernath will be providedunder the project. As yet, none of the urban population outside of the BMCarea has access to water-borne sewerage systems. GOM recently allocatedRs 20 million (US$2.4 million) for rural sanitation in the project area.MWSSB will prepare a sanitation project for this area which will be imple-mented in parallel with the IDA assisted project.

II. POPULATION, WATER CONSUMPTION AND SEWERAGE SERVICE DEMAND

Agencies Supplying Water

2.01 At present, three authorities supply water to the project area:(i) BMC, which supplies water from its transmission mains en route from BMCsources of supply to Bombay City; (ii) the Maharashtra Industrial DevelopmentCorporation (MIDC), a Statewide organization established by GOM in 1962 toprovide infrastructure for industrial estates; and (iii) MWSSB, which during1979 will assume responsibilities for facilities formerly operated by theEnvironmental Engineering Organization (paragraph 4.01).

2.02 In the northern part of the project area, north of the Ulhas river(Map IBRD 14110), the towns of Thane and Bhiwandi and 12 villages receivewater from the BMC system. Bhiwandi also obtains a very small supply (about2 mld) from Varala lake. Water for industrial estates in these areas issupplied by MIDC.

2.03 In the southern part of the project area (south of the Ulhas river,Map IBERD 14110), three water treatment plants draw water from the Ulhas riverand supply the four towns of Kalyan, Dombivli, Ulhasnagar and Ambernath, and10 villages in the southeast extremity of the project area. Two of the plants,

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Shahad and Jambul, 1/ are owned and operated by MIDC primarily to supplyindustrial estates in the area (Map IBRD 14110). The third plant atBadlapur is operated by MWSSB.

Existing Water Treatment Plants

2.04 MIDC's Shahad water treatment plant was designed to be developedin two stages of 48 mld each; the first stage was completed in 1966 to supplytreated water to industries in the Ulhasnagar and Dombivli areas. The trans-mission system was extended to supply industries in Thane in 1968. Parts ofthe system (the intake, pumping station and associated mains) were constructedto accommodate the ultimate plant flows of 96 mld, but expansion of theremaining plant components (the filtration system and clear water storagetank) beyond the present 48 mld was deferred when the nearby Jambul plantwas constructed in 1973.

2.05 The Jambul water treatment plant, capacity 295 mid, was completedby MIDC in 1973. Water for the plant is drawn from the Ulhas river, at aweir located below the confluence of the Barvi and Ulhas rivers, and issupplemented by releases of water from a reservoir formed by the Barvi dam.Fully treated water from the Jambul treatment plant is pumped to a trans-mission system primarily serving industries in Ambernath, Dombivli, Thane(Map IBRD 14110) and areas outside the project area. Both the Shahad andJambul works are well designed, soundly constructed and are efficientlyoperated and adequately maintained.

2.06 The third,water treatment plant in the project area is the Badlapurplant which is owned and operated by MWSSB. This is the oldest of the threeplants having been constructed in 1926 and subsequently enlarged to itspresent capacity of 34 mld. The plant serves Ambernath and villages locatedbetween Ambernath and the plant. Although the plant is old it is in soundcondition, with the exception of several minor items which are receivingattention. It is efficiently operated and adequately maintained.

The Six Towns in the Project Area

2.07 The Thane Municipality (population 247,000) receives water in bulkfrom BMC and MIDC for its domestic water demands, and operates its own dis-tribution system which covers about 65% of the municipal area (Map IBRD 14111).The distribution system was adequate in 1955, but has not been augmented tokeep pace with population growth. The supply is intermittent and limited tobetween two and four hours a day. Many of the industrial water demands aremet by direct connections to BMC and MIDC mains and, although supplies arerestricted, most reasonable industrial water demands are satisfied. Morethan 95% of the property connections in Thane are metered.

1/ Jambul is sometimes referred to as the Barvi plant since it draws partof its water from the Barvi reservoir.

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2.08 The Bhiwandi Municipality (population 116,000) receives most ofits water from BMC and a very small quantity (about 2.0 mld) from its ownsurface water source. Although the distribution system is owned by theMunicipality it is operated and maintained by MWSSB. The supply is inter-mittent and limited to between two and four hours per day, and there areno large industrial water demands. Most property connections and standpipesupplies are not metered.

2.09 Kalyan (population 123,000) has a continuous supply of water whichis purchased in bulk by MWSSB from the MIDC (Shahad) system. The Municipalityoperates its own distribution system which covers about 80% of the municipalarea; most of the distribution system is more than 30 years old and is oflimited capacity. All property connections are metered.

2.10 Dombivli (population 89,000) is also supplied with water purchasedin bulk by MWSSB from MIDC. Although additional water is available from theJambul plant, which supplies Dombivli, the supply to the town is limited tobetween two and four hours a day because of inadequacies in the distributionsystem. The distribution system is operated by the Municipality and allproperty connections are metered.

2.11 lJlhasnagar (population 224,000) is also supplied with water fromMIDC's Jambul plant, purchased in bulk by MWSSB. The distribution system,which is operated by MWSSB, is inadequate and only 70 to 75% of the municipalarea at lower elevations and 25% of the higher areas receive water. All con-nected properties are metered.

2.12 Ambernath (population 82,000) receives a continuous supply of waterfrom MWSSB's Badlapur plant. The distribution system, operated by MWSSB,requires extension and improvement. All connected properties are metered.

Existing Sewerage Systems

2.13 There are no water-borne sewerage systems in operation in the sixtowns although systems to serve Thane, Kalyan and Bhiwandi are under construc-tion (Map IBRD 14112). At present, the urban area is served by a variety ofsewage disposal systems including septic tanks, pit latrines, bucket latrinesand soakage pits. In many areas sewage is diszharged to open drains andsullage ponds.

2.14 The sewerage system under construction in Thane will serve 60 to70% of the municipal area; sewage will be treated in a conventional primarytreatment plant (comprising grit and screenings removal, sedimentation,sludge digestion, sludge drying beds) and the effluent will be discharged toThane Creek. As yet, less than one hundred properties in Thane are connectedto the syscem.

2.15 Sewerage systems which are nearing completion in Kalyan and Bhiwandiwill each serve about 70 to 75% of their respective municipal areas. Sewagetreatment at Kalyan is similar to that of Thane; in Bhiwandi, oxidation pondshave been constructed and the use of effluent for irrigation is being con-sidered. By November 1978, some 50 properties had been connected to theKalyan system but there were no connections in Bhiwandi.

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Population Forecasts

2.16 Population projections for BMR have influenced GOM's resolution toimpose constraints on commercial and industrial development in the GreaterBombay Municipal area in an effort to restructure the regional developmentpattern. Experience with similar measures in other countries suggests thatto limit immLigration by controlling industrial development may only be effec-tive in the longer term, and the effect of GOM's policy on the growth ofpopulation in BMR is, therefore, speculative.

2.17 The growth of urban population in BMR (excluding Greater Bombay)between the 1961 and 1971 census was 0.41 million (about 6.7% per annum).During the past seven years, the urban population of BMR has increased at arate of about 8% per annum to an estimated 1978 urban population of 1.6million. The estimated rural growth rate over this seven year period was3.7% per annum and the estimated BMR rural population in 1978 was 1.0 million.As in the case of Greater Bombay, there is little scope for reduction in thenatural increase of population in the next 10 to 15 years since a small de-cline in biith rate resulting from population control measures would probablybe offset by lower death rates from improved health measures. 1/ Since mi-gration to Greater Bombay is intended to be controlled by constraints onindustrial and commercial development, migration rates to peripheral townsin the project area where industrial development is to be encouraged, mayincrease. Based on these assumptions, the growth rate of population in BMR(excluding Greater Bombay) is likely to increase from about 5% per annum inthe period 1971 to 1981 to about 5.8% per annum in 1981-91. GOM expectsgrowth rates in the project area to decline from the present 5.4% to about4.7% in the period 1981 to 1991, in the same way that growth rates in BombayCity have declined, and conforming with the Government's projected trend forGreater Bombay (Table 2.1). The distribution of the present and futurepopulation in the project area is detailed in Annex 3, Table 1.

Table 2.1: ESTIMATED POPULATION /a

Population - Millions Annual Increase %Year BMR /b Project Area BMR Project Area

1971 (Census) 1.8 0.91978 2.6 1.3 5 5.41981 3.0 1.5 5 5.41991 5.2 2.4 5.8 4.7

/a Source: Draft Feasibility Report, Maharashtra WaterSupply and Sewerage Project, April 1978.

/b Excludes Greater Bombay.

1/ Staff Appraisal Report No. 1970-IN, the Second Bombay Water Supply andSewerage Project, July 5, 1978.

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Water Demand and Consumption

2.18 About 36% of the population of the six towns in the project arealive in slumns. It is probable that a major part of the population increaseof 1.1 million in the period 1978 to 1991 will occupy hutments or singleroom tenements and, although not all of these people will have low incomes,most of them will draw water from communal taps or standpipes rather thanusing individual piped connections. Thus, less water will be used thanwould normally be required by such a large population increase. Despitethis, the projected increase in consumers' demand for water in the projectarea, as a whole, will rise to about 300 mld by 1981, almost three times thequantity presently available. Water demands will be satisfied for a fewyears after the project is completed, but it is estimated that by 1991demand will again reach the level at which additional works will be needed(Table 2.2).

2.19 The projected water demand figures for the project area have beencalculated by applying per capita water supply targets to projected popula-tion figures previously discussed (paragraph 2.17 and Annex 3, Table 1).Projected net domestic water requirements are:

Urban dwellers,supplied through property connections 120 lcdsupplied through standpipes 50 lcd

Rural diwellers,supplied through property connections 70 lcdsupplied through standpipes 40 lcd

2.20 In addition to net domestic water requirements, allowances havebeen made for industrial and commercial water needs, unavoidable losses fromtransmission and distribution systems and water used in operating the variouswater treatment plants. The present and projected patterns of water consump-tion and demand are summarized in Table 2.2; more detailed domestic water con-sumption and demand data by areas are given in Annex 3, Table 2.

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Table 2.2: COMPOSITION OF WATER CONSUMPTION AND DEMAND IN THEPROJECT AREA, FROM 1978 TO 1991

Quantities of Water Consumed andWater Availability and Use Required (mld) /a

Financial Year Ending March: 1978 1981 1984 1991

Gross Quantity at Source /b 155 232 418 402Net Quantity at Source /c 153 180 /d 303 /d 402/dTransmission Losses (1%)I/e 2 2 3 4Treatment Plant Use (2%) /e 1 1 7 8Net for Distribution 150 177 293 390Distribution Losses /f 45 50 64 86Net to Consumers 105 127 229 304Demand and Consumption for: /g

Industry 36 37 63 78(30) (31) (76)

Trade Commerce and 10 12 14 19Government Undertakings (6) (8)

Municipal Use 8 9 10 14(4) (7)

Domestic, via Connections 82 96 110 151(53) (67)

Domestic, via Standpipes 24 28 32 44(12) (14)

Total Demand 160 182 229 306(105) (127)

Deficiency 55 55 - 2

Notes and Assumptions:/a Numbers are rounded to the nearest mld./b Excludes allocations for MIDC use./c Excludes water which cannot be used in the project area./d Increases result from: augmentation of MIDC works at Jambul (1981),

Shahad (1982), MWSSB works at Badlapur (1982) and a new MWSSB plantat Temghar (1984).

/e Increases with enlargement of transmission system and treatment capacity./f Presently estimated at 30%, reducing to 20-25% in the period 1980 to

1984 with improved control and maintenance of the systems.Ig Watev consumption figures in the period when demand exceeds supply are

shown in parentheses.

2.21 Project area water demands (Table 2.2) also reflects some of thepresent constraints in the water supply system. The northern part of theproject area is supplied from the trunk mains en route to BMC and is limitedin quantity. Conversely, a part of the southern area is supplied from theMIDC system which has surplus capacity at present, although there are nomeans of conveying some of this water to some parts of the project area.

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The table shows the water demand by the whole of the project area includingcommunities which have no piped water at present but which will be suppliedwith water on completion of the project in 1984. Distribution system losses,which are IIow estimated to be about 30%, would be reduced to acceptablelevels of 20 to 25% by 1984, with the introduction of distribution systemsurveys to locate defective mains, coupled with mains improvements andrepair programs (paragraph 3.17).

2.22 The small number of water connections to properties in urban areas(43,000 in 1978, averaging 14 people per connection) arises from the practiceof installing one connection to serve a large number of single-room tenementsin a building, although the comparatively large number of standpipe users isalso a contributing factor. In rural areas, there is a tendency for connectedconsumers to share water with unconnected neighbors resulting in an usuallyhigh number of persons served per connection.

2.23 The number of standpipes in use in each of the six towns in rela-tion to the population presently served, and the estimated numbers of personsserved by each standpipe (Tables 2.3 and 2.4) indicate that there is not animmediate need to increase the total number of standpipes in urban areasalthough MWSSB and local authorities recognize the need to relocate stand-pipes to provide a more equitable service, particularly to the poorer areas,and to substantially increase the number of standpipes serving rural areas(paragraphs 6.05 and 6.06). During negotiations, GOM informed the Associationthat it will require local authorities to provide sufficient public standpipesin both urban and rural areas (based on not more than 300 consumers per stand-pipe and a maximum distance of 100 meters from dwelling to standpipe) to en-sure an equitable distribution of water.

Table 2.3: ESTIMATED POPULATION SERVED BY STANDPIPES ANDCONNECTIONS IN URBAN AND RURAL AREAS

Population in Thousands1978 1981 1984 1991

Population Served by:Connections,

Urban 590 683 780 1,060Rural 51 61 220 316Total 641 744 1,000 1,376

Standpipes,Urban 291 337 383 522Rural 65 77 312 449Total 356 414 695 971

Total Population Served 997 1,158 1,695 2,347

Population Not Served 265 317 0 0

Total Population 1,262 1,475 1,695 2,347

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Table 2.4: ESTIMATED NUMBERS OF CONNECTIONS AND STANDPIPESIN URBAN AND RURAL AREAS

1978 1981 1984 1991

Number of Connections,in Thousands:

Urban Areas 43.0 59.0 80.0 106.0Rural Areas 2.0 2.6 13.4 22.0

Number of Standpipes,in Thousands:

Urban Areas 1.7 1.7 2.0 2.6Rural Areas 0.1 0.1 1.6 2.2

Average Number of People per:Connection,

Urban 14 12 10 10Rural 25 24 16 14

Standpipe,Urban 171 197 193 205Rural 650 713 200 200

Demand for Access to Sewerage Services Within the Project Area

2.24 Although more than 80% of the urban areas and almost all of theurban population have some degree of access to piped water, none of theurban population has access to water-borne sewerage and very few, if any,of the rural population have acceptable means of safely disposing of wastes.The entire urban area will have access to acceptable waste disposal systemson completion of both the project, and GOM's Rs 20 million (US$2.4 million)sanitation program (paragraph 3.17) which is designed to provide sanitationfor all of the villages in the project area.

III. THE PROJECT

Background

3.01 In May 1977, at the request of BMRDA, the Association reviewed aproposed project designed to improve the water supply and sewerage services inthe BMC area and of its satellite towns and villages. At that time, engineer-ing proposals for the satellite towns and villages had reached little morethan a conceptual stage whereas the proposals for the BMC area, which formedpart of a well conceived long-range development program, were well advancedand, in most cases, ready for detailed engineering design. Because of thisdisparity, and since there were no physical links between the water systemsserving the two areas, the two segments of the project originally proposedby BMRDA were developed independently.

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3.02 The project serving the BMC area was appraised in January 1978;after furLher preparation, a project to serve the satellite towns was for-mulated as the Maharashtra Water Supply and Sewerage Project, and is now thesubject of this appraisal report. Thus, this is the third project in thewater supply and sewerage sector in Maharashtra, the two previous projectswere the first and second Bombay Water Supply and Sewerage Projects, Credits390 and 842-IN respectively.

Objectives of the Sector and the Project

3.03 India's present urban population of about 120 million is expectedto increase to about 300 million over the next 25 years. Annual urban popula-tion growth is about 4% and exceeds the rate at which water supply and sewer-age services are being provided. Urbanization is most pronounced in the Statesof Gujarat, Tamil Nadu and Maharashtra.

3.04 About half of the urban population of India, some 50 million people,are very poor having income levels below that required to provide an adequatediet. While the extent of rural poverty is greater than urban poverty --since only about one-fifth of the population is urban -- the number of urbanpoor is still very large, probably more than in the whole of Latin America.While the root of the urban poverty problem (and its ultimate solution),almost certainly lies in unemployment and underemployment, the potential pro-ductivity of the poor would be improved and their suffering reduced by ensuringthat basic needs -- food, wholesome water, sanitation, shelter -- are within

their reach. In addition, provision of water and disposal of wastes alsoinfluence the investment which entrepreneurs are willing to make and theresulting creation of employment.

3.05 Urban water supply and sewerage projects in India are invariablydesigned on a complete system approach; however, the poor receive a propor-tionately greater benefit than the higher income groups because they dependsolely on the public water system without the advantage of privately installedappurtenai.ces designed to reduce the effects of inadequacies of the systemby securing a greater share of the supply. Tariff structures normally providefor a degree of subsidy to the poor by higher-income consumers, particularlyby industry and commerce.

3.06 Objectives of the project are to a large extent synonymous withthose of the sector and are summarized as follows:

- Provide satisfactory water and sewerage services to 2.4million people (estimated 1991 population) in the commun-ities concerned including essential services for the poor.

-. Improve public health in urban and rural areas by makingavailable adequate quantities of wholesome water, attariffs within the public's ability to pay, and by thecollection and safe disposal of sewage.

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Improve the ability of authorities tr implement, operateand maintain water and sewerage works and to achievefinancial and economic viability.

- Provide an environment conducive to the development ofindustry, and the creation of jobs and better conditionsfor the employed.

3.07 The project would relieve hardship caused by the inadequacy ofwater supplies and sewerage facilities and would improve the health of peoplein the project area; it would also optimize the use of some of the existingwater resources and associated works. Benefits of the project include thedevelopment of the newly formed Maharashtra Water ';upply and Sewerage Boardand a fulrillment of one of BMRDA's functions to -cordinate and monitor aregional (levelopment program in a major sector.

Consideration of Technological Alternatives

3.08 A water resources study of watershel areas contributing to BMR wascompleted by BMRDA, with the help of consultants, 1/ as part of project pre-paration. Under the study, all water needs for irrigation, as well as waterdemands f,r industry and domestic consumers within BMR, were estimated to theyear 1991 and approximate projections were made to 2005. An inventory andevaluation of all existing water supply facilities in BMR was made and yieldsof all watler sources available to BMR were assessed. These data provided abasis for a systems analysis study to identify regioral resource developmentalternatives to meet projected water demands.

3.09 Having established a regional plan for both water allocation andconveyance, the individual systems and components were selected and sequencedto meet the desired standards of service at least cost. Also identified wereways to optimize the use of some of the existing wliter sources and associatedworks. In general, by 1984, the whole of the population in the project area,with the exception of nine villages (paragraph 1.12) will receive piped waterin adequate quantities and of satisfactory quality.

3.10 The range of alternative means of collecting, conveying and treat-ing sewage in the urban areas was limited. Plrovision of water-borne sewagecollectioTn systems for the towns is long over:due since the major parts ofthe municipal areas have developed beyond the point at which alternative meansof sanitat:ion (septic tanks, soakage pits or pit latrines) are desirable oreven practicable. Local authorities have long been aware of the need forimproved sanitation, and construction of parL:s of the systems in Thane, Kalyanand Bhiwanidi began as early as 1971.

1/ Draft Feasibility Report Part I, Water Resources for Bombay MetropolitanRegion Development Authority; Kirloskar Consultants, Ltd., Pune, India,January 1978.

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3.11 Treatment of sewage prior to its discharge to water courses isrequired under the Maharashtra Pollution Control Act, 1970. Treatment ofsewage in oxidation ponds has been identified as the least cost treatmentmethod and extension of the existing ponds at Bhiwandi is proposed under theproject. Primary treatment of sewage in conventional plants (comprisingscreening, grit removal, sedimentation, sludge digestion, sludge drying andeffluent chlorination) is proposed for the remaining five towns because thecomparatively large areas of land required for oxidation ponds 1/ are notavailable within reasonable distances of the towns.

Project Description

3.12 The principal project elements are illustrated in Maps IBRD 14110,14111 and 14112, described in Annex 1 and summarized as follows:

Water Supply - Northern Area

(a) A river water intake and pumping station (capacity 260 mld)on the Ulhas river, near Shahad weir, and a transmissionmain (including the necessary bridges) to the proposedTemghar water treatment plant.

(b) A water treatment plant (initial capacity 200 mld) andpumping station at Temghar.

(c) Three transmission mains having diameters ranging from800 millimeters (mm) to 1,500 mm, each about three kilo-meters (km) long, to serve Thane, Bhiwandi, and thenorthern rural areas.

(d) Three service reservoirs, total capacity 21.7 millionliters (ml), to serve Thane, Bhiwandi, and the northernrural areas.

