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BOARD DOCUMENT BD 2015-17

CERTIFICATION AND FINANCING PROPOSAL

WASTEWATER TREATMENT INFRASTRUCTURE IN DELICIAS, CHIHUAHUA

Submitted: August 13, 2015

BOARD DOCUMENT BD 2015-17 CERTIFICATION & FINANCING PROPOSAL DELICIAS, CHIHUAHUA

AUGUST 13, 2015 1



INDEX

EXECUTIVE SUMMARY 2

1. ELIGIBILITY 4

2. CERTIFICATION CRITERIA

2.1 Technical Criteria

2.1.1. Project Description 5

2.1.2. Technical Feasibility 9

2.1.3. Land Acquisition and Right-of-Way Requirements 11

2.1.4. Management and Operations 11

2.2 Environmental Criteria

2.2.1. Compliance with Applicable Environmental Laws and Regulations 12

2.2.2. Environmental Effects/Impacts 13

2.3 Financial Criteria 16

3. PUBLIC ACCESS TO INFORMATION

3.1 Public Consultation 18

3.2 Outreach Activities 18

BOARD DOCUMENT BD 2015-17 CERTIFICATION & FINANCING PROPOSAL

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EXECUTIVE SUMMARY


Project: The project consists of the design, construction and operation of the North Wastewater Treatment Plant with a total capacity of 370 liters per second (lps) or 8.4 million gallons a day (mgd), along with the West lift station, a force main and a cogeneration facility, to serve the city of Delicias, Chihuahua (the “Project”)

Project Objective: The purpose of the Project is to provide access to sustainable wastewater treatment services by constructing wastewater conveyance and treatment infrastructure, thereby reducing the risks of untreated or inadequately treated wastewater discharges, and improving the quality of effluent discharged to receiving water bodies. The cogeneration facility will also help reduce demand on electricity generated from fossil-fuel sources, thus contributing to the reduction of greenhouse gas emissions.

Expected Project Outcomes:

The Project is expected to generate environmental and human health benefits related to the following Project outcomes:

a) Provide 370 lps (8.4 mgd) of wastewater treatment capacity.

b) Eliminate 320 lps (7.3 mgd) of untreated or inadequately treated wastewater discharges.1

c) Install 763 kW of renewable energy generation capacity.

d) Displace approximately 1,461 metric tons/year of carbon dioxide equivalent (CO2e), 0.16 metric tons/year of sulfur dioxide, and 2.68 metric tons/year of nitrogen oxides. 2

Population Benefited: 130,962 residents of Delicias, Chihuahua3

Sponsor: Tratadora de Aguas de Delicias, S.A. de C.V. (TAD), a special-purpose company created by the consortium awarded the build-operate-transfer contract to carry out the Project (the “BOT Contract”) by the state water agency, Junta Central de Agua y Saneamiento de Chihuahua (JCAS), and the local water utility,

1 Discharge is calculated as 80% of the drinking water delivered (400 lps) based on a production volume of 632.02 lps

less physical losses (36.7%). 2 The carbon dioxide equivalent for a gas is derived by multiplying the tons of a certain greenhouse gas, such as

methane, by the associated global warming potential. 3 Source: CONAPO Projections for 2015.


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Junta Municipal de Agua y Saneamiento de Delicias (JMAS).

Borrower: TAD.

Project Cost: $257.6 million pesos (US$17.2 million).4

NADB Loan Amount:

Up to $80.0 million pesos (US$5.3 million).

Uses & Sources: (Millions of pesos)

Uses Amount %

Construction and supervision $205.28 79.68

Value-added taxes ( VAT) 33.90 13.16

Indirect costs* 6.62 2.57

Other costs** 11.82 4.59

TOTAL $257.62 100.0

Sources Amount %

NADB loan $80.00 31.05

JMAS/JCAS funds 35.09 13.62

Federal funds (FONADIN) 69.17 26.85

Equity 73.36 28.48

TOTAL $257.62 100.0

* Commissions, insurance, bonds and letter of credit fees. ** Bank commissions and other costs during construction.