(e) A network of transmission mains having diameters rangingfrom 100 to 1,500 mm, and a total length of about 118 km.

(f) Three booster pumping stations and 34 distribution reservoirs(total capacity 23 ml) serving various villages in the northernpart of the project area.

(g) Distribution system improvements in Thane, Bhiwandi andvillages in the northern area, including two booster pump-ing stations, 12 distribution reservoirs (total capacity32 ml), and associated networks of mains and standpipes.

1/ About two hectares are required per thousand population.

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Water Supply - Southern Area

(h) Renovation of Badlapur water treatment plant and pumpingstation and expansion from a capacity 34 mld to 49 mld.

(i) A network of transmission mains having diameters rangingfrom 100 to 800 mm and a total length of about 43 km.

(j) Ten distribution reservoirs (total capacity 11 ml),serving villages in the southern part of the distributionarea.

(k) Distribution system improvements in Kalyan, Dombivli,lJlhasnagar, Ambernath and villages in the southern areaincluding two booster pumping stations, 13 distributionreservoirs (total capacity 36 ml), networks of mains andstandpipes.

Seweratge - Northern Area

(1) Extension of the sewage collection and conveyance systemsin Thane and Bhiwandi, including about 48 km of sewers havingdiameters ranging from 150 to 1,100 mm, five sewage pumpingstations, and associated force mains, some 9,000 propertyconnections, expansion of a primary sewage treatment plantfrom a capacity of 18 to 62 mld, and expansion of oxidationponds from a capacity of 5.5 mld to 19.5 mld.

Sewerage - Southern Area

(m) Provision of sewage collection and conveyance systems in1)ombivli, Ulhasnagar and Ambernath, including about 168 kmof sewers ranging in diameter from 150 mm to 1,000 mm, tensewage pumping stations and associated force mains, some15,000 property connections, as well as a primary sewagetreatment plant for each town. Minor surface water drain-age works in Dombivli, which are essential for the properfunctioning of Dombivli's sewerage system are also included.

(n) Connections for about 2,000 properties to the existing publicsewerage system in Kalyan.

Other Items

(o) WIorkshops for water meter testing and repair; stores anddepots; vehicles and tools for meter servicing and mainstesting and repair; bulk water meters.

(p) Technical assistance to MWSSB for engineering design; train-ing of MWSSB personnel in management, financial management,operation and maintenance of water and sewage treatment

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plants and pumping stations, control of water losses, metertesting and repair.

(q) Engineering and administration of the project.

Property Connections to Water and Sewerage Systems

3.13 GOM has provided guidelines 1/ to local authorities on the proce-dures to be used for connecting privately owned properties to water supplyand sewerage services. Consumers' applications for water connections areusually granted subject to compliance with certain conditions includingadequate facilities for the drainage of waste water. Connections are madeby local authorities upon receipt of an advance payment for the estimatedcost. The average cost of a water connection is quite modest, within propertyowners' abiLity to pay and is not a barrier in obtaining access to the service.

3.14 In contrast, connections to sewers are more expensive and oftenrequire quite costly modifications of facilities within properties so thatthey may be connected to a water-borne sewerage system. These factors havecontributed to the unsatisfactory situation in Thane, Kalyan and Bhiwandiwhere new sewerage systems are grossly underutilized because of propertyowners' reluctance to meet the costs of connection and/or conversion.

3.15 The mission's discussions with GOM and MWSSB officials led to apossible resolution of the difficulties experienced in requiring propertyowners to connect to sewerage systems, by adopting a program similar to thatused successfully by BMC in which all owners of property in sewered areas(i) are required by law to connect to the system and (ii) are eligible forfinancial assistance in the form of a grant from the local authority to meetpart of the cost of either the connection and/or conversion of existing house-hold faciliLies. In this context, the "connection" is from the property toan interception chamber which may serve several properties; connections frominterception chambers to the sewer are included as part of the cost of thesewerage system. 2/ This agreed solution was formalized during negotiationswhen assurances were obtained from GOM that appropriate bylaws will begazetted, under existing legislation requiring: (i) owners to connect theirproperties to sewerage systems where a sewer is provided within a specifieddistance of the property; and (ii) local authorities to provide grants or softloans (under terms acceptable to the Association) to property owners to meeta stipulated part of the expense in converting existing household sanitaryfacilities to systems suitable for connection to the public sewer system,and towards the cost of such connections.

1/ The Maharashtra Mlunicipalities Act, 1965; sections 215 to 223 and 200to 214 for water and sewerage, respectively.

2/ Connections from interception chambers to sewers are termed "propertyconnections" in the project description.

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Metering

3.16 About 92% (about 41,000) of the present water supply connectionsin the project area are metered. As GOM's policy is to meter water consump-tion, metering will be extended under the project to the whole of the projectarea. Metering is justifiable economically (Annex 19). Based on MWSSB'sestimates, about 25,000 meters will be tested and repaired each year. Facil-ities for this work at present comprise two meter workshops (Badlapur andUlhasnagar) operated by MWSSB and one at Thane which is operated by the ThaneMunicipality. Under the project, an additional meter workshop, suitablystaffed and equipped, will be provided at Bhiwandi.

Complementary Works

3.17 Other items not included in the project but which are essentialfor the accomplishment of project objectives are summarized as follows:

(i) A sanitation project for 104 villages in the project area,will be implemented by MWSSB in the period 1980 to 1984.GOM has confirmed that sufficient funds will be madeavailable to implement this project.

(ii) Provision of additional public latrines in the six towns.This program will be executed by local authorities duringthe same period as the proposed project. During negotia-tions, GOM informed the Association that local authoritiesTill be required to provide and maintain additional publiclatrines to serve the poorer areas (MIap IBRD 14111).

(iii) The capacity of the MIDC system, comprising the Barvi dam,the Jambul and Shahad treatment plants and associated works,will be increased as required to enable MIDC to meet itscommitments to industrial consumers and to make availablesufficient additional water to MWSSB for the project area,estimated at 100 mld in 1984 and 150 mld in 1991. Atnegotiations, GOM agreed to cause MIDC to make availablethe required quantities of potable water to MWSSB at reason-able rates to be set after consultation with the Association.

(iv) Industries having toxic and harmful liquid wastes shouldtake corrective action to ensure that wastes will notadversely affect the sewers and sewage treatment systems.The Maharashtra Prevention of Water Pollution Board andother concerned agencies, have a satisfactory program fort.he enforcement of corrective actions by industries aswell as a monitoring/control program of waste discharges.I)uring negotiations, GOM agreed to reduce industrial wastedischarges to acceptable levels in accordance with thisprogram.

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(v) MWSSB proposes to establish teams to detect distributionsystem losses and to repair mains throughout the projectarea, and has identified manpower and equipment require-ments for a leakage detection and mains repair programbeginning in 1979/80; during negotiations MWSSB agreedthat such a program will be implemented.

Cost Estimates

3.18 The estimated cost of the project is Rs 860 million (US$100.0 mil-lion) including contingencies, customs duties and taxes. The estimated costof the principal features of the project is shown in Annex 2 and summarizedin Table 3.2.

3.19 Civil works costs are based on MWSSB's and consultants' estimatesof work for which preliminary designs have been completed. Materials andequipment cost estimates are based on bids for items in current projects,suitably updated, or on recent quotations by manufacturers and suppliers.Physical contingencies of 10 to 30% (depending on the type of work) have beencalculated on estimated basic costs as at January 1979. Price contingenciesfor both local and foreign costs have been included in accordance with currentguidelines on the basis of the following annual rates for the project imple-mentation period 1979 through 1983: local and foreign equipment, 6.5% forthe period 1979/80 and 6% thereafter; civil works, 7.5% for 1979/80 and 7%thereafter.

Financing

3.20 Al IDA Credit of US$48.0 million is proposed; this is about 50%of the project cost of US$95.8 million excluding customs duties and taxes.In order that MWSSB may appoint engineering consultants to begin design ofproject components it is recommended that retroactive financing, not exceedingUS$0.5 million, be authorized from the Credit for expenditures incurred afterApril 1, 1979. The following table summarizes the project financing plan:

Table 3.1: SUMMARIZED FINANCING PLAN /a

Project CostFinanced by Percentage (US$ Million)

IDA 48.0 48.0G()M 42.0 42.0Local Authorities'

Contributions 10.0 10.0

Total 100.0 100.0

/a Excludes interest during construction and workingcapital (Table 4.4).

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Table 3.2: SUMMARY OF ESTIMATED PROJECT COST

Description Local Foreign Total Local Foreign Total---- Rs Million --- --- US$ Million ---

Water SupplyCivil Works 166 - 166 19.3 - 19.3Equipnment 94 54 148 10.9 6.3 17.2

Subtotal 260 54 314 30.2 6.3 36.5

SewerageCivil Works 151 - 151 17.4 - 17.4Equipr.ent 35 - 35 4.2 - 4.2

Subtotal 186 - 186 21.6 - 21.6

Common ServicesStores, Workshops and Depots 11 - 11 1.3 - 1.3Vehicles and Miscellaneous

Equipment 6 - 6 0.7 - 0.7

Subtotal 17 - 17 2.0 - 2.0

OthersEngineering:

Consultants 13 5 18 1.5 0.6 2.1MWSSB 33 - 33 3.9 - 3.9

Training 1 1 2 0.1 0.1 0.2Land Acquisition 18 - 18 2.1 - 2.1

Subtotal 65 6 71 7.6 0.7 8.3

ContingenciesPhysical 71 9 80 8.3 1.0 9.3Price 141 15 156 16.4 1.7 18.1

Subtotal 212 24 236 24.7 2.7 27.4

Total Before Duties and Taxes 740 84 824 86.1 9.7 95.8

Duty and TaxesCustoms Duties 21 - 21 2.4 - 2.4Taxes 15 _ 15 1.8 - 1.8

Subtotal 36 - 36 4.2 - 4.2

Total Project Cost 776 84 860 90.3 9.7 100.0

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Project Design, Construction and Supervision

3.21 HWSSB will have overall responsibility for project design andconstruction and will appoint consultants to complete most of the finalengineering designs. MWSSB engineering staff will plan and control projectdevelopment, as well as supervise construction. Although MWSSB has staffcapable of carrying out work of this type, the additional work load willrequire a considerable manpower input during the first half of the projectperiod. The appointment of consultants to undertake the engineering designof both water supply and sewerage components is a critical item in theproject schedule and the appointment of suitable consulting engineers, whoare acceptable to the Association is, therefore, a condition of effective-ness of the credit.

3.22 The project provides for an estimated 1,100 man-months of consul-tant services during the whole of the project implementation period. Thelargest item is final engineering design of the works although a small com-ponent for advice to MWSSB on financial planning and accounting is alsoincluded. It is estimated that the total cost of consultants' services willbe about Rs 18 million (US$2.1 million) representing some 70 man-months byforeign consultants (at US$8,500 per man-month) and 1,050 man-months bylocal consultants (at US$1,400 per man-month). Foreign consultants wouldonly be needed to provide specific design expertise for particular components,primarily sewage treatment. Even where foreign firms are involved they wouldassociate with a local firm which would provide the major portion of themanpower requirement.

Implementation Schedule

3.23 HWSSB plans to implement the project in a four-year period, begin-ning with engineering design in 1979 and terminating the work on the projectcompletion date of September 30, 1983, by which time all of the works would bein operation. Few civil works contracts would begin during the first year,since the major part of MWSSB's efforts would be directed toward preparingdetailed engineering designs and contract documents. However, by the firstquarter of 1981, most of the larger civil works contracts would have beenawarded and would be completed in construction periods of about 24 months(Annex 4). The schedule is a realistic one, although completion of the workswithin this time frame will require careful planning and good management.

Procurement

3.24 All contracts for equipment, materials and meters would be awardedunder international competitive bidding procedures in accordance with theAssociation's guidelines, with the exception of contracts for items such assewer pipes, fabrication of steel pipes (from steel plate purchased underinternational bidding procedures), and items costing less than US$50,000 butwith an aggregate value of not more than US$1.0 million. Contracts for sewerpipes and fabrication of steel pipes would be awarded under local competitivebidding procedures and items costing less than US$50,000 would be procuredunder local procurement procedures, both of which are acceptable to theAssociation. The estimated cost of sewer pipes and fabrication of steel

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pipes is about US$2.2 million. Sewer pipes cannot be economically trans-ported over long distances because of their bulk and fragile nature; fab-rication of steel pipes has a high labor content and foreign contractorsare not competitive with Indian contractors. Items costing less thanUS$50,000 would not attract foreign bidders, are unsuitable for packaginginto larger contracts and would not justify international bidding.

3.25 All civil works in this project -- with the possible exceptionof the Temghar treatment plant -- comprise a large number of relativelysmall contracts, which are widely dispersed throughout the project area,do not require special plant, equipment or techniques, are labor intensiveand are traditionally carried out by registered contractors established inBombay or other major Indian cities. These works would not attract foreignbidders since it is clear that overseas firms could not successfully com-pete with local bidders for works of this type and size. The Temghar watertreatment plant, for which international competitive bidding is proposed,is the only large item of civil works component which might attract foreignbidders.

3.26 In evaluating bids for equipment and materials, domestic manufac-turers would be given a preferential margin equal to 15% of the c.i.f. costsof the competing imports or the existing rate of customs duty, whichever islower. A preferential margin of 7.5% would be allowed for local contractorsin evaluating civil works bids. Most of the contracts for equipment andmaterials supply and all contracts for civil works, other than possibly theTemghar water treatment plant, are likely to be won by local contractors.

Land Acquisition

3.27 Some 200 hectares of land will be required for the project, 134hectares of which is presently privately owned and will be acquired underexisting legislation. About 114 hectares of the land to be acquired isused for agricultural purposes. This is a small area, some of which isused for paddy cultivation, and its loss to agriculture would have no impacton the State's agricultural program. The period required to complete normalland acquistion procedures is about two years; however, in cases of urgencyGOM may make land available for construction within a year after the initialapplication and prior to completion of the whole of the formal acquisitionprocedures. In the case of GOM-owned land, permission to occupy the landprior to completion of land transfer formalities may be granted.

3.28 During appraisal, the necessary steps for acquisition of land forthe project were identified by MWSSB and a land acquisition program wasprepared. During negotiations, GOM and MWSSB agreed that all necessaryaction to acquire land needed for the project will be taken in accordancewith this program which is acceptable to the Association.

Disbursements

3.29 The proceeds of the credit would be disbursed over a four-yearperiod. An estimated disbursement schedule is shown in Annex 5. Disburse-ments would be made as follows:

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(a) Equipment (US$30.6 million). For equipment procured underinternational or local competitive bidding, 100% of foreignexpenditures for directly imported goods, or 100% of localexpenditures (ex-factory costs) for locally manufacturedgoods. For goods procured under local procurement proce-dures, 50% of local expenditures.

(b) Civil Works (US$12.0 million). About 75% of expendituresfor civil works contracts procured under international orlocal competitive bidding procedures for water supply worksexcluding distribution systems.

(c) Consultants' Services and Training (US$2.8 million). 100%of expenditures for training and consultants' services(excluding any reimbursement of taxes).

(d) Unallocated (US$2.6 million). About 5% of the totalcredit.

Environmental and Health Aspects

3.30 The water supply component will ensure that a continuous supplyof wholesome water is available to the whole of the population in the projectarea, with the exception of some five thousand people living in remote vil-lages. The project, and an allied sanitation program, will ensure that thispopulation also has access to acceptable forms of waste disposal.

3.31 Thus, the proposed water supply, sewerage and sanitation improve-ments, by ensuring an equitable distribution of wholesome water, as well asthe collection and disposal of human waste, will reduce potential sources ofdisease that presently pervade the community, particularly the slum areas(paragraphs 6.07 to 6.10).

IV. FINANCIAL ANALYSIS

Introduction

4.01 Under the Maharashtra Water Supply and Sewerage Board Act theassets and liabilities of ENE may be vested in MWSSB with effect from anydate specified by GOM. Under a resolution (dated March 26, 1979) GOMdetermined the terms and conditions for transferring ENE's assets and lia-bilities to MWSSB; GOM also determined that the date of transfer shallbe the same as the date of transfer of the staff of ENE to MWSSB. Thetransfer of staff from ENE to MWSSB was to have been effected by a G014resolution dated January 10, 1979. However when this resolution was issueda number of representations were received from ENE staff seeking clarifica-tion regarding terms and conditions of deputation to MWSSB. GOM thereforepassed a further resolution, deferring the transfer of staff to permitthese issues to be resolved. Despite this delay, GOM is confident that MWSSB

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will be fully staffed during 1979 (paragraph 5.09). In the meantime, thestaff continues to carry out is duties as part of MWSSB's organization but isemployed by ENE.

4.02 There are three different levels of institution involved with thisproject. First, there is GOM which until recently has acted in the watersupply and sewerage sector through ENE, a department of government rather thana separate financial entity. ENE is to be superseded by MWSSB, a separatefinancial entity. Secondly, there are the six municipalities and thirdly thevillages, each of which is a separate financial entity. When the project iscompleted oa September 30, 1983 MfWSSB will establish bulk tariffs and supplywater to the whole project area. As part of the sector reorganization, GOMintends to transfer the water distribution systems in Ulhasnagar, Ambernathand surrounding villages from MWSSB to these local authorities during theproject period. On completion of these arrangements MWSSB will supply waterin bulk to the towns and villages which will operate and maintain their ownwater distribution system; the six towns will also operate and maintain thesewerage systems to be constructed under the project. The six municipalitieshave expressed their support for the project and have prepared relevant reso-lutions which will be placed before the municipal councils. The approval ofthese resolutions by municipal councils will be a condition of effectivenessof the credit.

4.03 Uader the Maharashtra Water Supply and Sewerage Board Act 1976,MWSSB is required to operate, as far as practicable, without incurring aloss. MWSSB is required to establish separate funds for its loan (LoanFund) and other (Board Fund) transactions, a depreciation reserve, andprepare an annual budget for submission to GOM. MWSSB is also required toprepare annual accounts and a balance sheet in a prescribed form for auditand publication.

4.04 Prcesent accounting and financing arrangements at all levels ofthe sector are based on government rather than commercial practice. Watersupply accounts are kept on a cash basis in accordance with GOM and localauthorities accounting procedures; water supply cash transactions are con-solidated with those of other services to form the GOM state accounts orindividual local authority accounts, as the case may be, and any shortfallor surplus in water supply revenues is funded from or contributes to therespective consolidated state or local authorities' revenues. Separateincome statements and balance sheets for water supply are not preparedalthough records of water supply assets exist. Although recent, reliableinformation on collection and recovery of revenues is incomplete, availabledata suggests that current procedures are not entirely satisfactory. Annualbudgets are prepared but there is a lack of financial management.

Past Financial Performance and Present Position

4.05 As part of the feasibility study for the proposed project, BMRDAengaged Kirloskar Consultants, Ltd., Pune, to prepare income statements, cashflow statements and balance sheets for ENE and the local authorities, in theproject area, from 1974/75 in accordance with commercial practice, and to

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revalue existing water supply assets in operation on the basis of replacementcost in mid-1977. Income statements based on data prepared by the Consultantsfor 1974/7' through 1978/79 are summarized in Annex 6 and salient featuresare given below.

ENE (nlow MWSSB)

4.06 Summary income statements for water supply systems operated andmaintained by ENE throughout the entire state, and estimated fixed assets inoperation, are as follows:

Table 4.1: ENE INCOME STATEMENT(Rs Million)

1977/78 1978/79Actual Estimated

Quantity of Water Sold 131,619 ml 147,314 ml

Average Revenues (Rs/1,000 liters) (0.32) (0.32)

Operat.ing Revenues (billings) /a 41.9 47.1

Operating Costs 38.4 43.4

Deprec. iation 4.9 5.5

43.3 48.9

Operating Deficit 1.4 1.8

Add Interest 14.6 16.3

Total Deficit 16.0 18.1

Net Fixed Assets in Operation 246 265

/a Revenues recovered (i.e., cash collected during the year) areRs 39.2 million in 1977/78 and Rs 45.9 million estimated ini978/79 but the total amount of receivables is not available.

4.07 although GOM 1/ required ENE to establish tariffs to provide reve-nues sufficient to cover its operating costs, notional depreciation andinterest this has not been done and deficits were incurred in both 1977/78and 1978/79 on statewide activities. Similarly, ENE's activities in the

1/ GOM Public Works Department Circular No. WST 1059, December 1959.

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project area have also operated at a loss in recent years and, as ofMarch 31, 1979, ENE had an estimated accumulated deficit of Rs 11.7 millionon such operations. In the past, losses have been met from GOM's consolidatedrevenues.

4.08 Some of the local authorities' distribution systems, which will formpart of MWSSB's assets, will soon be transferred to the appropriate localauthorities (paragraph 4.02). After this transfer MWSSB's balance sheet inthe project area will be approximately as follows:

Table 4.2: MWSSB (PROJECT AREA) ESTIMATED BALANCE SHEETAT DATE OF TRANSFER /a

(Rs Million)

ASSETS:Net Fixed Assets 10.2Current Assets 0.3

Less: Current Liabilities (0.1) 0.2

10.4

Represented by:

EQUITY:Iransfer from ENE 5.7Revaluation Reserve 4.7

10.4

/a Based upon information at April 1, 1979.

Municipalities

4.09 Income statements for the years 1974/75 through 1978/79 for thefour municipalities (Thane, Bhiwandi, Kalyan, Dombivli), which at presentoperate water supply distribution systems are summarized in Annex 6. Thefinancial performance has varied; Thane has had a surplus, Kalyan and Dombivlihave had small deficits and Bhiwandi has had a substantial deficit. Undermunicipal practice, operating deficits have been funded from municipal taxa-tion while surpluses have been applied to the consolidated municipal fund forthe benefit of other services. A common feature in all the municipalities isthe high proportion of accounts receivable.

4.10 Tfe estimated financial position of each of the municipalities'water services, including Ulhasnagar and Ambernath, which will receive dis-tribution systems from MWSSB after April 1, 1979 is set out below and isgenerally satisfactory.

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Table 4.3: ESTIMATED MUNICIPAL BALANCE SHEETS AT DATE OF TRANSFER /a

Thane Bhiwandi Kalyan Dombivli Ulhasnagar Ambernath------------------ Rs Million ---------------------

ASSETS:Net Fixed Assets 6.2 4.5 5.8 6.2 11.0 4.3Work in Plrogress:Water Supply - 7.4 - - - 2.6Sewerage 28.4 3.2 19.1 - - -

Current Assets 3.4 2.1 0.8 0.4 0.4 0.2Less: Current

Liabilities (0.9) (0.3) (0.3) (0.2) (0.3) (0.1)37.1 16.9 25.4 6.4 11.1 7.0

LIABILITIES:Equity:Transfer from ENE 27.3 14.9 12.0 2.8 4.5 4.7Revaluation Reserve 1.6 1.4 4.2 2.9 6.6 2.3Operational Surplus 1.5 - - - - -

Total 30.4 16.3 16.2 5.7 11.1 7.0Long-terma Debt 6.7 0.6 9.2 0.7 - -

37.1 16.9 25.4 6.4 11.1 7.0

Current Ratio 3.8 7.0 2.7 2.0 1.3 2.0

Debt/Equity Ratio 18:82 3:97 36:64 11:89 0:100 0:100

/a Based upon information at April 1, 1979.

V illages

4.11 Little information is available on the financial activities ofindividual village water supply operations but tariffs generally appear toprovide sufficient revenues to cover operating costs.

Transfer Ai-rangements

4.12 is part of GOM's program to establish MWSSB, the transfer of ENE'sfixed assets (as Government equity) to MWSSB was scheduled for March 1, 1979.Any liabilities for previous operating deficits would not be transferred.This transfer has been deferred to permit resolution of issues raised by thestaff which are to be transferred from ENE (paragraphs 4.01 and 5.09). GOMis confident that the transfer of asset and liabilities will be completed in1979 and that thereafter the water distribution systems will be transferredto local authorities.

Future Accounting Arrangements

4.13 During negotiations GOM and MWSSB, as appropriate, agreed that thefollowing actions will be taken in accordance with a program acceptable tothe Association:

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(i) GOM will require each of the six municipalities in theproject area to prepare and thereafter maintain separateaccounts, on a commercial basis, for its water andsewerage services;

(ii) MWSSB will prepare and thereafter maintain accounts on acommercial basis for all of its operations and will main-tain separate accounts, on this basis, for the projectarea. MWSSB also informed the Association that it wouldcontinue ENE's practice of maintaining separate recordsof costs associated with each of its water supply systemsthroughout the State;

(iii) GOM will require each village in the project area toprepare and thereafter maintain a separate receipts andpayment account for its water supply services.

4.14 It was also agreed that:

(i) GOM will require each local authority to improve billingand collection procedures for its water and sewerageservices to enable consumer receivables to be reducedto an acceptable level, to be agreed with the Association,by March 31, 1981;

(ii) GOM will cause each local authority in the project areato pay its bills for bulk supplies promptly to MWSSB; ifany bills remain unpaid for more than 90 days, GOM willensure full payment by the local authority concernedeither by deduction from grants due to the local authorityor other means;

(iii) MWSSB will submit to IDA by September 30, 1979, a satis-factory program leading to the introduction and operationof financial management and information systems.

Financing Plan

4.15 MWSSB has yet to formulate a financing plan, for its operationsthroughout the State, which will include projects to be executed for localauthorities in the Sixth Five-Year Plan period ending in 1982/83. This planwill be reflected in MWSSB's annual investment programs which will be sub-mitted to the Association as part of the project reporting procedures. Toprotect its future viability, MWSSB will be required not to incur any long-term debt without IDA's. prior agreement unless its overall operating surplusbefore depreciation, for its most recent financial year, is at least 1.3 timesthe maximum debt service in any future year. During negotiations MWSSBagreed to this long-term debt limitation.

4.16 MWSSB's estimated financial requirements in the project area in theperiod 1979/80 through 1983/84, and the sources from which they will be met(which also reflects the State's funding pattern in Table 4.5) are summarizedas follows:

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Table 4.4: PROJECT FINANCING PLAN

Rs Million US$ Million Percentage (%)

Source of lunds:

1. Local Authority Contributionand Internal Cash Generation 129 15.0 15

2. IDA Credit (through GOI) 413 48.0 463. GOM: Loan 43 5.0 4

Grant 318 361 37.0 42.0 35 39903 105.0 100

Application of Funds:

4. Project Cost:(a) Water Supply

Bulk Supply System 366 42.5Distribution Systems 193 22.5

(b) Sewerage 301 35.0860 100.0 95

5. Interest During Construction 41 4.7 46. Working Capital 2 0.2 1

903 105.0 100

4.17 The proceeds of the proposed IDA Credit of US$48 million will beincluded in GOI's allocation to GOM. At negotiations, it was agreed that:

(i) GOM will relend the proceeds of the credit to MWSSB for25 years, including a four-year grace period, at thecurrent GOM lending rate of 6-3/4%.

Ihe proposed terms are similar to those of the Second BombayWater Supply and Sewerage Project (Credit 842-IN) approvedby the Board on July 25, 1978. Although the onlending rateis below the current 8-1/2% interest rate on 25-year loansavailable from the Life Insurance Corporation of India forwater supply and sewerage projects, it is above GOM's cur-rent open market borrowing rate of 6-1/4% for 10- to 12-yearmaturity loans. The annual rate of inflation in India was-1.1%, 2.1%, and 5.1% in 1976 through 1978 and is forecastat 5% for each of the next three years.

(ii) GOM will provide MWSSB with working capital and sufficientfunds, including loans on the same terms as above, to completethe project.

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GOM will make funds available in accordance with a longestablished pattern of funding for local authority waters;upply and sewerage projects, set out below (paragraph 4.18).GOM's grant, which will comprise about 35% of the project,ost, is justified having regard to the number of low-income consumers using standpipes and the limited capacityi:or cross-subsidization in the areas to be served. Much(of the industry is located in industrial estates which are,;upplied with water by MIDC thus reducing the opportunityfor cross-subsidy from industry to domestic consumers.

4.18 GOM has established the following arrangements for financing localauthority water supply and sewerage schemes.

Table 4.5: FINANCING PATTERN FOR STATE GOVERNMENTASSISTANCE TO LOCAL AUTHORITIES

Population of GOM Local AuthorityVillage or Town Grant Loan Contribution

Under 15,000 90 - 1015,000 - 35,000 50 40 1035,000 - 75,000 40 50 1075,000 and over 23-1/3 66-2/3 10

4.19 in line with these arrangements, an understanding was reached withGOM during negotiations that if the resources of any local authority, par-ticularly the villages which at present have no piped water supply, prove tobe insufficient to provide for a contrioution of 10% of the project cost, aswell as fii,ancing interest on loans during project construction, then GOMwill make the contribution and recover the amount from the local authority.

4.20 To safeguard project financing, GOM agreed during negotiations thatduring the period of project construction (i) MWSSB will not utilize any sur-plus arisii,g from its operations in the project area for operational anddevelopment purposes outside that area and (ii) local authorities will notutilize surplus funds from water and sewerage operations for other purposes.

Tariffs

Generc.

4.21 ihe present bulk and retail water tariff arrangements in theproject area are set out in Annex 7. Most connected properties are meteredand a charg,e is fixed according to consumption. Unnmetered supplies arecharged according to the rateable value of the property or a fixed annualpayment fov each property. On completion of the project all connectedproperties will be metered. At present there are no sewerage charges andthe cost of waste removal is charged against general municipal revenues.

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4.22 A socio economic study has been commissioned by BM1RDA for theproject area which will provide a basis for the consideration of alter-native tariff structures. At negotiations, it was agreed that beforeApril 1, 1980, GOM will review the bulk and retail tariff structures in theproject area in consultation with MWSSB, the local authorities and IDA havingregard, among other things, to consumer's ability to pay and the economiccost of future expansion of services.

MWSSB

4.23 MNSSB has adequate powers under the MWSSB Act of 1976 to charge forand recover the cost of water supply. Projected bulk supply tariffs in theproject area from 1979/80 are shown in Annex 8. The following agreementswere reached during negotiations:

(i) MJSSB will review and set its bulk tariffs in the projectarea before the commencement of each financial year toensure that:

(a) from April 1, 1980 revenues are sufficient to coveroperating expenses and depreciation of fixed assetsin operation;

(Di) from April, 1983, revenues are sufficient, in additionto covering the costs included above, to provide a rateof return on average currently valued net fixed assetsin operation of not less than 4% in 1983/84 and 1984/85,5% in 1985/86 and 6% thereafter. 1/

(ii) With effect from April 1, 1980 MWSSB will review itstariffs outside the project area before the commencementof each financial year to ensure that revenues are suffi-cient to cover operating expenses and the greater ofdepreciation or debt service.

Local Authorities

4.24 Alequate powers to levy charges have been granted to local author-ities in the Maharashtra Municipalities Act 1965 and the Bombay VillagePanchayats kct 1958 (as modified). Model bylaws issued by GOM under the1965 Act, in respect of sewerage charges in the project area need to be ex-tended to include the power to recover sewerage charges in accordance withthe volume of water consumed. From 1983/84 onwards, a rate of return covenantis proposed for the six towns, based on net fixed assets in operation, asrevalued from time to time. The rate of return will be increased gradually,

1/ For the purpose of the rate of return MWSSB will annually review thevalue )f its fixed assets and, if price levels have increased by morethan 1)% since the previous revaluation, MWSSB will revalue its fixedassets in operation in accordance with a method agreed with IDA.

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however, a; the impact on domestic consumers will vary considerably from townto town, depending on the level of water demand by industry and commerce(Table 4.6). In the three towns, Kalyan, Dombivli and Ulhasnagar, industrialwater demand forms a small proportion of the total, thereby reducing consider-ably the opportunity for cross-subsidization. Furthermore water charges toindustry anid commerce must be comparable to MIDC water charges to adjoiningindustry. A uniform combined water and sewerage charge of Rs 3/1,000 litersin 1983/84 to industry and commerce in the project area has been assumed inthe financ-al projections. This rate is reasonable when compared to MIDC's1978/79 water rate of Rs 1.50/1,000 liters and BMC's 1978/79 water and sewer-age rate of Rs 3/1,000 liters for water and sewerage (BMC also imposes addi-tional water and sewerage taxes, based on the rateable value of property).

4.25 "he combined water and sewerage charges in 1983/84 to an averagefamily (ex(luding standpipes users) would range from Rs 11 to 28 per month(at 1979 piices) as shown below and discussed in paragraph 6.17. The monthlywater charge to urban standpipe users, if fully recovered (paragraph 4.26(iv))would range from Rs 3 to 7 (at 1979 prices). The monthly water charge torural families would range from Rs 4 to 7 as indicated in Annex 14.

Table 4.6 ESTIMATED DOI4ESTIC TARIFF(WATER AND SEWERAGE) 1983/84

MonthlyPercentage Tariff Household ChargeNon-Domestic Tariff (Constant (ConstantConsumption 1983/84 Prices 1978/79 Prices) 1978/79 Prices)

% (Rs/1,l000 liters) Rs

Thane 31 0.65 0.51 11Bhiwandi 22 1.06 0.83 18Kalyan 11 1.34 1.05 23Dombivli 7 1.58 1.24 27Ulhasnagar 10 1.66 1.30 28Ambernath 18 0.95 0.74 16

4.26 During negotiations, assurances were obtained from GOM that:

(i) for the years 1980/81 through 1982/83 each of the six municipali-ties in the project area will set water and sewerage tariffstefore the commencement of each financial year to ensure thatrevenues are sufficient to cover operating expenses,debt serviceand the required annual contribution towards the project cost.(The contribution to the project cost may be transferred fromthe municipality's general funds);

(ii) from April 1, 1983 municipal tariffs in the project area willLe set to ensure sufficient revenues to cover the greater ofeither operating expenses and depreciation and to produce a

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-ate of return on average currently valued net fixedassets in operation of not less than 3% in 1983/84, 4%Ln 1984/85, 5% in 1985/86 and 6% thereafter, or operating,osts and debt service; 1/

(iii) irom April 1, 1983 village tariffs in the project area willbe set at levels to ensure that revenues are sufficient tocover bulk water charges, operating costs and debt service;

(iv) .any operating subsidy for the water supply and sewerage;ervices will be limited to the cost of supplying water bypublic standpipe calculated at the domestic tariff, unlessotherwise agreed by the Association.

Future FinaLnces

4.27 During negotiations GOM agreed to cause local authorities in theproject area to pay to MWSSB the amount required to service outstandingloans, rais;ed to finance the construction of water distribution and seweragesystems on behalf of local authorities, when such systems are transferred tolocal auth(rities.

4.28 Financial projections have been prepared for MWSSB and the sixtowns for the period 1979/80 through 1986/87 and are set out in Annexes 8to 13. The financial position of a typical village is set out in Annex 14.Notes on as;sumptions used in the preparation of financial projections aregiven in Atnex 15. Salient features for 1985/86 (i.e., the third year aftercompletion of the project) are set out below. During the project period,MWSSB will require funds to finance construction materials kept in store forthe projecl.; the local authorities will require sound cash management toensure the prompt payment of their contributions to MWSSB. From 1983/84onwards, major financial indicators for MWSSB and the municipalities aresatisfactory. Current ratios rise, reflecting increasing cash balances whichwill be available for further investment in water supply and sewerage servicesin the late 1980s.

1/ For purpose of the rate of return calculation, the same procedureswill be applied to local authorities as for MWSSB, (paragraph 4.23).

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Table 4.7 FINANCIAL INDICATORS

1985/86 /aOperating Debt Service: CurrentPercentage Times Covered Ratio

MWSSB 60 2.3 3.7Thane 59 1.6 3.4Bhiwandi 58 1.6 4.4Kalyan 65 1.5 4.0Dombivli 60 1.9 5.5Ulhasnagar 56 1.5 2.7Ambernath 59 . 1.9 4.9

MWSSB MUNICIPALITIES/a Rate of return 1985/86 5% 5%

4.29 Iladicators which will assist in monitoring performance of MWSSBand the municipalities are set out in Arnnex 16 and were discussed duringnegotiatons.

V. THE IMPLEMENTING AGENCY

Lending Arrangements

5.01 The recipient of the credit, GOI, will make available the proceedsof the credit to GOM, which will onlend it to MWSSB, the beneficiary and theimplementing agency.

Organizatioa

5.02 Prior to 1977/78 water supply and sewerage development in the Stateof Maharashtra was the responsibility of ENE, which was part of a departmentof the Stata Government. Initially ENE was part of the Public Works Depart-ment, then a section of the Irrigation Department and finally part of theUrban Develapment Department.

5.03 Ia January 1977 MWSSB was formed under an act 1/ to "provide forestablishmeat of a water supply and sewerage board for rapid developmentand proper regulation of water supply and sewerage services in the Stateof Maharashcra." Initially MWSSB's primary function was to raise funds tofinance capital works in the sector but in 1978 GOlA began to broaden the scopeof MWSSB's activities, with the aim of phasing out ENE and transferring itsduties and responsibilities to MWSSB. The transfer of staff, assets, dutiesand respons[bilities from ENE to MWSSB is to be completed during 1979 underGOM resolut[ons which have already been passed.

1/ Maharashtra Water Supply and Sewerage Board Act 1976.

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5.04 iluch of the former organization pattern will be retained under thenew organization (Annex 17). Although the headquarters of MWSSB is locatedin Government offices in Bombay, it will soon occupy new offices; there aresubsidiary offices in several regions of the State (termed circles) and indistricts within the circles. This project is located in the Thane districtof the Bombay circle.

Management and Staffing

5.05 The chairman of the board, the member-secretary and nine boardmembers are appointed by the State Government. The member-secretary is thechief executive of the Board and is required to be a qualified engineer withexperience in water supply and sewerage works and also experience in admin-istration. There are four ex-officio members of the Board and five non-official members. The ex-officio members are from the Departments of UrbanDevelopment: and Public Health, Rural Development, Finance and Planning.Three of the non-official members are appointed from elected heads of localauthorities and two are experts in water supply and sewerage.

5.06 llnder the new organization MWSSB will have capable and experiencedengineering staff (transferred from ENE) who are competent to design and con-struct works to a satisfactory standard. The staff comprise approximately1,600 professionals, 4,500 technical (semi-professional) personnel and 3,000non-technical personnel. Experience of ENE indicates that this level ofmanpower meets average needs of the sector, provided that assistance, in theform of the services of consulting engineers, is obtained to meet aboveaverage woik loads;-this is an acceptable and economical arrangement.

5.07 Because the project forms a large part of MWSSB's program , itwill be implemented by a separate unit (Annex 17) which has been establishedspecifically for this purpose and is headed by a Chief Engineer.

5.08 Although the transfer of personnel from ENE will provide MWSSBwith adequaite staff to carry out its engineering and technical functions,difficultiEs have been encountered in providing suitable financial andaccounting staff for MWSSB. This is primarily because a separate GovernmentDepartment formerly satisfied the accounting needs of the EnvironmentalEngineerin% Organization, whereas, MWSSB will adopt a commercial form ofaccounting which is not traditionally used by Government departments.

5.09 In discussion with GOM and 1MWSSB officials during project appraisal,considerable emphasis was placed on the need to obtain suitable staff forfinancial management and accounting. During negotiations assurances wereobtained from GOM that any vacant key positions in MWSSB will be filled bySeptember 30, 1979 and that thereafter, any significant changes in the orga-nization structure will be made only afrer consultation with the Association.

Training

5.10 A large number of training courses are available in Indian insti-tutions for technical personnel ranging from artisans through senior engineer

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grades and for non-technical personnel, from clerks and typists through senioradministrative, accounting and management grades. Public health trainingprograms and refresher courses are also conducted by GOI's Ministry of Worksand Housing. These courses range from Dne week to three months and coverdiverse technical subjects including engineering design, water and seweragetreatment plant operation, distribution system maintenance and other alliedsubjects. GOM has recently established a training program on operation andmanagement of water systems and is considering extending its program to otherrelated subjects.

5.11 a tentative, satisfactory training program under the project hasbeen proposed in outline by MWSSB and BMRDA and will be developed in moredetail as the project proceeds. At present the program includes training forsome 200 to 300 engineers, accountants, administrators and artisans in Indianinstitutions and overseas training in specialized engineering subjects forsix to ten engineers.

5.12 INE from which 1MWSSB will be substantially formed, is a wellorganized and efficient department of GOM. It is reasonable to assume thatinitially NWSSB will be an equally competent organization and that in duecourse its efficiency will be enhanced by the relative increase in flexibilityof operaticn of the Board and its more commercially oriented management, bud-geting and accounting systems. Its degree of success will rely to a largeextent UPOIL its key personnel, in engineering, management and finance, mostof whom have yet to be identified. The success with which GOM has estab-lished other semi-autonomous corporations, -- MIDC, the State ElectricityBoard and others -- promotes considerable confidence in MWSSB's future.However, much has yet to be accomplished, particularly in establishing newfinancial and accounting systems.

Audit and Insurance

5.13 The Act under which MWSSB was established requires that MWSSB'saccounts are audited annually by an auditor appointed by the State Govern-ment. The audited accounts together withi an audit report are then submittedto the State Government. Local authorities' accounts are audited by GOMunder the Maharashtra Municipalities Act 1965. These audit arrangementsare satisfactory. At negotiations assurances were obtained that MWSSBand GOM will submit MWSSB's and municipalities' audited accounts of water andsewerage operations in the project area to the Association by December 31 eachyear.

5.14 kn assurance was obtained at negotiations that materials and equip-ment for the project will be adequately insured and that all other publicutility risks will be adequately insureul by MWSSB and the local authorities.

Operation and Maintenance Responsibilities

5.15 As well as its major role as a State agency for the planning designand construction of water supply, sewerage and sanitation facilities, MWSSBwill also operate and maintains water supply facilities in some areas.

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5.16 linder the present arrangement in the project area, MWSSB willoperate an([ maintain the Badlapur water treatment plant as well as the waterdistribution systems serving Bhiwandi, Ulhasnagar, Ambernath and 10 of the22 villages presently supplied. MWSSB will purchase water from MIDC tosupply to Kalyan and Ulhasnagar.

5.17 HWSSB will continue to operate and maintain the Badlapur watertreatment plant and will operate and maintain the Temghar plant upon itscompletion, as well as the associated transmission system. As the projectprogresses, MWSSB will assume the role of bulk water supplier for the entireproject arE-a, continuing to purchase wacer from MIDC as required and assist-ing the municipalities of Bhiwandi, Ulhasnagar and Ambernath to take overresponsibilities for operating and maintaining their water distributionsystems. The Thane, Kalyan and Dombivli municipalities will continue tooperate and maintain their own distribution systems; each of the munici-palities will operate its own sewerage system. Distribution systems invillages will be operated and maintained by village councils.

5.18 lhese institutional arrangements, and the financial implicationsof the project (paragraphs 4.23 and 4.25) have been discussed with concernedlocal authcrities and with GOM and BMRDA officials. Resolutions by localauthorities in support of the project have been prepared and placed beforethe concerned municipal councils as a step towards establishment of the newinstitutional arrangements.

5.19 Although the six municipalities are capable of operating and main-taining their respective distribution systems, MWSSB will assist the smallerauthorities, particularly the villages and other authorities which are newto these tasks, by providing technical personnel and expertise in the earlystages. MWSSB will also examine the distribution systems periodically toensure that they are being well maintained and will carry out surveys todetect any undue water losses from the systems (paragraph 3.17). Severalvillages in the project area are operating distribution systems satisfactorily.Village systems have the advantage of being extremely simple to operate andmaintain in this project since treatment, transmission and storage are theresponsibility of the bulk supplier, usually leaving only a single smalldistribution main and several standpipes to be tended by the village. MWSSBwould in any event be available to carry out any major repairs or extensions.

VI. ECONOMIC AND SOCIAL JUSTIFICATION

General

6.01 This project, the third water supply and sewerage project in theState of Maharashtra, is part of GOM's program to provide sanitation facili-ties and adequate quantities of safe, dependable water throughout the State.Provision of these services in the project area is of high priority, not only

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because thE area is experiencing rapid growth due to its proximity and com-munication linkages with Greater Bombay but also because of Government effortsto relieve population pressures in Bombay City by providing and improvingamenities in surrounding areas.

6.02 "he six towns which comprise the urban component of the projectpresently all have piped water systems. These systems, however, provideunreliable and intermittent services and some of the water is of questionablequality; tlie systems serve only a part of the population. Sanitation facili-ties are ir,adequate to serve the urban population and associated healthl risksare apparert. Of the 104 villages included in the project, 82 lack pipedwater. Thc rural population typically obtains water from wells or from riverswhich are cften inaccessible and of poor quality. Supply problems increaseduring the dry season when groundwater sources dry up, and villages with pipedsystems suffer from water deficiencies.

6.03 The project would help to alleviate the hardship and public healthproblems cciused by the inadequacy of water and sanitation services through acombinatior, of infrastructure and institutional improvements. In the urbanareas, water supply systems would be augmented and extended, thereby improvingservice leNels and water distribution to all sections of the urban community,including the poor. The project would also provide for water-borne sewagecollection, sewage treatment, and safe disposal facilities which would improvethe visibly poor sanitary conditions. All villages would be provided withwholesome, protected and assured supplies of piped water. In general, insti-tutional eificiency would be improved both for the planning and execution ofprograms with the development of MWSSB and for the operation and maintenanceof systems by local authorities on a self-supporting basis.

Population Served

6.04 It is estimated that, by 1991, an additional 1.4 million people inthe projeci area will benefit from the extension and augmentation of watersupply systems and that the approximately one million present consumers willbenefit fro.m improved water services. The per capita water supply will beincreased throughout the project area, in order to meet accepted Indianstandards (f "adequate" supplies (paragraph 2.19). Local authorities willprovide additional public latrines in tne urban areas, and MWSSB will imple-ment a rural sanitation program during the project period. By 1984, whenthe project. is completed, the entire urban population will have access toacceptable forms of sanitation and collactively benefit from a cleanerenvironment.

Impact on Ploverty Groups

6.05 (f the total incremental population of 1.4 million to be served by1991 when t.he project is fully utilized, approximately 0.9 million representthe urban pioor (Map IBRD 14111) and predominantly low income rural population.In urban areas, additional standpipes will be provided to improve service toan estimated 36% of the urban population who live in slum areas. The design

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targets ar, 250 dwellers per standpipe -- only two towns presently meet thesestandards -- and a distance of no more than 100 meters between dwellings andstandpipes. As a consequence, the long daily waiting times for water collec-tion will be reduced and walking distances shortened, in addition to servicelevel improvements. An estimated 33% of the urban population will be servedby standpipes and the remainder by metered connections.

6.06 in rural areas, 82 villages will be provided with piped water andsupplies will be augmented in the remaining 22 villages. Standpipes will beprovided to achieve a service standard of not more than 300 people per stand-pipe throughout the area; this standard has not yet been achieved where pipedwater supplies are currently available. The present hours of supply aretypically 2-4 hours daily due to lack of water; these hours will be increasedas demand requires upon project completion. The target is for 60% of therural population to be served by standpipes and 40% by metered connections.

Impact on Ilealth

6.07 Preliminary health statistics 1/ indicate the prevalence of water-and sanitat:ion-related diseases throughout the project area. Vital and healthstatistics for the six municipal towns as registered in municipal recordsfor the period 1975-77 show that an average of 8% of all deaths are directlyattributable to water-borne diseases. These figures vary among the townsbut, in general diarrhea, gastroenteritis, and dysentery predominate togetherwith typhoid which appears to be sharply increasing. These mortality figuresunderestimaLte the incidence of diseases. Although data on the incidenceof disease are difficult to obtain and interpret, the municipal records forKalyan for 1975 and 1976 indicate 65 cases of diarrhea, gastroenteritis anddysentery for each recorded death. Incidence statistics also underestimatethe true magnitude of health problems due to the indeterminate numbers ofpeople who seek treatment from unrecognized, private, or distant medicalsources, or who fail to obtain a proper diagnosis. The incidence of jaundicehas increased suddenly in 1978, particuLarly in the urban areas, reflecting acurrent epidemic of the disease in the region.

6.08 lresently available recorded data on the status of health in ruralareas are also difficult to evaluate. The magnitude of water- and sanitation-related diseases varies among the villages; and there are records of theincidence of gastroenteritis, malaria, jaundice, and some cholera. In asample of 28 villages, seven villages reported cases of guineaworm between1976 and 1977 with as much as 15% of the population of any one village suffer-ing from the disease. For the sample as a whole, there are more recordedcases of guineaworm than for any other water-borne disease indicating poorwater supply condition.

6.09 During the monsoon months, the incidence of water-borne diseasesincreases dramatically. To illustrate, approximately 70% of the water-

1/ These are now being compiled by Tata Insitute of Social Sciences, whichhas boen engaged by BMRDA to carry out a socio-economic study of theproject area.

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and sanitaiion-related cases recorded in the Kalyan municipal hospital in1975 and 1976 and 45% of recorded municipal cases in Dombivli from 1976-1978occur between June and September. During these months of heavy rains, opendrainage guitters overflow and spread stormwater contaminated by sewage; thereis a deterioration in water quality, particularly in local village sources;and stagnating rainwater pools become convenient although polluted watersources besides becoming insect breeding sites.

6.10 In the absence of the project, gastroenteritis, guineaworm, andother watei- and sanitation-related diseases would be expected to continueand to inclease, affecting the health and productive capacity of the popula-tion. The introduction of piped water supply will dramatically reduce thenumber of guineaworm infestations in the affected villages. The healthconsequences of inadequate water supply and sanitation also fall most heavilyon the poor, living in high density areas, sharing communal facilities, andsusceptible to infection due to poor nucrition. Although associated healthbenefits are difficult to quantify, local officials in villages in the projectarea with recently introduced piped water supplies have been able to perceivehealth improvements.

Return on Investment

6.11 Incremental revenues, based oii present water charges, are assumed torepresent the consumers' minimum willingness to pay for services and are thusa proxy foi the minimum level of benefics derived from the project. Usingthe cost ar,d revenue data streams shown in Annex 18, the minimum measure ofinternal economic rate of return (IER) for the entire project is 3.5%, withlabor valued at 100% of its market price (LlO0), or 4.5%, with labor valuedat 70% of its market price (L70). The relatively low rate of return on invest-ment reflects both the degree to which present charges are below marginalproduction costs and the omission of any sewerage charges (paragraph 6.12).

6.12 The calculated economic rate of return, using revenues as a proxyfor benefits, underestimates the real economic return of the project since itexcludes benefits which cannot be meaningfully quantified. For example, theamount by which consumers value additional consumption above the price paidfor additional water, is not included. This consumer's surplus will be sig-nificant in areas where the project is providing the first increments inwholesome, reliable water for consumption. Secondly, no proxy for seweragebenefits has been included in the revenie stream based on present charges,as there aie no indicators of consumers' willingness to pay for water-bornesystems in the project area. In addition, there will also be external sewer-age benefits accruing to the population as a whole from improvements in publichealth and environmental conditions. Finally, other nonquantifiable benefitsthat are onmitted from the IER calculation include increases in labor product-ivity and employment opportunities, increased property values, the promotionof economic development, improved institutional capabilities, and the reductionin the drudgery and anxieties associated with current services.

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6.13 With revenue streams based on increased tariffs proposed upon com-pletion of the project (Annex 18, Table 9) the IER rises to 8.3% (LIOO) or9.4% (L70).. This assumes that consumers are willing to pay the increasedtariffs for improved services (pragraph 6.17).

Marginal Cost and Tariffs

6.14 Average incremental costs (AIC), used to estimate the long-runmarginal costs of water supply and sewerage, are calculated based on datapresented in Annex 18. A comparison between the AIC of water supply (Annex18 Table 1i) and present average retail water tariffs (Annex 7) indicatesthat metered, domestic consumers are paying between 17-50% of AIC in thenorthern sector of the project area and between 26-47% of AIC in the southernsector. 1/ Commercial and industrial establishments are being charged between29-127% of AIC in the north and 52-94% of AIC in the south. 1/ With the addi-tion of water-borne sewerage systems, the differentials between current tariffsand water/ewerage AIC's would become further skewed. The present averagetariff will be revised to satisfy both financial and economic goals (para-graphs 4.22, 4.23 and 4.26). The on-going socio-economic study is analyzingtariff structures and levels with consideration to ability to pay and pos-sibilities for cross-subsidization.

Ability to Pay

6.15 Economic and social considerations require that low income familiesare not denLied minimum water and sanitation services to sustain a healthy andproductive life because of an inability to pay. Determining affordability isnecessarily judgemental, and preliminary estimates of the income distributionof the population in the project area are shown in Table 6.1. These figuresare being refined in the socio-economic study and are now based on availablestatistics regarding expenditure patterns in the project area.

Table 6.1 PERCENTAGE DISTRIBuTION OF HOUSEHOLDS BY INCOME

Monthly Household RuralIncome in Rs Population % Urban Population

Total % Slum %Below 200 20 10 20200-450 40 30 45450-750 30 35 25Over 750 10 25 10

100 100 100

6.16 According to Indian standards, households with incomes belowRs 200 (about US$23) per month are classified in the Economically Weaker

1/ For a discount rate of 10%, with a foreign exchange shadow price ofRs 10/US$1.

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Section (EWS) with a negligible capacity to pay for services. 1/ Thisapplies to approximately 20% and 10% of the population in, respectively,the rural and urban areas. The percentages of those with limited capacityto pay (Rs 200-450) is 40% rural and 30% urban. The remainder of the house-holds has :sufficient capacity to pay for services.

6.17 The projected tariff increases (paragraph 4.25) imply that meteredurban households with water and sewerage connections would pay between Rs 11and 28 for services (based on 120 lcd consumption), or a maximum of 6% ofmonthly in(:ome assuming that these households earn at least Rs 450/month.Urban standpipe users would pay at most Rs 7/month (based on 50 lcd consump-tion) perhaps together with a fixed household charge for the maintenance ofpublic latvines; excluding the EWS category, the monthly water charge would atmost repret;ent about 3-1/2% of monthly household income. Although 80% of theurban slum households have a monthly income greater than Rs 200, i.e. standpipecharges would be afforable by most families, there will be a need to subsidizestandpipe charges in order to benefit the extremely deprived. In the villages,the monthly water charges will be on the order of Rs 5 per month (based on40 lcd consumption) or no more than 2-1/2% of monthly household income,excluding 1-he EWS category. Preliminary socio-economic surveys have observedthe eagerness of consumers for improved services and their willingness to payfor improvements.

6.18 Opportunities for cross-subsidization are possible between the lowand high income domestic consumers. In devising tariff structures and levels,the socio-economic study will consider such factors as ability to pay, incomeand expenditure patterns, service levels, current tariffs, long-run marginalcosts, and financial goals. There are limited opportunities for cross-subsidization from industry in the project area since MWSSB will provide onlya portion of the total industrial consumnption, the remainder being supplied byMIDC. The project area will, however, benefit indirectly from industriessupplied by MIDC in that these industries will influence the regulation ofMIDC bulk rates to MWSSB (paragraph 3.17(iii)).

VII. SUMMARY OF AGREEMENTS

7.01 During negotiations with GOI, GOM and MWSSB agreements were reachedon the following:

(i) G(OM will require local authorities to gazette appropriatebylaws by September 30,1980 (under existing legislation)to require property owners to connect properties to sewerswhen sewers are within a specified distance (paragraph 3.15);

1/ The Bank defines the absolute poverty line for India as US$70 per capitaper year, or Rs 300 (US$35) per household (family size of 6) per month.

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(ii) GOM will require local authorities to provide grants orloans under terms acceptable to the Association to assistproperty owners to convert their household waste disposalsystems to forms suitable for connection to public sewersand to assist with connection costs (paragraph 3.15);

(iii) GOM will require MIDC to make available to MWSSB suf-ficient potable water to enable MWSSB to meet itscommitments in the project area (estimated quantitiesfrom MIDC: 100 mld and 150 mld in 1984 and 1991,iespectively) at reasonable bulk tariffs to be agreedbetween GOM, MIDC and MWSSB, and in consultation withthe Association (paragraph 3.17(iii));

(iv) COM will require action by industries in the project areato reduce waste strengths and quantities to acceptablelevels (paragraph 3.17(iv));

(v) IWSSB will implement an agreed program to detect waterlosses from transmission and distribution systems and toreduce such losses to acceptable levels (paragraph 3.17(v));

(vi) MISSB will execute a contract with engineering consultants,acceptable to the Association, to complete engineeringdesigns for the project (paragraph 3.21);

(vii) Land acquisition procedures will be completed by GOM andMWSSB in accordance with a program acceptable to theAssociation (paragraph 3.28);

(viii) GOM will require each of the six municipalities in theproject area to pass resolutions confirming their parti-cipation in the Project, on terms satisfactory to theAssociation (paragraph 4.02);

(ix) GCO will require each of the six municipalities in theproject area to prepare, in accordance with an agreedprogram, and thereafter maintain separate accounts, ona commercial basis, for its water and sewerage services(paragraph 4.13 (i));

(x) MWSSB will prepare and thereafter maintain accounts on acommercial basis for all of its operations and willmaintain separate accounts, oni this basis, for the projectarea (paragraph 4.13(ii));

(xi) GOM will require each village in the project area toprepare, in accordance with an agreed program, and there-after maintain a separate receipts and payments accountfor its water supply services (paragraph 4.13(iii));

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(xii) GOM will require each local authority to improve billing;mnd collection procedures for its water and sewerage;ervices to enable consumer receivables to be reduced toin acceptable level, to be agreed with the Association,by March 31, 1981 (paragraph 4.14(i));

(xiii) GOM will cause each local authority in the project areaco pay its bills for bulk supplies promptly to MWSSB; if.ny bills remain unpaid for more than 90 days, GOM willmnsure full payment by the local authority concernedeither by deduction from grants due to the local authorityor other means (paragraph 4.14(ii));

(xiv) IIWSSB will submit to IDA by Septemebr 30, 1979, a satisfac-tory program for the introduction and operation of financialmianagement and information systems (paragraph 4.14(iii));

(xv) IWSSB will not incur any long-term debt without IDA'sprior agreement (paragraph 4.15);

(xvi) (OM will make arrangements, satisfactory to the Associa-i:ion to: (a) onlend the proceeds of the credit toItWSSB for 25 years, including a four-year grace period,at 6-3/4%; (b) make available sufficient funds to com-plete the project (paragraph 4.17(i) and (ii));

(xvii) (OM will ensure that during the project MWSSB will notutilize any surplus arising from its operations in theproject area for operational and development purposesoutside that area and the local authorities will notutilize surplus funds from water and sewerage operationsior other purposes (paragraph 4.20);

(xviii) ]sefore April 1, 1980, GOM will review the bulk and retaillariff structures in the project area in consultationwith MWSSB, the local authorities and IDA having regard,among other things, to consumers' ability to pay andthe economic cost of future expansion of services(paragraph 4.22);

(xix) HWSSB will review and set its bulk tariffs in the projectarea before the commencement of each financial year toensure that:

(a) from April 1, 1980 revenues are sufficient tocover operating expenses and depreciation of fixedassets in operation (paragraph 4.23(i)(a));

(b) from April 1, 1983, revenues are sufficient, inaddition to covering the costs included above,to provide a rate of return on average currently

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valued net fixed assets in operations of notless than 4% in 1983/84 and 1984/85, 5% in1985/86 and 6% thereafter (paragraph 4.23(i)(b));

(xx) Wlith effect from April 1, 1980 MWSSB will review its tariffsoutside the project area before the commencement of eachfinancial year to ensure that revenues are sufficient tocover operating expenses and the greater of depreciationor debt service (paragraph 4.23(ii));

(xxi) (,OM will ensure that:

(a) for the years 1980/81 through 1982/83 each of the sixmunicipalities in the project area will review andset water and sewerage tariffs before the commence-ment of each financial year to ensure that revenuesare sufficient to cover operating expenses, debtservice and the required annual contribution to MWSSBtowards the project cost (paragraph 4.26(i));

;b) from April 1, 1983 municipal tariffs will be setat such levels as will ensure revenues sufficientto cover the greater of either operating expensesand depreciation and to produce a rate of return onaverage currently valued net fixed assets in opera-tion of not less than 3% in 1983/84, 4% in 1984/85,5% in 1985/86 and 6% thereafter, or operating costsand debt service (paragraph 4.26(ii));

iC) from April 1, 1983 village tariffs in the projectarea will be set at such levels as will ensurerevenues sufficient to cover bulk water chargesoperating costs and any debt service (paragraph4.26(iii));

(d) any operating subsidy for the water supply andsewerage services will be limited to the cost ofsupplying water by public standpipe calculated atthe domestic tariff', unless otherwise agreed by theAssociation (paragraph 4.26(iv)).

(xxii) GOM will cause local authorities in the project area to payLZo MWSSB the amount required to service outstanding loans,riaised to finance the construction of water distribution and3ewerage systems on behalf of local authorities, when suchsystems are transferred to local authorities (paragraph 4.27);

(xxiii) Key staff positions in MWSSB will be filled by suitablecandidates by September 30, 1979 and thereafter any signifi-cant changes in the organizational structure will only bemade after consultation with the Association (paragraph 5.09);

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(xxiv) 3'OM will submit audited accounts of the six municipali-ties water supply and sewerage operations, and MWSSB willsubmit their own audited accounts, to the Associationby December 31 each year (paragraph 5.13);

(xxv) kll materials and equipment for the project will beadequately insured and all other public utilityinsurance risks will be adequately insured by MWSSB andthe local authorities (paragraph 5.14).

7.02 Che execution of a contract between MWSSB and engineering consul-tants to complete detailed engineering design (paragraph 3.21) and the com-pletion of resolutions by the six municipalities in the project area insupport of the project (paragraph 4.02), are conditions of effectiveness ofthe proposed credit.

7.03 ,ubject to agreement of the issues set forth in this report, theproject is suitable for an IDA credit for US$48.0 million on the standardterms.

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I N D I A

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Project Description AN 1page 1 of 6

COMPONENT LOCATION DESCRIPTION CAPACITY/SIZE FUNCTION

A. WATER SUPPLY NORTHiCRN AREA

Temghar river water North bank of Ulhas A reinforced concrete Capacity 260 mld. To extract water from the Ulhasintake and pumping river at Shahad, above inlet chamber and pump- IDesigned to meet ." river and convey it to Temgharstation. Shahad weir. ing station with 8 elec- 1991 water demand of treatment plant.

trically operated pumping the northern area.units.

Temghar river water From Tenghar intake A steel main constructed Capacity 310 mld. To convey water from Ulhas rivertransmission main. (at Shahad) to Temghar above ground. (Includes Designed for 1991 to Temghar treatment plant.

treatment plant. pipe bridges across the aemand (with a peakUlhas river at Shahad and factor 1.2); 1,600 mSarauli). diameter and 10 km long.

Temghar water treat- About 4 km south of A conventional wates treat- Initial capacity 200 mld To supply fully treated water toment plant. Bhiwandi and east of ment plant comprisirg to meet 1991 demand in the northern area.

Varala lake, north of aeration, coagulation the northern area.TJlhas river. clarification, rapid sand Designed for staged

filtration, chlorination, expansion.treated water storage andpumping.

Three treated water - Teaghar to reser- Steel pumping mains con- For Bhiwandi town, 800 mm To convey treated water frompumping mains serving ooirs at Fene and structed above grourd. dia, 3 km long. For Temghar plant to reservoirsBhiwandi town, Pimplas villages. Bhiwandi rural area, serving Bhiwandi, Thane andBhiwandi rural area, 800 mm dia, 3 km long. Bhayandar.mhane and Bhayandar. For Thane/Bhayandar

1,500 mm dia, 3 km long.

Three reservoirs Fene village (2) Reinforced concrete For Bhiwandi town, To store treated water for res-serving Bhiwandi Pimplas village (1) reservoirs at ground 3.3 ml; for Bhiwandi pective demand areas (and totown, Bhiwandi rural level. rural area , 3.4 ml; minimize pumping main lengths).area, Thane and for Thane and Bhayandar,Bhayandar. 15 ml.

Miscellaneous Pimplas village to Steel gravity main asove Total length 11.3 km; To convey water from storage totreated water, Majivade. ground. (Includes t wo 1,500 am dia. demand areas at Thane andgravity,transmission pipe bridges across Thane Bhayandar.mains as listed by creek at Anjur and"location". Balkum.

From Kashi to Bhayandar Steel gravity main, con- Total length 7.8 km; To supply treated water to Cashi,and Mira villages. structed below ground. 500 and 600 mm dia. Bhayandar and Mira.

Chitalsar to Kashi. Cast iron gravity mains. Total length 31 km; Treated water supply to 8 villages100 to 800 am dia. between Chitalsar and Ghodbandar.

From Balkum to Chitalsar. Steel gravity main con- Total length 5.0 km; Treated water supply to 4 villagesstructed below ground 800 mm dia between Balkum and Chitalsar.level.

From the reservoir C0I. gravity mains. Total length 18.4 km; Treated water supply to 9 villagesat Fene to Kambe. 125 to 500 m dia. peripheral to Bhiwandi.

From Fene to Hone. C.I. gravity mains. Total length 10.5 km; Treated water supply to 7 villages150 to 400 mm die. between Fene and HEne-

From Pene to Kharbao. C.I. gravity mains. Total length 10 km; Treated water supply to 9 villages350 to 600 mm dia. between Fene and Kharbao.

From Fene to Kasheli. C.I. gravity mains. Total length 8.7 km; Treated water supply to 5 villages100 to 250 rm dia. between Fene and Kasheli.

Tapping from 1,500 mm C.I. gravity mains. Total length 4.7 km; Treated water supply to Anjur,main to Thane. 150 to 250 mm dia. Vehele and Pimplas.

ANNEX 1- 48 Page 2 of 6

COMPONENT LOCATION DESCRIPTION CAPACITY/SIZE FUNCTION

Booster pumping ashi Pumping station housin g Reservoir 0.6 ml; To raise water pressure to supplystation and main. two pumps. installed hp of pumps, Kashi, Bhayandar and Mira villages.

60; main, 450 mm dia,0.5 km long.

Booster pumping .hitalsar Pumping station housiLg Reservoir, 1.5 ml; To raise water pressure to supplystation and main. three pumps. installed hp of pumps, 10 villages in the Chitalsar area.

300; main 800 mm,0.3 km long.

Booster pumping )ongri Pumping station housing Reservoir 0.08 ml; To raise water pressure to supplystation and main. three pumps. installed hp of pumps, Dongri and Utan villages.

37.5; main-250 ma,0.1 km long.

Reservoirs listed lvashi ) Reinforced concrete 1.2 ml ) Water storage for 14 villagesby "location". )hitalsar) reservoirs at ground 1.5 ml ) between Chitalsar and Utan.

:)ongri ) level. 0.7 ml

Distribution reser- ,alkum )4.o m Water storage for Balkin, Majivadevoirs for villages ) and Kolshet.as listed by

"location".

.etween Kolshet ) 1.0 ml Water storage for Kolshet and Kavesarnd Kavesar. ) villages.

Reinforced concrete)wale ) elevated distribution 1.0 ml Water storage for Owale, Vadavli

reservoirs. and Borivade.

ishayandar, Kashi.and 1.6, 0.2 and 0.4 ml Water storage for Bhayandar, Kashilira. sand Mira villages.

aimurdhe, Utan and 0.5, 0.8 and 0.4 ml Water storage for Raimurdhe, Utanlanju. ) and Panju villages.

;hodbandar, Varsave Reinforced concrete 0.2, 0.1 and 0.1 ml Water storage for Ohodbandar, Varsave,nd Chene. distribution reser- and Chene villages.

voirs at ground level.

i honi Reinforced concrete 0.5 ml ) Serving 18 villages peripheral to,avandhe elevated distribution 0.9 ml ) Bhiwandi.'impalghar reservoirs. 0.4 mlKaneri o.6 ml ).alvar 0.4 ml ),harivli 0.4 ml )

farpoli Reinforced concrete 0.1 ml Uiter storage for Narpoli.distribution reservoiiat ground level.

Aagaon ) 0.7 ml Water storage for Nagaon.

,helar ) 0.4 ml Water storage for Shelar.

Reinforced concreteavad ) elevated distribution 0.4 ml Water storage for Kavad.

reservoirs.

;arauli O.4 ml Water storage for Sarauli.

.amatghar O.4 ml Water storage for Kamatghar.

ANNEX 1Page 3 of 6

- 49-

CCMPONENT LOCATION DESCRIPTION CAPACITY/SIZE FUNCTION

Kharbao ) Reinforced concrete 0.2 ml Water storage for Kharbao.distribution reservo:irs.at ground level.

Dive ) 0.2 ml Water storage for Dive and Kevni.

Purne Reinforced concrete 0.4 ml each Serving 6 villags Eaha-nal, Fumre,Kalher elevated distributiot. Kopar, Gundavli, Dapode and Kalher.

reservoirs (2).

Between Anjur and Reinforced concrete o.8 ml Serving 3 villages, Anjour, VebeleVehele (South of distribution reservoir and Pimples.National Highway). at ground level.

BMC transmission Between BMC Borivli Part contribution to new Not applicable Temporary increase in supply frsmmain (Part), reservoir and Dlahisar. BMC transmission line. BMC source.

Thane Distribution Systes..

Distribution ThLne Nine reinforced conciste Ground level regervoiwu To go_a nonage and to balancereservoirs. diatribstion raervoirs, 8 ml; slanted rar- supply and d_S in UAn.

3 at groiud level and voirs 14 ml.6 elevated.

Booster pumping Tane Pumping station housing Reservoir, 0.4 ml. To supply high level areas instation. two pumps. Pumping capacity appro- Theane.

ximstely 20 mld.

Distribution mains. Thane Steel gravity mains. Total length 6.5 km; Reservoir feeder (inlet) mains.800 to 1,500 mm die.

Distributi-n mains. mane Cast iron gravity mails. Network of 100 to 900 ma. Reservoir outlet and servicedi& mains. (Details at mains.final design).

Bhiwandi Distribution Sy5-.em.

Distribution Bhiwandi Three reinforced concrete Ground level reservoir To provide storage and to balancereservoirs. distribution reservoirs 2.4 ml. supply and demand in Bhivandi.

one at ground level and Elevated reservoirstwo elevated reservoirs. 4.9 ml and 2.1 ml.

Booster pumPing Bhiwandi Pumping station housing Reservoir 0.1 ml. To maintain pressure in astation, two pumps. Pumping capacity remote part of the distribution

approximately 6.0 ml. system.

Distribution mains. Bhiwandi Steel gravity mains. 750 m die, 2.5 kcs long. Reservoir feeder (inlet) mains.

Distribution mains. Bhiwandi Cast iron gravity mains. 600 mm dia, 1.6 km long. Reservoir feeder (inlet) mains.350 mm die, 2.3 lm long.

Village distribution Northern Area Cast iron and asbesta3 200 mm dia to 80 mm dia. Service mains for villages.mains. (55 villages), cement mains.

B. WATER SUPPLY SOUTHEIN AREA

Badlapur water treat- Badlapur (5 km south- Renovation of weir gates Existing plant capacity Treatment of river water to supplyment plant renova- east of Ambernath). and washwater tanks; 34 mld. Expanded plant to Ambernath and southeast ruraltion and expansion. modification of clarifiers capacity 49 sld. areas.

and filters to higheroperating rates.

Badlapur treated Badlapur water treat- Installation of new p imps To match future plant To convey treated water to storagewater puimping station ment plant. and modification of existing capacity of 49 mld. at belavli.expansion. plant.

Transmission mains Belavli to Ambernath. Steel gravity main (50 ma dia, 5.5 km long. To convey treated water to(as listed by constructed above Ambernath.location). ground.

Ambernath Cast iron gravity main. 500 mm die, 1.2 km long. To convey treated water to Ambernath.

Ambernath to Javesai Cast iron gravity main. 100 mm dia, 1.3 km long. To convey treated water to Javesaivillages.

ANJIX 1Page 4 of 6

COMPONENT LOCATION DESCRIPTION CAPACITY/SIZE FUNCTION

Sl,ahad reservoir to Cast iron gravity main. 150 ma dia, 1.5 km long. To supply Mharal reservoir andMDharal reservoir and 100 mm dia, 1.3 km long. Mharal, Varap and Kambe villages.3 villages. 100 mm dia, 2.6 km long.

Sl ahad reservoir to Cast iron gravity main 700 mm dia, 4.0 km long. To supply Mohone, Atali, Barhi,P1 hone. Ambivli-Budruk, Vadavli, and

Galegaon.

UMhasnagar reservoir Cast iron gravity main. 800 mm dia, 2.0 kl long. To supply Ashele and Khade-te Ashele reservoir. Golavli.

FRom existing Barvi main Steel and cast iron Total length 23.5 km, To supply Kalyan and Dombivli(:-750 mm) at Navali to gravity mains. 250 to 1,000 mm dia. towns and surrounding villages.N tivli, Barave, Thakurli,K1tamanlivli and Sonar-pE da.

Distribution reser- Ml ral ) 0.3 ml Serves 3 villages Mharal,voirs for villages ) Varap and Kambe.listed by location.

Aaihele Khade-Golavli, ) o.o6 ml Serves Ashele villageAtali and Mohone. ) 0.03 ml Serves Khade-Golavli village

1.5 ml Serves Atali, Mohone, Ambivli-Reinforced concrete Budruk, Vadavli, and Galegaonelevated distributioni (villages northeast of Shahadreservoirs. intake).

BE rave ) 1.8 mL Serves Chikanghar, Shahad,Barave, Kolivale, Gandhare,Sapad, Umbarde, Vadegharvillages (north of Kalyan).

Dcsbivli rural ) 1.2 ml Serves Thakurli, Dombivliand Kopar villages (northof Dombivli town).

SE gaon-Sonarpade and Reinforced concrete 1.0 ml Serves 8 villages south ofSendap. elevated distribution 1.0 ml Dombivli town.

reservoirs.

KEtemanlivli ) 1.8 ml Serves 3 villages, Katemanlivli,Reinforced concreteTigoanNndvidistribution reservoirs Tisgaon and Nandivli.at ground level.

Ci.le ) 1.8 ml Serves 5 villages east ofDombivli town.

Distribution KE Lyan 4 reinforced concrete Capacity 2.0 ml To provide storage and balancesystem reservoirs. elevated reservoirs. each. supply and demand in Kalyan.

Dc abivli 4 reinforced concrete Two of 2.2 ml capacity To provide storage and balanceelevated reseroirs. and two of 2.3 ml supply and demand in Dombivli.

capacity.

U3nasnagar ) 1 reinforced concrete Capacity 2.2 ml ) To provide storage and balanceelevated reservoir. ) supply and demand in Ulhasnagar.

2 reinforced concrete Capacity 5.1 ml anddistribution reservoir 1.2 ml.at ground level.

AMjernath 2 reinforced concrete Capacity 3.8 ml and To provide storage and balancedistribution reservoirs 3.7 ml. supply and demand in Ambernath.at ground level.

Distribution Ansernath Pumping station housing Reservoirs 0.7 ml. To raise water pressure to supplysystem booster three pumps. Installed hp of pumps high level area.pumping station. 180; main 350 mm dia,

0.2 km long.

Booster pumping Ulhasnagar Pumping station housing Reservoir to be expanded To raise water pressure to servestationi and main, two pumps. to 2.0 ml. Installed hp high level area.

of pumps 280 and 380;main 350 mm dia, 0.9 kmlong.

- 51- -SiS ANNEX IPage 5 of 6

_()MPONENT LOCATIOON DESCRIPTION CAPACITY/SIZE FUNCTION

DIsLribution mains Kalyan, DombivIi, Details of mains distribution networks for these towns will be formulated during detailedI r towns. Ulhasnagar, Ambernath design of the project. Distribution system costs have been estimated by applying snit

rates to areas of specific population density and land use.

Village distribution Southern area Cast iron and asbestos 200 ma dia.to 80 am dia. Service mains for villages.,ains. (i9 villages) cement mains.

C. SEWERAIE - NORTHERN AREA

TIIANE TOWAI

,ewage collection Thane 26.6 km of sewers varying Design population ofsystem. from 150 to 1,100 mm dia. extended part of system

130,000.Collection of sewage from

Sewage pujmping Tmane 3 sewage pumping stations. C pacities 2.9, 21.2 and 4 districts and conveyancestations. 41.7 mld. } to a treatment plant.

Sewage force mains. Thane Cast iron force mains. Total length 1.0 sm,350 to 1,000 mm dia.

Sewage treatment Thane Primary sewage treatment Capacity 44 mld. Primary treatment of sewage.and disposal. plant and disposal of

effluent to 'Thane creek.

Property connections Thane Connection of property 4,200 connections. As described.drains to the public:sewerage systems.

B_IWAINDI TOWN

Sewage collection Bhiwandi 21 km of sewers varying Design population ofsystem, from 150 to 600 mm dia. extended part of

of system 100,000.

Collection of sewage fromSewage pumping Bhiwandi 2 sewage pumping Capacity 9.5 and 14.8 ) two districts and conveyancestations. stations. mld. to a treatment plant.

Sewage force mains. Bhiwandi Cast iron force mains. Total length 3.7 km.l700 and 800 ma dia.

Sewage treatmenat Bhiwandi Oxidation ponds Capacity 11.5 mld. Treatment of sewage and disposaland disposal by land irrigation.

Property connectioas Bhiwandi Connection of property 4,850 connections As described.drains to the publicsewerage systems.

D. SEWERAGE - SOUTHERN AREA

KALYAN TOWN

Property connection Kalyan Connection of property 1,860 connections As described.drains to the publicsewerage system.

D0&MBTVLI TOWN

Sewage collection Dombivli 29.1 km of sewers varying Design populationsystem from 150 am to 900 mm. 157,500.

Collection of sewage and con-Sewage pumping Dombivli 4 sewage pumping stations. Capacities 5.8, 3.1, ) veyance to a treatment plant.statioNs. 25.2 and 2.5 mld.

;eware force mains Dombivli Cast iron force mains. Total length 2.25 Ium,300 to 503 *m dis.a)

ANNrX 1

-52- Page 6 nf 6

fx)NN.Cq'rOlI LOCATION DESCRIPTION CAPACITY/SIZE FUNCTION

,!i!Wa,' treat.ment. Dombivli Primary sewage treatment Capacity 13 mld. Primary treatment of sewage.a'i'i disposal. plant; disposal of affluent

to Ulhas creek (via Koparcreek).

l'r.lperLy c-n,ectii)ns Doobivli Connection of property 2,330 connections As described.drains to the public sewerssystem.

ULHASNAGAR 'ITOWN

Sewage collection (Jlhasnagar 81 km of sewers varying Design populationSystem from 150 to 900 m dLa. 210,000

Sewage p-mping Ulhasnagar 4 sewage p-ping stations Capacities 26.8, 6.8, ) Collection of sewage and conveyancestations. l0.6 and 40:0 mld. ) to a treatment plant.

Sewage force mains tlhasnagar Cast iron force mains. Total length 2.85 km,;500 to 1,100 mm dia.

Sewage t,eatment lahasnagar Primary sewage treatment Capacity 28 mlid. Pumping treatment of sewage.and disposal plant; disposal of effluent

to Waldhuni river.

Property connections lilhasnagar Connection of property 8,500 connections As described.drains to the publicsewerage system.

AMBERNATH TOWN

Sewage collection Ambernath 58.0 km of sewers varying Design populationsystem. from 150 to 1,000 mm. 125,000.

Collection of sewage and con-Se-age pumping Ambernath 2 sewage pumping stations. Capacity 37 mld. and ) veyance to a treatment plant.stations. 74 mld.

Sewage force mains Ambernath Cast iron force mains. Total length 0.3 lsm;1,200 mm dia.

Sewage treatment Ambernath Primary sewage treatment Capacity 39 mld. Primary treatment of sewage.and disposal. plant, disposal of effluent

to Walhuni river.

Property connections. Ambernath Connection of property drains 4,000 connections As described.to the public sewerage system.

- 53- ANNEX 2Page 1 of 4

I N D I A

MAHARASHTRA WATER SUPPI Y AND SEWERAGE PROJECT

Project Cost Estimate

% ofTotalProject

Item Local Foreign Total Local Foreign Total CostR 3s Mij;>on - - - - - - US$ Million - - -

A. WATER SUPPLY NORTHERN AREA

Civil Works

Intake, Transmission & Treatment

Temghar Intake, Bridges,Pumping Station and Trans-mission Main. 16 - 16 18 - 1.8

Temghar Treatment Plantand Pumping Station. 18 - 18 2.1 - 2.1

Transmission Mains, Bridges,PumpinIg Stations, Reservoirsand Bulk Meters. 51 - 51 5.9 - 5.9

Distribution System Improvements

Thane 20 - 20 2.4 - 2.4

Bhiwantdi 7 - 7 0.8 - 0.8

Villages (55) 5 - 5 0.6 - 0.6

'lubtotal 117 - 117 13.6 - 13.6 13.6

Equipment ai,d Materials Supply

Intake, iransmission & Treatment

Temghar Intake, Bridges,Pumping Station and Trans-mission Main. 4 14 18 0.5 1,6 2.1

Temghnir Treatment Plantand Puimping Station. 5 6 11 0.6 0.7 1.3

Transnission Mains, Bridges,Pumping Stations, Reservoirsand Bulk Meters. 25 23 48 2.9 2.7 5.6

Distribution System Improvements

Thane 14 7 21 1.6 0.8 2.4

Bhiwai,di 2 1 3 0.2 0.1 0.3

Villages (55) 5 - 5 0.6 - 0.6

Subtotal 55 51 106 6.4 5.9 12.3 12.3

ANNEX 2-54 Page 2 of 4

Project Cost Estimate

% ofTotalProject

item Local Foreign Total Local Foreign Total Cost

___Rg Million - - - - - - US$ Million - - -

B. WATER SUPPLY SOUTHERN AREA

Civil Works

Treatment and Transmission

Badlapur Treatment PlantExtensLon and Improvements 2 - 2 0.2 - 0.2

Transmission Mains,Reservoirs and Bulk Meters 15 - 15 1.8 - 1.8

DistributLon System Improvements

Kalyan 7 - 7 0.8 - 0.8

Dombivii 7 - 7 0.8 - 0.8

Ulhasnigar 9 - 9 1.1 - 1.1

Ambernath 4 - 4 0.4 - 0.4

Villag.:s (49) 5 - 5 0.6 - 0.6

S-ibtotal 49 - 49 5.7 - 5.7 5.7

Equipment anu Materials Supply

Treatment and Transmission

Badlapiir Treatment PlantExtensLon and Improvements 1 - 1 0.1 - 0.1

Transmission Mains, Reservoirs

and BuJk Meters. 10 3 13 1.1 0.4 1.5

Distribution System Improvements

Kalyan 4 - 4 0.5 - 0.5

Dombivii 4 - 4 0.5 - 0.5

Ulhasnagar 10 - 10 1.1 - 1.1

Ambernath 4 - 4 0.5 - 0.5

Village-s (49) 6 - 6 0.7 0.7

Suibtotal 39 3 42 4.5 0.4 4.9 4.9

ANNEX 2- 55 - Page 3 of 4

Project Cost Estimate

% ofTotalProject

Item Local Foreign Total Local Foreign Total Cost

- - -Rs Million - - - - - - -US$ Million - - -

C. SEWERAGE NORTHERN AREA

Civil Works

Thane

Collection and Conveyance SystemExtensions and Improvements 17 - 17 2.0 - 2.0

Property Connections 7 - 7 0.8 - 0.8

Treatment and Disposal 6 - 6 0.7 - 0.7

Bhiwandi

Collection and ConveyanceExtensions and Improvements 8 - 8 0.9 - 0.9

Property Connections 10 - 10 1.2 - 1.2

Treatment and Disposal 2 - 2 0.2 - 0.2

Subtotal 50 - 50 5.8 - 5.8 5.8

Equipment and Materials Supply

Thane

Collection and Conveyance SystemExtensions and Improvements 7 - 7 0.8 - 0.8

Sewage Treatment and Disposal 3 - 3 0.4 - 0.4

Bhiwandi

Collection and Conveyance SystemExtensions and Improvements 4 - 4 0.5 - 0.5

Subtotal 14 - 14 1.7 - 1.7 1.7

D. SEWERAGE SOUTHERN AREA

Civil Works

Kalyan

Property Connections 5 - 5 0.6 - 0.6

Dombivli

Collection and Conveyance System 6 - 6 0.7 - 0.7

Property Connections 3 - 3 0.4 - 0.4

Treatment and Disposal 2 - 2 0.2 - 0.2

Storm Water Drainage 3 - 3 0.4 - 0.4

Ulhasnagar

Collection and Conveyance System 29 - 29 3.1 - 3.1

Property Connections 15 - 15 1.8 - 1.8

Treatment and Disposal 4 - 4 0.5 - 0.5

- 56 - ANNEX 2

Page 4 of 4

Project Cost Estimate

% of

TotalProject

Item Local Foreign Total Local Foreign Total Cost

- - - Rs Million - - - - - -- US$ Million --

D. SEWERAGE SOUTHERN AREA (continued)

Ambe nath

Collection and Conveyance System 25 - 25 2.8 - 2.8

Pioperty Connections 6 - 6 0.7 - 0.7

Tieatment and Disposal 3 - 3 0.4 - 0.4

Subtotal 101 - 101 11.6 - 11.6 11.6

Equipmert and Materials Supply

Dombivli

Ccllection and Conveyance System 2 - 2 0.2 - 0.2

Treatment and Disposal 1 - 1 0.1 - 0.1

Ulhasaagar

Collection and Conveyance System 7 - 7 0.9 - 0.9

Treatment and Disposal 4 - 4 0.5 - 0.5

Ambernath

Collection and Conveyance System 5 - 5 0.6 - 0.6

TieatmEint and Disposal 2 - 2 0.2 - 0.2

Subtotal 21 - 21 2.5 - 2.5 2.5

E. COMMON SERVICES

Stores, Workshops, Depots andAs:;ociated Buildings 11 - 11 1.3 - 1.3

Vehicles and Tools 6 - 6 0.7 - 0.7

Subtotal 17 - 17 2.0 - 2.0 2.0

F. OTHERS

Engineering: Consultants 13 5 18 1.5 0.6 2.1

MWSSB 33 - 33 3.9 - 3.9

Training 1 1 2 0.1 0.1 0.2

Land Acquisition 18 - 18 2.1 < 2.1

Subtotal 65 6 71 7.6 0.7 8.3 8.3

Total A to F 528 60 588 61.4 7.0 68.4 68.4

G. CONTINGENCIES

Physical 71 9 80 8.3 1.0 9.3 9.3

Price 141 15 156 16.4 1.7 18.1 18.1

Total A to G 740 84 824 86.1 9.7 95.8 95.8

H. CUSTOMS DUTY 21 - 21 2.4 - 2.4 2.4

I. TAXES 15 - 15 1.8 - 1.8 1.8

PROJECT TOTAL 776 84 860 90.3 9.7 100.0 100.0

- 57 -

ANNEX 3Table 1

I N D i A

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Population Projections for the Project Area

Pcpulation (thousands)

1971 1S78 1981 1984 1991

Northern Arza

Thane 170 247 290 334 464

Bhiwandi 80 116 135 156 216

SubtotaL, Urban 250 363 425 490 680

Village3 (55) 152 219 257 295 406

Total N)rthern Area 402 582 682 785 1086

Southern Ar!a

Kalyan 99 123 134 147 181

Dombivl. 51 89 112 134 202

Ulhasna ar 168 224 253 282 366

Amberna-h 56 82 96 110 153

Total U-ban 374 518 595 673 902

Village:; (49) 101 162 198 237 359

Total Southern Area 475 680 793 910 1261

Summary for Project Area

Urban 624 881 1020 1163 1582

Rural 253 381 455 532 765

Total 877 1262 1475 1695 2347

- 58 -

ANNEX _3Table 2Page 1. ot 3

I N D I A

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Water Demand Projections for the Project Area

(ommunity Water Demand (mld)1978 1981 1984 1991

NORTHERN AREA

ThaneIndustr) and Commerce 13,4 14.5 15.7 19.0Municipe l 2 5 3.0 3.3 4.6Domestic:

Conmected 19.8 23.3 26.9 37.3Stardpipes 4.1 4.8 5.5 7.7

Other Uses and Losses 17.1 17.9 18.5 27.3Total Water Demand, Thane 56.9 63.5 69.9 95.9

BhiwandiIndustry and Commerce 4 0 4.2 4.4 4.9Municipc l 0,6 0.7 0.8 1.1Domestic:

Connected 9,4 10.8 12.6 17.4Stardpipes 1.9 2.3 2.6 3.6

Other Uses and Losses 6 8 7.0 5.7 7.6Total Water Demand, Bhiwandi 22.7 25.0 26.1 34.o

Northern Villages and Rural AreasIndustr) and Commerce 1.3 1.4 25.8 '37.2Municipal 1.1 1.3 1.5 2.1Domestic:

Connected 7,0 8.1 9.3 13.3Standpipes 5.3 6.0 6.8 9.5

Other Uses and Losses 6,7 6.7 16.4 17.5Total Water Demand, Rural 21.4 23.5 59.8 79.6

- 59 -

ANNEX 3Table 2Page 2 of 3

Community Water Demand (mld)1978 1981 1984 1991

SOUTHERN AREA

KalyanIndustry and Commerce 1.0 1.6 1.8 2.3Municipal 0.6 0.7 0.7 0.9Domestic:

Connected 9.8 10.8 11.7 14.5Standpipes 2.1 2.2 2.5 3.0

Other Uses and Losses 5.8 5.8 4.7 5.8Total Water Demand, Kalyan 19.3 21.1 21.4 26.5

DombivliIndustry and Commerce 0.8 0.9 1.0 1.3Municipal 0.4 0.6 0.7 1.0Domestic:

Connected 7.2 9.0 10.8 16.2Standpipes 1.5 1.9 2.2 3.4

Other Uses and Losses 4.2 4.7 4.8 6.2Total Water Demand, Dombivli 14.1 17.1 19.5 28.1

UlhasnagarIndustry and Commerce 2.4 2.7 3.0 4.0Municipal 1.1 1.3 1.4 1.8Domestic:

Connected 18.0 20.4 22.8 29.4Standpipes 3.7 4.2 4.7 6.1

Other Uses and Losses 10.8 11.1 9.0 15.1Total Water Demand, Ulhasnagar 36.0 39.7 40.9 56.4

AmbernathIndustry and Commerce 15.9 16.5 17.0 18.4Municipal 0.4 0.5 0.6 0.7Domestic:

Connected 6.6 7.7 8.9 12.4Standpipes 1.4 1.6 1.8 2.5

Other Uses and Losses 10.4 10.2 8.0 9.6Total Water Demand, Ambernath 34.7 36.5 36.3 43.6

Southern Villages and Rural AreasIndustry and Commerce 7.3 7.6 8.3 10.1Municipal 0.8 1.0 1.2 1.8Domestic:

Connected 4.6 5.5 6.7 10.1Standpipes 3.9 4.8 5.7 8.6

Other Uses and Losses 7.3 7.7 6.2 8.7Total Water Demand, Rural 23.9 26.6 28.1 39.3

- 60 -

ANNEX 3Table 2Page 3 of 3

Water Demanl Summary

Comnunity Water Demand (mld)

1978 1981 1984 1991Northiern Ar,!a

Thane 56.9 63.5 69.9 95.9Bhiwandl 22.7 25.0 26.1 34.6Vi-llage; (55) and Rural Areas 21.4 23.5 59.8 79.6

Sub:otal, Northern Area 101.0 112.0 155.8 210.1.

Southiern AriaKalyan 19.3 21.1 21.4 26.5Dombivl' 14.1 17.1 19.5 28.1Ulhasna,ar 36.0 39.7 40.9 56.4Ambernac-h 34.7 36.5 36.3 43.6Village,; (49) and Rural Areas 23.9 26.6 28.1 39.3

Sub:otal, Southern Area 128.0 141.0 146.2 193.9

Total, Proj!ct Area 229.0-/ 253.0-" 302.0 404.0

1/ Include; demands from some of the industries presently supplied by MIDCand to be supplied by MWSSB on completion of the project.

- 61. -

AtEK 4

INDIAMAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

ENGINEERING DESIGN AND CONSTRUCTION SCHEDULE

CALENDAR YEAR 1979 | 198 | 1I 1982 | 957 19184

INDIA FISCAL YEAR 1970/80 198181,0 1981/82 19819B3/B4

IDA FISCAL YEAR 1980 I 1981 I_98_ i983 11984

QUARTERS O i8I < F

WATER SUPPLY NORTHERN AREA

TEMGHAR INTAKE.PUMPING STATION ,ND TRANS- _ M ----

MISSION MAIN

TEMGHAR TREATMINT PLANT

AND PUMPING STA7 iON _lm- mm _ M

TRANSMISSION MAINS. PIPE BRIDGESAND PUMPING STA1 .ONS

RESERVOIRS a

DISTRIBUTION SYS' EM IMPROVEMENTS

WATERSUPPLYSOUIHERNAREA

BADLAPUR TREATNIENT PLANTEXTENSION AND IMPROVEMENTS

TRANSMISSION MAINIS, ANDRESERVOIRS I u _SEWERAGE NORTHERN AREA

THANE_ _ |.

COLLECTION AND 2ONVEYANCE SYSTEMEXTENSIONS AND ,MPROVEMENTS M M r mi

TREATMENT AND ISPOSAL _ = o

PROPERTY CONNE TIONS

_mu ."|fi|tttl. ............... **S l~* I8* BHIWANDI

COLLECTION AND CONVEYANCEEXTENSIONS AND IMPROVEMENTS I o lm

TREATMENT AND I'ISPOSAL

PROPERTY CONNE TIONS _ _Dalmm.mse. louses utomua lUS on uuBSu

SEWERAGESOUTHERNAREA

KALYAN

PROPERTY CONNE; TIONS gas t t t t S mI...

DOMBIVLI

ULHASNAGAR

COLLECTION AND I ONVEYANCE SYSTEM

TREATMENT AND lISPOSAL

PROPERTYCONNEL TIONS

l~ ~ ~ ~ ~~85 188 Im I 55661 lUll IONS 5165 568AMBERNATH

COLLECTION AND CONVEYANCE SYSTEM

TREATMENT AND DISPOSAL

PROPERTY CONNE(TIONS

LEGENDENGINEERING DESIGN.

Is .. DD BIOOING AND CONTRACT AWARD.*uuuumuuuum C VI LWORKS CONSTRUCTION.* _ _ _-* EQUIPMENT OR MATERIALS SUPPLY,

MANUFACTURE AND ERECTION. AXASI B-1, - 18847

- 62 -

ANNEX 5

I N D I A

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Schedule of Estimated Disbursements

IDA Quarterly Cumulative CumulativeFiscal Year Disbursements Disbursements Percentageand Quarter US$ Million US$ Million %

1980

Fourth 0.5 0.5 1.0

1981

First 1.8 2.3 4.8Second 1.8 4.1 8.5Third 1.8 5.9 12.3Fourth 1.8 7.7 16.0

1982

First 1.8 9.5 19.8Second 4.5 14.0 29.2Third 2.3 16.3 34.0Fourth 4.5 20.8 43.3

1983

First 4.5 25.3 52.7Second 4.5 29.8 62.1Third 2.3 32.1 66.9Fourth 4.5 36.6 76.3

1984

First 4.5 41.1 85.6Second 4.5 45.6 95.0Third 2.4 48.0 100.0

- 63 - ANNEX 6

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT(1974-75 through 1978-79)

SUMMARY INCOME STATEMENT 1/ Rs Million

ACTUAL ESTIMATED

1974-75 1975-76 1976-77 1977-78 1978-79

THANE:

Operating Revenues2/ 3.20 3.79 3.99 6.97 7.20Operating Expentses- 3.31 3.74 4.09 6.06 - 6.29Surplus/(Defici.t) (0.11) 0.05 (0.10) 0.91 0.91Net Fixed Assets 2.92 3.56 4.00 5.71 5.89Rate of Return -- 1.5% -- 16% 15.4%% Receivables/Billings 31% 23% 20% N/A N/A

BHIWANDI:

Operating Reveinues 0.25 0.26 0.28 0.95 1.01Operating Expenses-2/ 1.47 1.40 1.91 2.65 2.79Surplus/(Defici.t) (1.22) (1.14) (1.63) (1.70) (1.78)Net Fixed Asset:s 1.66 1.96 2.70 4.65 4.57Rate of Return -- -- -- -- --% Receivables/Billings 88% 108% 129% N/A N/A

KALYAN:

Operating Revenzues 0.96 1.44 2.03 2.02 2.14Operating ExpelLsesY/ 1.16 1.19 1.87 2.37 2.46Surplus/(Defici.t) (0.20) 0.25 0.16 (0.35) (0.32)Net Fixed Asset-s 2.08 2.04 2.00 6.08 5.86Rate of Return -- 12.3% c.8% --% Receivables/Jsillings 45% 54% 54% N/A N/A

DOMBIVLI:

Operating Revetues 1.48 1.80 2.06 1.47 1.57Operating Expen,se s~ 1.51 2.15 2,29 1.94 2.03Surplus/(Deficit) (0.03) (0.35,) (0.23) (0.47 (0.46)Net Fixed Asset:s 3.50 3.43 3.50 6.49 6.29Rate of Return -- -- -- -- --% Receivables/lillings 16% 16% 16% N/A N/A

ENE/MWSSB(BADLAPUR WATERWORKS):

Operating Revenues 3.65 4.39 5.64 4.57 4.73Operating Expertses2/ 4.63 5.19 5.74 8.57 8.81Surplus/(Deficit) (0.98) (0.80) (0.10) (4.00) (4.08)Net Fixed Assets 13.32 13.04 12.78 26.77 25.91Rate of Return -- -- -- -- --

X Receivables/billing. 28% 38% 31% N/A N/A

1/ Converted from cash accounting records of the various bodies.2/ Includes depreciation.

INDIA

MAHARASHTRA WATER SUPPLY AND SEhERAGE PROJECT

Water Supply Tariff Structure 1978-79

Bhayandar Ulhasnaaarand other Ambernath

Thane Bhiwandi villages Kalyan Dombivli and villages 1/

Bulk Supply Tariff: - - - - - - - - - - - - - Rupees per thousand liters - - - - - - - - - - - -

BNC 0.34 0.34 0.34

MIDC - - - 0.30 0.30 -

Retail Tariff:

Domestic metered 0.36 0.22 o.65 0/ 0.50 0.50 0.275

Domestic unmetered 10% 42 per _ _ _Rateable vear perValue of dwellingthe property

Date of lasttariff increase 1975 1965 1975 1975 1975

Industrial/Commercial 1.2C 0.375 1.65 1.00 1.00 0.55

Date of lasttariff increase 1977 1965 1975 1975 1975

1/ "upplied directly by FNE from Dadlapur waterworkn,2/ A variety of charging systew exists: Rs 0.65/1,000 liters is an average equivalent.

- 65 -

I N D I A ANNEX 8

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

MWSSB: INCOME STATEMENT (1979/80 through 1986/87)

(Rs Million)

1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87

Operating Revenues-/ 10.88 10.94 12.16 12.54 35.80 63.59 70.10 77.00

Water Supply (ml) 30,300 30,475 33,935 34,150 107,310 110,960 115,340 120,635

Operating Costs:

Bulk Water Charges 6.21 6.70 6.20 6.60 11.47 17.58 19.60 21.61

Power 1.08 1.14 1.78 1.87 4.80 8.26 8.97 9.70

Chemicals 0.24 0.25 0.39 0.41 1.10 1.92 2.07 2.23

Maintenance 0.08 0.08 0.08 0.09 1.27 2.59 2.72 2.86

Salaries and Wages 1.44 1.72 1.81 1.90 4.35 7.14 7.39 7.76

Administration 0.45 0.49 0.51 0.54 1.15 1.87 2.04 2.21

9.50 10.38 10.77 11.41 24.14 39.36 42.79 46.37

Depreciation 0.30 0.30 0.30 0.30 4.86 9.41 9.41 9.41

Total Operating Costs 9.80 10.68 11.07 11.71 29.00 48.77 52.20 55.78

Operating Surplus 1.08 0.26 i.09 0.83 6.80 14.82 17.90 21.22

Net Fixed Assets in Ope-ation 10.02 9.72 9.42 9.12 188.00 381.25 371.84 362.43

Rate of Return % 11 3 12 9 4 4 5 6

1/ Revenues are based (0 the following bulk tariff charges. (Rs/1,000 liters)

Industry - - - - 2.00 2.10 2.30 2.50

Towns 0.36 0.36 6.36 0.36 0.40 0.42 0.44 0.46

Villages 0.30 0.30 0.30 0.30 0:34 0.35 0.37 0.39

NOTE: The bulk tariff charged to villages is based on operating ccsts (before depreciation)/1,000 liters in view of thenarrower revenue base in such communities and the bulk tarilf charged to towns is based on total operating costs.

- 66 -

ANNEX 9

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

MWSSB: FUNDS FLOW STATEEENT (1979/80 through 1986/87)

(Rs Million)

1979/80 1930/81 19E1/82 1982/83 1983/84 1984/85 1985/86 1986/87

SOURCE OF FUNDS:

Net Income 1.08 0.26 1.09 0.83 6.80 14.82 17.90 21.22

Depreciation 0.30 0.30 0.30 0.30 4.86 9.41 9.41 9.41

Internal Cash Generation 1.38 0.56 1.39 1.13 11.66 24.23 27.31 30.63

GOM Loans 17.90 82.27 165.53 158.15 11.00 - - -

GOM Grants 14.42 48.70 38.07 98.23 78.78

Contribution of Local Authorities 3.88 18.55 48.76 53.36 - - -

Debt Service Reimbursamentby Municipalities - - - - 20.66 22111 24.90 27.43

36.20 149.52 312.36 309.74 110.44 22.11 24.90 27.43

Total Sources of Funds 37.58 150.08 313.75 310.87 122.10 46.34 52.21 58.06

APPLICATION OF FUNDS:

Investment in Project -

Water Supply:

Local Distribution SystemNetwork 9.62 25.29 62.00 62.00 34.05

Bulk Supply Syster 18.62 48.74 12J.00 120.00 58.73

Sewerage: 7.86 71.49 117.72 103.47 -

Interest during Const:uction:

Water Supply 0.19 1.98 6.89 13.44

Sewerage 0.11 2.02 5.75 10.83 -

36.20 149.52 312.36 309.74 92.78 - - -

Debt Service:

Amortization - - - 0.41 2.35 6.77 10.88

Interest _ _ _ - 29.93 29.91 29.76 29.29

_ - - - 30.34 32.26 36.53 40.17

Increase in Working Cipital 1.38 0.56 1.39 1.13 (1.02) 14.08 15.68 17.89

Total Applications of Funds 37.58 150.08 313.75 310.87 122.10 46.34 52.21 58.06

- 67 -

ANNEX 10

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

MWSSB: BALANCE SHEET (1979/80 through 1986/87)

(RS Million)

1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87

ASSETS

Fixed Assets

Gross Fixed Assets in Operation 13.03 13.03 13.03 13.03 396.00 396.00 396.00 396.00Less: Accumulated Depreciation 3.16 3.46 3.76 4.06 10.04 19.45 28.86 38.27

9.87 9.57 9.27 8.97 385.96 376.55 367.14 357.73

Work in Progress 36.20 185.72 498.08 807.82 - - -Deferred Charges 1/ - - - - 302.75 301.06 296.48 289.04

Current Assets

Cash/(Overdraft) (6.29) (5.68) (4.41) 3.29 (0.03) 13.81 29.23 46.82Inventories 7.58 7.58 7.62 1.06 1.06 1.13 1.20 1.27Accounts Receivalle 0.91 0.91 1.01 1.05 4.92 5.30 5.74 6.22

2.20 2.81 4.22 5.40 5.95 20.24 36.17 54.31

Total Assets 48.27 198.10 511.57 822.19 694.66 697.85 699.79 701.08

LIABILITIES

Equity

Equity Transferrel 5.68 5.68 5.68 5.68 5.68 5.68 5.68 5.68Contribution of Lcal Authorities 3.88 22.43 71.19 124.55 47.29 47.29 47.29 47.29GOM Grant 14.42 63.12 141.19 239.42 177.21 177.21 177.21 177.21Revaluation Surplas 4.68 4.68 4.68 4.68 7.16 7.16 7.16 7.16Earned Surplus 1.08 1.34 2.43 3.26 0.56 5.89 14.35 26.27

29.74 97.25 225.17 377.59 237.90 243.23 251.69 263.61

Long Term Debt 17.90 100.17 28S.70 443.44 452.09 445.32 434.44 422.84

Current Liabilitijs

Accounts Payable 0.63 0.68 0.70 0.75 2.32 2.53 2.78 3.03Current Maturitie; on LongTerm Debt - - - 0.41 2.35 6.77 10.88 11.60

0.63 0.68 0.70 1.16 4.67 9.30 13.66 14.63

Total Liabilities 48.27 198.10 511.57 822.19 694.66 697.85 699.79 701.08

Current Ratio 1.2 1.3 1.7 4.7 1.3 2.2 2.6 3.7

Debt/Equity Ratio 2/ 38:62 51:49 56:44 54:46 66:34 64:36 63:37 62:38

1/ Obligation of six municipalities to repay to MWSSB loans outstanding on assets transferred on October 1, 1984.

2/ Excluding debt on transferredassets (i.e., deferred chargesabove). - - - 39:61 37:63 35:65 34:66

- 68 -

ANNEX 11INDIA Page 1 of 2

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

MUNICIPALITIES: INCOME STATEMENT (1979/80 through 1986/87)

(Rs Million)

1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87

TRANE:

RevenuesI/ (Average tariff/1,000 liters) (1.34) (1.43) (1.51) (1.55)

Water Supp]y 8.58 11.53 20.75 23.34 12.99 18.40 20.21 22.53

Sewerage 1.18 4.75 o.75 7.82 8.50 9.61 10.64 11.64

9.76 16.28 2i.50 31.16 21.49 28.01 30.85 34.17

Operating CoE s:

Water Suppl/ 7.14 7.97 8.74 9.31 11.01 13.32 14.49 16.21

Sewerage - 1.82 2.06 2.29 3.20 3.44 3.65 3.88

Depreciation 0.27 0.27 0.27 0.27 3.46 4.52 4.52 4.52

7.41 10.06 13.07 11.87 17.67 21.28 22.66 24.61

Surplus 2.35 6.22 16.43 19.29 3.82 6.73 8.19 9.56

Interest (0.52) (0.49) (0.46) (0.42) (6.41) (6.37) (6.30) (6.17)

Average Net Fixed Assets 137.28 169.50 164.98 160.46

Rate of retur. 3% 4% 5% 6%

BHIWANDI:

(Average tariff/1,000 liters) (1.42) (1.53) (1.61) (1.69)

Revenues-1

Water Suppl 3.77 4.77 8.14 9.04 5.65 7.54 8.25 8.95

Sewerage 0.31 1.84 3.55 3.75 3.68 4.20 4.65 5.14

4.08 6.61 11.69 12.79 9.33 11.74 12.90 14.09

Operating Cosis:

Water Suppl 3.29 3.54 4.01 4.30 4.88 5.66 6.14 6.63

Sewerage - 0.66 0.77 0.83 1.23 1.33 1.39 1.50

Depreciation 0.34 0.34 0.34 0.34 1.47 1.87 1.87 1.87

3.63 4.54 5.12 5.47 7.58 8.86 9.40 10.00

Surplus 0.45 2.07 6.57 7.32 1.75 2.88 3.50 4.09

Interest (0.07) (0.06) (0.05) (0.04) (2.70) (2.69) (2.66) (2.62)

Average Net FPxed Assets 65.16 72.31 70.44 68.57

Rate of Rerun 3% 4% 5% 6%

KALYAN:

1/ (Average tariff/1,000 liters) (1.45) (1.54) (1.63) (1.70)Revenues

Water Suppl) 3.23 3.97 5.55 5.55 4.97 6.48 7.03 7.56

Sewerage 1.20 2.62 2.77 2.87 2.96 3.28 3.56 3.86

4.43 6.59 8 32 8.42 7.93 9.76 10.59 11.42

Operating Cost 3:

Water Suppl 3.02 3.10 3.55 3.61 4.10 4.77 5.11 5.45

Sewerage - 1.16 1 40 1.52 1.62 1.73 1.81 1.92

Depreciation 0.21 0.21 083 0.83 0.99 1.36 1.36 1.36

3.23 4.47 5 78 5.96 6.71 7.86 RK7R R. 73

Surplus 1.20 2.12 2.54 2.46 1.22 1.90 2.31 2.69

Interest (0.77) (0.76) (0.75) (0.73) (1.87) (1.85) (1.82) (1.77)

Average Net FPIed Assets 38.85 47.95 46.59 45.23

Rate of Return 3% 4% 5% 6%

1/ Includes b.th water tariff revenues and contribution to water supply and sewerage project costs in the years 1979/80 through1982/83.

- 69

INDIA,ANNEX 11

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT Page 2 of 2

MUNICIPALITIES: INCOME STATEMENr (1979/80 throug, 1986/87)

(Rs Million)

1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87

DOMB I I. :

Revenues/ (Average tariff/1,000 liters) (1.57) (1,65) (1.73) (1.78)Revenues:-

Water Supply 2.30 3.06 4.86 4.86 4.43 5.98 6.61 7.22

Sewerage - 0.40 1.62 2.28 3.03 3.37 3.75 4.08

2.30 3.46 6.48 7.14 7.46 9.35 10.36 11.30

Operating Costs

Water Supply 2.11 2.30 2.79 2.97 3.53 4.30 4.72 5.14

Sewerage - - - - 1.32 1.38 1.49 1.57

Depreciation 0.19 0.19 0.19 0.19 1.12 1.47 1.47 1.47

2.30 2.49 2.98 3.16 5.97 7.15 7.68 8.18

Surplus - 0.97 3.50 3.98 1.49 2.20 2.68 3.12

Interest (0.06) (0.05) (0.05) (0.04) (1.79) (1.78) (1.78) (1.75)

Average Net Pi-ad Assets 46.13 55.23 53.76 52.29

Rate of Return 3% 4% 5% 6%

ULHASNAGAR:

1/ (Average tariff/1,000 liters) (1.68) (1.80) (1.90) (1.99)Revenues:-

Water Supply 5.87 6.71 9.09 9.88 9.11 12.83 13.98 15.15

Sverage 0.01 2.80 5.69 7.06 7.81 8.8" 9.86 10.77

5.88 9.51 14.78 16.94 16.92 21.69 23.84 25.92

Operating Costs

Water Supply 5.48 5.56 6.40 6.53 7.97 9.83 10.62 11.46

Sewerage - - -- - 2.39 2.55 2.71 2.83

Depreciation 0.39 0.39 0.39 0.39 3.10 3.75 3.75 3.75

5.87 5.95 6.79 6.92 13.46 16.13 17.08 18.04

Surplus 0.01 3.56 7.99 10.02 3.46 5.56 6.76 7.88

Interest - - . - (5.96) (5.96) (5.93) (5.83)

Average Net FixP J Assets 125.89 139.61 135.86 132.11

Rate of Return 3% 4% 5% 6%

ANEERNATH

Reveues-1/ (Average tariff/1,000 liters) (1.28) (1.37) (1.47) (1.55)

Water Supply 5.21 5.46 6.86 6.86 6.66 8.56 9.26 9.92

Sewerage 0.02 2.20 3.63 4.24 5.24 5.93 6.64 7.29

5.23 7.66 10.49 11.10 11.90 14.49 15.90 17.21

Operating Costs.

Water Supply 4.98 4.96 5.23 5.23 6.14 7.20 7.74 8.26

Sewerage - - . - 1.43 1.50 1.61 1.71

Depreciation 0.23 0.23 0.23 0.23 2.03 2.33 2.33 2.33

5.21 5.19 5.46 5.46 9.60 11.03 11.68 12.30

Surplus 0.02 2.47 5.03 5.64 2.30 3.46 4.22 4.91

Interest _ (2.88) (2.99) (2.86) (2.82)

Average Net FixPu Assets 81.34 86.91 84.58 82.25

Rate of Return 3% 4% 5% 6%

1/ Includes both .ater tariff revenues and contribution to water supply and sewerage project costs in the years 1979/80 through19 82/83.

70 -

I N D I A ANNEX 12

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

MUNICIPALITIES: FUNDS FLOW SCATEMENT (1979/80 through 1986/87)

(Rs Million)

1979/80 1980/81 1961/82 1982/83 1983/84 1984/85 1985/86 1986/87

THANE:

Internal Cash Generation 2.62 6.49 16.70 19.56 7.28 11.25 12.71 14.08

Less: Debt Servic_ (0.99) (0.96) (0.93) (0.89) (7.00) (7.34) (8.11) (8.82)

Contribution to Investment 1.63 5.53 15.77 18.67 0.28 3.91 4.60 5.26

Investment 1.63 5.53 15.77 18.67 - - - -

Increase in Working Capital - - - - 0.28 3.91 4.60 5.26

BHIWANDI:

Internal Cash Generation 0.79 2.41 6.91 7.66 3.22 4.75 5.37 5.96

Less: Debt Servic, (0.16) (0.15) (0.14) (0.13) (2.84) (2.99) (3.38) (3.63)

Contribution to In"estment 0.63 2.26 6.77 7.53 0.38 1.76 1.99 2.33

Investment 0.63 2.26 o.77 7.53 - - - -

Increase in Workini Capital - - - - 0.38 1.76 1.99 2.33

KALYAN:

Internal Cash Genelation 1.41 2.33 3.37 3.29 2.21 3.26 3.67 4.05

Less: Debt Service (0.97) (0.97) (0.97) (0.97) (2.18) (2.33) (2.48) (2.54)

Contribution to In*estment 0.44 1.36 2.40 2.32 0.03 0.93 1.19 1.51

Investment 0.34 1.36 i.91 1.52 - - - -

Increase in Workini Capital 0.10 - 0.49 0.80 0.03 0.93 1.19 1.51

DOMBIVLI:

Internal Cash Genelation 0.19 1.16 3.69 4.17 2.61 3.67 4.15 4.59

Less: Debt Service (0.16) (0.15) (H.15) (0.09) (1.84) (1.91) (2.17) (2.42)

Contribution to Insastment 0.03 1.01 3.54 4.08 0.77 1.76 1.98 2.17

Investment 0.03 1.01 J.54 3.68 - - - -

Increase in Working Capital - - - 0.40 0.77 1.76 1.98 2.17

ULHASNAGAR:

Internal Cash Generation 0.40 3.95 8.38 10.41 6.56 9.31 10.51 11.63

Less: Debt Service - - - - (5.96) (6.41) (7.19) (7.99)

Contribution to Investment 0.40 3.95 8.38 10.41 0.60 2.90 3.32 3.64

Investment 0.06 3.95 8.38 10.41 - - - -

Increase in Working Capital 0.34 - - - 0.60 2.90 3.32 3.64

AMBERNATH:

Internal Cash Generation 0.25 2.70 S.26 5.87 4.33 5.79 6.55 7.24

Less: Debt Service - - - (2.88) (3.12) (3.49) (3.87)

Contribution to Investment 0.25 2.70 5.26 5.87 1.45 2.67 3.06 3.37

Investment 0.06 2.70 5.26 5.76 - - - -

Increase in Working Capital 0.19 - - 0.11 1.45 2.67 3.06 3.37

- 71 -

INDIA ANNEX 13

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

MITNICTPALITIES: BALANW SHEETS (1979780 through 1986/87)

,Rs Million)

1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87

N,t i-ed I.ets (nc. W.T 1,) 36.02 35.75 35.48 35.21 171.76 167.24 162.72 158.20

'lrreutl A:seer 3.46 4.35 4.75 5.34 4.21 8.22 12.92 18.32

re:. ,orrrrnt S,iahilities o.98 2.48 1.87 2.48 2.27 2.48 2.98 2.36 1.95 2.26 2.89 5.33 3.83 9.09 4.12 14.20

38.50 3b.23 37.96 37.57 174.02 172.57 171.81 172.40

IN'qilitv 32.32 32.52 32.72 32.92 81.18 81.54 83.43 86.821* c'f rm l)Debt. 1/ 6.,8 5. 71 5.24 4.65 92.84 91.03 88.38 85.58

38.50 38.23 37.96 37.57 174.02 172.57 171.81 172.40

T1IIWANIDI:Net Fined A4:sets (Inc. W.I S.) 14.81 14.4" 14.13 13.79 73.24 71.37 69.50 67.63Cr-rent. Assets 2.10 2.43 2.76 2.82 2.90 4.43 6.46 8.83

Less r ,rrert liabilities 0.31 1.79 o,64 1.79 0.97 1.79 1.03 1.79 0.94 1.96 1.13 3.30 1.46 5.00 1.52 7.31

16.60 16.26 15.92 15.58 75.20 74.67 74.50 74.94

Equity 16.10 15.85 15.60 15.35 35.86 36.05 36.89 38.36on-g Term Sebt I' 0.50 0.41 0.32 0.23 39.34 38.62 37.61 36.58

16.60 16.26 15.92 15.58 75.20 74.67 74.50 74.94

F,A]I,YAIV:Net Fixed Assets (Inlc. W.I. '") 24.68 24.4'/ 29.90 29.07 48.63 47.27 45.91 44.55C-urent Assets 0.93 1.40 1.50 2.30 . 2.40 3.35 4.57 6.11Legs Current I.iabililie 0.39 0.54 0.87 0.53 0.50 1.00 0.57 1.73 0.81 1.59 1.01 2.34 1.15 3.42 1.20 4.91

25.22 25.00 30.90 30.80 50.22 49.61 49.33 49.46

Equity 16.26 16.26 17.04 17.25 25.27 25.32 25.81 26.73Long Term Debt 1/ 8.96 8.74 13.86 13.55 24.95 24.29 23.52 22.73

25.22 25.00 30.90 30.80 50.22 49.61 49.33 49.66

DOMBIVILI:Net Fixed Assets (Tnc. w.I.2.) 6.01 5.82 5.63 5.44 55.97 54.50 53.03 51.56Current Assets o.46 0.52 0.83 0.92 1.79 3.57 5.58 7.78Tess Current Liabilities 0.23 0.23 0.29 0.23 0.55 0.28 0.24 o.68 0.42 1.37 0.70 2.87 1.01 4.57 1.08 6.70

6.24 6.05 5.91 6.12 57.34 57.37 57.60 58.26

Equity 5.65 5.56 5.47 5.73 30.98 31.40 32.30 33.67Long 'erm Debt 1/ 0.59 0.49 0.44 0.39 26.36 25.97 25.30 24.59

6.24 6.05 5.91 6.12 57.34 57.37 57.60 58.26

JI.HASNA:'AR:Xet Fixed Aoneta 'Inc. W.I.'.) 10.65 10.26 9.87 9.48 141.49 137.74 133.99 130.24Current Anset.s 1.01 1.15 1.56 1.69 2.19 4.70 8.08 11.79Less Curren,t Liabilities 0.59 0.42 0.l3 0.42 1.14 o.42 1.27 0.42 1.62 0.57 2.o4 2.66 3.00 5.08 3.21 8.58

11.07 10.68 10.29 9.90 142.06 140.40 139.07 133.82

Equity 11.07 10.68 10.29 9.90 54.32 53.92 54.75 56.80Ilong Term Debt 1/ - - - 87.74 86.48 84.32 82.02

11.07 10.68 10.29 9.90 142.06 140.4o 139.07 138.82

AM81 RNATH:Net Fixed Assets (Inc. W.T. W) 6.71 6.48 6.25 6.02 88.08 85.75 83.42 81.09Current Assets 0.90 0.94 1.18 1.18 2.38 5.09 8.19 ii.61Lesn Current Liabilities 0.62 0.28 o.66 0.28 0.90 0.28 0.79 0.39 o.78 i.60 1.21 3.88 1.67 6.52 1.78 9.83

6.99 6.76 6.53 6.41 89.68 89.63 89.94 90.92

Fquity 6.99 6.76 6.53 6.41 47.09 47.67 49.03 51.12Lonr Tferm Debt 1/ - - - - 42.59 41.96 40.91 39.80

6.99 6.'e6 6.53 6.41 89.68 89.63 89.94 90.92

1/ Includes MWSSB debt which municipalities service from 1983/84.

- 72 - ANNEX 14

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Incom, Statement for 1983184 of a Typical Village Supplied with

Water under the Project

Population:

Number of v:il.lages supplied 104Number of ptersons served 532,000Typical village population 5,000

Water Consump.i:on (annual) ML

(a) Domestit,Standpiljes - 3,000 persons using 40 lcd 44Connect:L..ons - 2,000 persons using 70 lcd 51

95(b) Non-dom(stic 10

105

Income Statem:nt

Rs 1,000Revenues:

Non-domestic (Rupees 2/1000 liters) 20Domestic Rupees 0.67/1000 liters) -

Connect:ed supply 34Standpi.pe supply 30

84

Costs:Bulk supply 46Operation and maintenance 23Administration 3Bad debts (2% revenues) 2Depreciat:i.on (2-1/2% assets) 10

84

Impact on Dom.stic Consumer:

The montthly charge for water supply to most families (assumedsize - six persons) will be an affordable amount of household income.However, 20% of families have a monthly income below 200 rupees and maybe unable to <afford five rupees. This problem will be overcome by cross-

- subsidization from other consumer groups.

(a) Family with connected supply - Rs 9 per month(at 1979 prices = Rs 7 per month);

(b) Family with supply from standpipe - Rs 5 per month(at 1979 prices = Rs 4 per month)

- 73 -

ANNEX 15Page 1

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Notes on Financial Projections

1. Yinancial projections have been prepared covering the period 1979/80through 1986/87 for MWSSB's activities in the project area - as project executingagency and bulk supplier of water - and for the water distribution and sewerageactivities of the 6 towns.

(A) MWSSB:

2. 'T'he following assumptions have been made:

(a) H1WSSB will supply bulk water to the towns of Kalyan, Ulhasnagarand Ambernath and a few villages from April 1, 1979. BMC andMIDC will continue to supply bulk water to the other towns andvillages; these arrangements will continue until September 30, 1983;

(b) From October 1, 1983, on completion of the project, MWSSB willsupply bulk water to the whole of the project area from itsown sources and from MIDC purchases;

(c) Vhe 6 towns and the villages will operate and maintain thewater distribution systems and collect revenues from theconsumers in their areas from April 1, 1979;

(d) MWSSB will supply water to, and collect revenues fromindustry located in rural parts of the project area fromOctober 1, 1983. Prior to that date MIDC will continueto supply such industry with water; and

(e) ItWSSB will keep separate accounts for the project area.

Income Statement (Annex 8)

3. Revenues are based on the charges for bulk water supply stated inAnnex 8.

4. Operating Costs

Projections have been made using data from the existing water worksfacilities in the project area, and reasonable estimates of staffing, powerand chemical costs for facilities to be provided under the project. Materialsfor operation and maintenance are estimated at 1/2% of gross assets in service.Provision has been made for water purchased from MIDC to supplement MWSSB'sown supply. All costs include 5% a year for inflation.

- 74 -

ANNEX 15Page 2

5. Depre iation

Jwo and one-half percent of gross fixed assets in service.

Funds Flow Statement (Annex 9)

6. Sources:

Internally generated funds, including contributions from localauthorities, will amount to about 15% of total project investment. GOMwill supply the balance to complete the project by a combination of loansand grants to MWSSB.

7. Applications:

MWSSB will execute the project between 1979/80 and 1983/84 and oncompletion, transfer the water distribution and sewerage systems to the localauthorities. No other works are contemplated in the project area before thelate 1980's.

8. Debt Service

MWSSB will repay GOM loans over 21 years, after an initial 4 years'grace pericd with interest at 6-3/4%. The six towns will reimburse MWSSB thedebt service on loans raised for the water distribution and sewerage systems.MWSSB will recover debt service on loans raised to construct bulk assetsthrough the bulk supply tariff.

9. Working Capital

Requirements under the project are limited to purchases of steel forpipe fabrication. A cash deficit until 1981/82 will be met from MWSSB'soverall wo1king balances and a cash surplus in later years will be investedby MWSSB after taking into account its overall requirements.

Balance ShEets (Annex 10)

10. Fixed Assets

Existing assets were revalued in 1977 at current replacement costand have been included in MWSSB's balance sheet at April 1, 1979 on thisbasis. A further revaluation of existing assets has been assumed based oninflation at 5% a year from 1977 through 1982, and these revised valuesincluded in MWSSB's balance sheet at March 31, 1984. Assets commissionedunder the project are included at cost.

11. Deferred Charges (i.e. loan obligations of municipalities)

Represent obligations of the six towns to repay to MWSSB the loansoutstanding in respect of the water distribution and sewerage systems.

- 75 -

ANNEX 15Page 3

12. Loan )ebt

Jonsists of GOM loans raised to finance the project and outstandingat each yeir-end.

13. EquitA

Consists of local authority contributions and GOM grants towardsproject expenditure, the surplus arising from asset revaluation and accumu-lated operating surplus (after payment of interest on loan debt).

14. Invencories

Represent 3 months' supply of chemicals and materials and projectrelated purchases of steel between 1979/80 and 1982/83 (paragraph 9 above).

15. Receivables

itepresent 1 month billings to local authorities and other waterconsumers.

L6. Accouats Payable

Rtepresent 1 month's supply of power, chemicals and materials andI month's purchase of water from MIDC.

(B) MUNICiPALITIES:

17. It is intended that each of the municipalities will maintain sepa-rate accou.its for its water supply and sewerage activities with effect fromApril 1, 1)79.

Incom! Statement (Annex 11)

18. Revenues

dave been calculated for each municipality as follows:

(a) Jater Supply -

J) From 1979/80 to recover operating costs, debt serviceand the required cash ccntribution towards the cost ofthe water supply component of the project.

(Li) From 1983/84 to recover operating costs and depre-ciation and to produce the rate of return on net fixedassets as specified in Chapter IV, paragraph 4.26(ii).

- 76 -

ANNEX 15Page 4

(b) ;ewerage -

,ystems in Thane, Bhiwandi and Kalyan will be partly:ommissioned from 1980/81. Prior to April 1, 1983Tharges will be made to recover operating costs; depre-:iation will not be charged until the systems are fully:ommissioned. From 1983/84 revenues have been calculated to:ecover operating costs and depreciation and to produce arate of return on net fixed assets as specified in paragraphL8(a). The cash contribution towards the sewerage component)f the project is assumed to be met from municipal taxation,in the absence of any existing body of consumers; theuransactions are shown passing into and from the water;upply and sewerage account.

(c) j3ad Debts -

[ave been assumed at 2% of annual revenues.

19. Opera:ing Costs

'rojections have been made using existing data, where available andreasonable estimates of staffing, power and chemicals for new water distribu-tion and sewerage facilities. M4aterials for operation and maintenance areestimated it 1/2% of gross assets in service. All costs include 5% a yearfor inflat:Lon.

20. Bulk water purchases from MWSSB are based upon demand in each town,before adjlustment for losses in the distribution system, at the tariffs indi-cated at Li Annex 8.

21. Depret;iation

L'wo and one-half percent gross fixed assets in service.

Funds Flow Statement (Annex 12)

22. Sources

onsist of internally generated funds from surplus revenues beforedepreciatio,n including contributions from municipal taxation (paragraph 18above).

23. Appli,ations

;onsist of some small ongoing works, funded from GOM grant andlocal contributions; payments to MWSSB towards project costs, debt service onexisting loans and reimbursement to MWSSB of debt service from April 1, 1983on assets ,:ransferred on completion of the project.

- 77 -

ANNEX 15Page 5

Balance Sh.ets (Annex 13)

24. Fixed Assets

'T'hese consist of existing assets revalued at 1977 prices, and againin 1982 (paragraph 10 above), and water distribution and sewerage assetstransferred from MWSSB on completion of the project.

25. Loan I)ebt

Consists of existing loans raised previously by the towns tofinance water supply and sewerage schemes.

26. Deferred Credits (combined with "Loan Debt" in Annex 13)

T'hese are the equivalent of the deferred charges shown at the endof each year, in the accounts of MWSSB, and represent the obligations of thesix towns to repay the loans outstanding in respect of the water distributionand sewerage assets transferred to the towns.

27. Equity

(Consists of local contributions and GOM grants towards capitalexpenditures, the surplus arising from asset revaluation and the accumulatedoperating surplus (after payment of interest on loan debt).

28. Inventories

Represent 1 month's supply of chemicals and materials.

Recei'x ables

Represent 2 month's billings to consumers (17% annual billings).

Accournts Payable

Represent 1 month's supply of bulk water from MWSSB, power, chem-icals and nmaterials.

I N D I A

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Monitoring Indicators

1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87

MWSSB (Project Area)

1. Accumulative Project Investment:

Rs Million 36 181 481 767 860

Percentage 4% 22% 56% 89% 100% I

2. Cost of Water Sold (Rs/1,000 liters) 0.32 0.35 0.33 0.34 0.42 0.43 0.45 0.46 m

3. Average Tariff (Rs/1,000 liters) 0.36 0.36 0.36 0.37 0.55 0.57 0.60 0.62

4. Rate of Return on Net Fixed Assets 4% 4% 5% 6%

5. Current Ratio 1.2 1.3 1.7 4.7 1.3 2.2 2.6 3.7

6. % Receivables/Billings 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5%

7. Debt/Equity Ratio 38:62 51:49 56:44 54:46 39:61 37:63 35:65 34:66

8. Debt Service Cover 1.2 2.4 2.3 2.4

MUNICIPALITIES:

Indicators 2 - 8 above will be used for each of the six towns based upon data compiledfrom the financial projections (Table 4.7 and Annexes 11 - 13).

INDIA - MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECTORGANIZATION CHART OF

THE MAHARASHTRA WATER SUPPLY AND SEWERAGE BOARD

MINISTRY OF URBAN DEVELOPMENTAND PUBLIC HEALTH I

MAHARASHTRA WATER SUPPLY ANO SEWERAGE SOARDCHAIRIMANMOIONGC

MEMBER SECRtTARY/CHIEF EXECUTIVE E P ECMEMBERS (S9

FINANCIAL SECRETAIFINANCIAL ADVISER ENGINEERING SECRETARYCHIEF ACCOUNTANT ADDITIONAL CHIEF ENGINEERS 13) SUPPORTING STAFFSUPPORTiNG STAPFFSPOTNSAF

T DEPUTY CHIEF ACCOUNTANT D|EPUTY CHIEF ACCOUNTANT ESTABLISHIMENT SECRETARIALDEUT HIFACONTNT (INNE N ACU NTI (INTERNALHAUDIT)PEONLLEA

(UDE )|SUPPO SUPPORTING STAFF SUPPORTING STAFF SUPPORTING STAFF SUPPORTING STAFF

ADDITONAL CHIEF ENGINEER 1 AITNAL CH |EP N NEER (IAOITONALCCHIEFERNGI(RURAL AREAS |URDAN AREAS) IBMR PROJEC

OFFICE STAFF FOR CHIEF ENGINEER I OFFICE STAFF FOR CHIEF ENGINEER 1 F

-EXECUTIVE ENGINEER IWATER SUPPLY) II1 -EXECUI VE ENGINEER (WATER SUPPLYE (1)-EXECUTIVE ENG INEER (SEWERAGE) R I EXECUTIVE ENGINEER SEWERAGE) I1) OFFICE STAFF FOR CHIEF ENGINEER-DEPUTY ENGINEER (WATER AND SEWERAGE 141 -DEPUTY ENGINEER (WATER AND SEWERAGE, 14) -SECRETARIAL OFFICER RI)

OPERATION AND MAINTENANCE) OPERATION AND MAINTENANCEI -ACCOUNTANT 12)-DEPUTY ENGINEER (WATER AND SEWERAGE, (4) -DEPUTY ENGINEER (WATER AND SEWERAGE, 14) -PERSONNEL OFFICER Rl

PLANNING AND CONSTRUCTION) PLANNING AND CONSTRUCTIONI -EXECUTIVE ENGINEER 131-PURCHASING AND STORES OFFICER t11 _PURCHASING AND STORES OFFICER (1) -DEPUTY ENGINEER 171-SENIOR ACCOUNTS OFFICER (EUDGETS, 2 _SENIOR ACCOUNTS OFFICER (SUGGETS. Q2l -PURCHASING OFFICER

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- 80 - ANNEX 18

Page 1 of 7

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Aver-age Incremental Costs and Internal Economic Rates of Return

In order to efficiently allocate available resources, the pricepaid for water by consumers should reflect the incremental economic costof making additional consumption possible. The average incremental cost(AIC) represents a through-time average of the incremental economic costof additional consumption, and it is calculated by (1) discounting allfuture capital costs and incremental operating and maintenance costs and(2) dividing the results by the discounted value of incremental consump-tion over the time period, using the opportunity cost of capital. The datarequired for the AIC calculations can also be used to determine the internaleconomic rate of return (IER) - the incremental return on investment -assuming that the benefits of the project can be approximated, as a mini-mum, by t:he revenue generated. The IER is the discount rate at which thenet present value of the project is zero. If pricing policy follows theAIC, then the IER of the project will equal the opportunity cost of capital.

The following assumptions were made in the calculations of theAIC and )ER for the project:

(1) The opportunity cost of capital is 10%, with sensitivitytesting at 8% and 12%.

(2) All costs are in constant 1978 domestic prices, net oftaxes and duties.

(3) There is a 4-year construction period and an average usefulproject lifetime of 40 years.

(4) Incremental consumption and costing figures are taken fromthe financial annexes, adjusted for inflation.

(5) The shadow price of foreign exchange is Rs 10/US$l.

(6) Labor is valued at both the full market wage rate (LlOO)and 70% of the market wage rate (L70).

(7) The project time horizon (until 1990-91) coincides withfull project utilization.

(8) Sewage flows are taken at 80% of incremental water consumpticn.

INDIA - 81 - ANNEX 18

Page 2 of 7MAHARASHTRA WATER SUPPLY ANI) SEWERAGE PROJECT

Incremental Production and Costs for Northern Water Supply Table I

Incremental Water Incremental OperatingFinancial Year Consumption (ml) Capital Costs and Maintenance Costs

( Rs Million) ( Rs Million)L70 L100 70 L100

1979-80 2,800 22.87 24.72 2.13 2.131980-81 4,400 37.83 39.98 3.78 3.781981-82 6,900 130.14 137.56 5.76 5.761982-83 8,100 99.97 105.66 5.87 5.871983-84 25,800 0 0 10.54 11.941984-85 27,200 0 0 10.76 12.161985-86 28,900 0 0 11.01 12.411986-87 30,600 0 0 11.25 12.651987-88 32,300 0 0 11.49 12.891988-89 34,100 0 0 11.83 13.231989-90 35,800 0 0 12.07 13.471990-91 41,200 0 0 12.33 13.731991-2023 41,200 0 0 12.33 13.73

Table 2

Incremcntal Production and Costs for Southern Water Supply

Incremental Water 1/ Incremental Operating andFinancial Year Consumption (ml) Capital Costs- Maintenance Costs

(Rs Million) (Rs Million)L70 L100 L70 L100

1979-80 1,000 2.20 2.33 .52 .541980-81 2,000 25.89 27.21 .75 .821981-82 6,000 59.18 63.42 .96 1.031982-83 7,000 34.60 36.84 1.07 1.141983-84 18,100 0 0 8.60 9.461984-85 19,500 6.79 7.46 9.19 10.051985-86 21,200 21.96 13.14 9.99 10.851986-87 22,900 2.49 2.74 10.69 11.551987-88 24,900 0 0 11.50 12.361988-89 26,600 0 0 12.19 13.051989-90 28,600 0 0 13.11 13.971990-91 30,600 0 0 13.92 14.781991-2023 30,600 0 0 13.92 14.78

1/ The costs include those costs essential for the full utilization of projectcomponents although not necessarily financed through the proposed credit.

ANNEX 18- 82 - Page 3 of 7

Incremental Production and Costs for Thane Sewerage Table 3

Incremental Water Incremental Operating and

Financial Year Consumption (ml) Capital Costs Maintenance Costs

(Rs Million) (Rs Million)L70 L100 L70 L100

1979-80 1,400 1.93 1.97 .77 1.10

1980-81 2,700 12.34 13.60 1.17 1.50

1981-82 3,700 18.15 19.76 1.26 1.59

1982-83 4,300 15.76 16.69 1.36 1.69

1983-84 6,200 0 0 1.94 2.27

1984-85 6,900 0 0 1.98 2.31

1985-86 7,500 0 0 2.01 2.34

1986-87 8,200 0 0 2.04 2.37

1987-88 8,900 0 0 2.07 2.40

1988-89 9,700 0 0 2.10 2.43

1989-90 10,200 0 0 2.13 2.46

1990-91 11,200 0 0 2.16 2.49

1991-2023 11,200 0 0 2.16 2.49

Incremental Production and Costs for Bhiwandi Sewerage Table 4

Incremental Water Incremental Operating and

Financial Year Consumption (ml) Capital Costs Maintenance Costs

(Rs Million) (Rs Million)1.70 L100 L70 L100

1979-80 700 2.55 2.55 .32 .45

1980-81 900 6.89 7.30 .42 .55

1981-82 1,400 13.80 14.64 .45 .58

1982-83 1,600 8.77 9.12 .47 .60

1983-84 2,200 0 0 .74 .87

1984-85 2,500 0 0 .76 .89

1985-86 2,700 0 0 .77 .90

1986-87 3,000 0 0 .79 .92

1987-88 3,300 0 0 .79 .92

1988-89 3,600 0 0 .81 .94

1989-90 3,900 0 0 .81 .94

1990-91 4,200 0 0 .83 .96

1991-2023 4,200 0 0 .83 .96

-83- ANNEX 18Page 4 of 7

Inczemental Production and Costs for Dombivli Sewerage Table 5

Incremental Water Incremental Operating andFinancial Year Consumption (ml) Capital Costs Maintenance Costs

(Rs Million) (Rs Million)L70 L100 L70 L100

1979-80 200 .06 .07 0 01980-81 400 2.65 2.95 0 01981-82 1,000 9.76 10.66 0 01982-83 1,200 10.29 10.91 0 01983-84 1,800 0 0 .76 .941984-85 2,100 0 0 .76 .941985-86 2,300 0 0 .78 .961986-87 2,600 0 0 .80 .981987-88 2,900 0 0 .82 1.001988-89 3,300 0 0 .84 1.021989-90 3,600 0 0 .86 1.041990-91 3,900 0 0 .88 1.061991-2023 3,900 0 0 .88 1.06

Incremental Production and Costs for Ambernath Sewerage Table 6

Incremental Water Incremental Operating andFinancial Year Consumpon (ml) Capital Costs Maintenance Costs

(Rs Million) (Rs Million)L70 L100 L70 L100

1979-80 200 .13 .14 0 01980-81 400 15.00 16.62 0 01981-82 900 19.09 21.17 0 01982-83 1,100 16.32 17.44 0 01983-84 1,600 0 0 .90 .991984-85 1,800 0 0 .90 .991985-86 2,000 0 0 .92 1.011986-87 2,200 0 0 .92 1.011987-88 2,500 0 0 .94 1.031988-89 2,800 0 0 .94 1.031989-90 3,000 0 0 .96 1.051990-91 3,300 0 0 .96 1.051991-2023 3,300 0 0 .96 1.05

- 84- ANNEX 18Page 5 of 7

Incremental Production and Costs for Ulhasnagar Sewerage Table 7

Incremental Water Incremental Operating andFinancial Year Consumption (ml) Capital Costs Maintenance Costs

(Rs Million) (Rs Million)]70 L100 170 L100

1979-80 200 .13 .14 0 01980-81 400 18.23 20.09 0 01981-82 1,700 29.09 31.21 0 01982-83 2,000 24.85 26.05 0 01983-84 3,100 0 0 1.47 1.671984-85 3,500 0 0 1.49 1.691985-86 3,900 0 0 1.51 1.711986-87 4,300 0 0 1.53 1.731987-88 4,700 0 0 1.55 1.751988-89 5,100 0 0 1.57 1.771989-90 5,500 0 0 1.59 1.791990-91 5,900 0 0 1.61 1.811991-2023 5,900 0 0 1.61 1.81

Incremental Production and Costs for Kalyan Sewerage Table 8

Incremental Water Incremental Operating andFinancial Year Consumption (ml) Capital Costs Maintenance Costs

(Rs Million) (Rs Million)1.70 L100 L70 L100

1979-80 100 2.71 2.71 .50 .711980-81 200 2.82 2.82 .76 .971981-82 900 ( 0 .90 1.111982-83 1,000 ( 0 .93 1.141983-84 1,600 () 0 .96 1.171984-85 1,800 0 0 .98 1.191985-86 1,900 0 0 .98 1.191986-87 2,100 0 0 1.00 1.211987-88 2,200 0 0 1.00 1.211988-89 2,400 0 0 1.02 1.231989-90 2,600 0 0 1.02 1.231990-91 2,700 0 0 1.04 1.251991-2023 2,700 0 0 1.04 1.25

- 85 -

ANNEX 18Page 6 of 7

Incremental Revenues for Proect Package Table 9

FinanciaL Year Incremental Revenues- Incremental Reenues(Rs Million) (Rs Million)

1979-80 11.13 11.27

1980-81 12.40 13.93

1981-82 15.24 16.49

1982-83 15.76 16.88

1983-84 50.23 78.35

1984-85 52.73 82.74

1985-86 55.46 86.84

1986-87 58.79 89.89

1987-88 62.91 93.56

1988-89 65.43 97.61

1989-90 69.36 101.65

1990-91 72.83 105.64

1991-2023 72.83 105.64

1/ Based on present tariff levels, in constant Rs.

2/ Based on financially projected tariff levels, in constant Rs.

- 86 -

ANNEX 18Page 7 of 7

Average Incremental Costs(Rs per 1,000 liters) Table 10

Discount Rate 8% 10% 12%Water Supply

NorthernL70 1.03 1.22 1.41L100 1.11 1.30 1.51

SouthernL70 .88 .99 1.10LIOO .95 1.06 1.17

SewerageThane

L70 63 .74 .84LIOO 71 .82 .94

BhiwandiL70 .95 1.14 1.32LIOO 1,03 1.23 1.43

DombivliL70 .80 .94 1.09L100 .90 1.05 1.21

AmbernathL70 1.81 2.19 2.59L100 1.98 2.40 2.84

UlhasnagarL70 1.46 1.75 2.07L100 1.58 1.90 2.23

KalyanL70 .72 .80 .90L100 .83 .92 1.02

- 87 -ANNEX 19Page 1

ILIDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Justification for Metering

1. rhe Government of Maharashtra pursues the policy that all watersupply should be metered in order both to account for water usage and toprovide the basis for cost recovery. As of 1977, over 90% of all domesticconnections were metered in the projecL area, and remaining domestic con-nections and standpipes will be metered during the project period.

2. rhe decision to meter should be based on an economic evaluationof the expected benefits and costs of such metering. The value of benefitsarises fro.n the water conservation induced by metering. Such a reductioncan enable an allocation of water savings to other consumers, can induce dis-cipline in water use, and can permit an equitable allocation of water coststo users based on consumption. In quantifiable terms, the reduction inaggregate demands due to metering can permit savings in the capital andoperating costs of the system and/or postpone future investment.

3. The benefits of metering arising from decreased water consumptionwill be offset by two types of costs. First there are the costs to the con-sumer of foregone consumption. These are difficult to quantify but includeboth direct expenditures incurred to reduce household wastage and the valueof foregone consumption. Secondly, there are quantifiable costs to theutility of initial meter purchase, installation, maintenance, and reading,billing and collection.

4. An evaluation of the quantifiable elements for benefit-cost analysiscompares the discounted cash flows of the savings derived from reduced waterconsumption to the costs to the utility of metering. Because data rarelyexist which indicate the reduction in consumption which would follow theintroductian of metering, the analysis can be reformed to determine thereduction in water consumption that would be necessary to make meteringeconomical.

Costs of Metering

5. Almost all connections in the project area have one-half inchmeters. The utility costs associated with these meters are estimated asfollows:

- 88 - ANNEX 19

Page 2

Cost (Rs)

Purchase of 1/2" meter 150Installation 50rotal Initial Cost 200

Equivalent Annual Cost /a 26Annual Maintenance Cost 15Annual Reading, Billing, Collection 30rotal Annual Cost Per Meter 71

The m)nthly cost per meter is Rs 5.9.

/a Xssumes an average meter lifetime of 15 years anda discount rate of 10%.

Metering Sivings

6. [n order to determine the reduction in consumption that wouldbe requirei to justify metering, the average utility metering costs aredivided by the marginal water supply and sewerage costs:

ieduced consumption > Metering CostsAIC

In general, at least a 12% reduction in water consumption would be requiredto justify metering connections based on economic costs. 1/ This is judgedto be a mitiimum figure for the actual influence metering is likely to haveon consumpt:ion.

1/ This calculation assumes a discount rate of 10%, that labor is valuedat 70% of its market value, and that the average household consumptionis 120 lcd for a family size of 6.

- 89 -

ANNEX 20

INDIA

MAHARASHTRA WATER SUPPLY AND SEWERAGE PROJECT

Related Documents and Data Available on Project File

1. Draft Feasibility Report, (Part I Water Resources, Part IITechnical and Financial) for the Water Resources Management Board ofBMRDA; b3 Kirloskar Consultants Ltd., Pune, India; April 1978.

2. Draft Feasibility Report, Amended Financial Data.

3. Project Cost Estimates. Detailed project cost data in fourvolumes: Northern Area, Water Supply; Southern Area, Water Supply; NorthernArea, Severage and Southern Area, Sewerage. By Kirloskar Consultants Ltd.,Pune, India; November 1978.

4. Data Used for AIC and IER Calculations Including PreliminarySocio-Economic Data from TATA Institute of Social Sciences.

5. (i) Maharashtra Water Supply and Sewerage Board Act, 1976.

(li) Maharashtra Municipalities Act, 1965.

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