4 Unless otherwise noted, all U.S. dollar figures are quoted at an exchange rate of $15.00 pesos per dollar.

BOARD DOCUMENT BD 2015-17



1. ELIGIBILITY Project Type

The Project falls within the eligible sector of wastewater treatment. Project Location

The Project is located in the municipalities of Delicias and Rosales, Chihuahua, approximately 115 miles southeast of the U.S.‐Mexico border. The Project is in the border region defined as within 300 kilometers of the U.S.-Mexico international border. Project Sponsor and Legal Authority

The private‐sector project sponsor is Tratadora de Aguas de Delicias, S.A. de C.V. (“TAD” or the “Sponsor”). In 2008, the Chihuahua state water agency, Junta Central de Agua y Saneamiento de Chihuahua (JCAS) and the Delicias water utility, Junta Municipal de Agua y Saneamiento de Delicias (JMAS), conducted a competitive bid process in accordance with the Federal Public Procurement, Leasing and Services Law, whereby they awarded the consortium formed by Grupo AMDS, S.A. de C.V. and ICOEQUIPOS, S.A. de C.V., a build-operate-transfer contract for the implementation of two wastewater treatment plants, the North and West plants, in Delicias, Chihuahua (the “BOT Contract”). The consortium created TAD, a special-purpose company, to execute the BOT Contract and carry out the Project. In September 2014, TAD and JCAS/JMAS reached an agreement to modify the original project. The legal representative of TAD is Francisco Ayala Michel.

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2. CERTIFICATION CRITERIA

2.1 TECHNICAL CRITERIA 2.1.1. Project Description

Geographic Location

Most of the Project components will be located within the municipality of Delicias in the state of Chihuahua. The North Wastewater Treatment Plant (North WWTP) and conveyance infrastructure will be constructed in Delicias, Chihuahua, and a lift station with pretreatment facilities (the “West Lift Station”) will be located in the adjacent municipality of Rosales, Chihuahua.5 Figure 1, below, shows the approximate geographical location of both municipalities.

Figure 1 PROJECT LOCATION MAP

5 In accordance with the agreement related to the new Project scope, the West Lift Station will be constructed with

pretreatment facilities, and the wastewater flows will be conveyed to the North WWTP for treatment.


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Community Profile

According to the 2010 population census conducted by the Mexican national institute for statistics, INEGI, the state of Chihuahua has a population of 3.41 million residents and approximately 4% of the state population (139,000) lives in the municipality of Delicias. According to INEGI data, the city of Delicias is home to 85% of the population of the municipality (approximately 118,071 residents). Likewise, INEGI statistics show that the growth rate for Delicias was 1.0% between 1995 and 2000, and 1.6% between 2000 and 2010. The Mexican national population council, CONAPO, reported that the city of Delicias will continue to grow at an average rate of 1.33 % for the next five years and estimates that the population will be almost 131,000 in 2015. According to the latest Mexican economic census for the municipality of Delicias, manufacturing generates 52.0% of the gross domestic product (GDP) and employs 32.2% of the working population, while commerce represents the second largest sector, generating 19.9% of GDP and employing 32.0% of the work force, and construction services account for 9.0% of the economy and 5.5% of total employment. Overall, Delicias represents 3.4% of the state GDP. Table 1 summarizes the status of public services and infrastructure in the city of Delicias in 2014.

Table 1 PUBLIC SERVICES AND INFRASTRUCTURE

Water System*

Coverage 100%

Supply source 24 wells

Number of connections 53,758

Wastewater Collection

Coverage 100%

Number of connections: 53,745

Wastewater Treatment

Coverage 0%

Treatment facilities None

Solid Waste

Collection coverage Information not available

Final disposal Landfill

Street Paving**

Coverage 43%

* Source: Information provided by JCAS. ** Calculation based on data from the Assessment for Basic Infrastructure for the State of Chihuahua, developed by BECC in 2010.

Local Water and Wastewater System


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Drinking water distribution and wastewater collection services are provided by JMAS. Water is supplied by 24 groundwater wells, disinfected, and then sent directly to the distribution system, which includes 15 regulating tanks. The water system provides service to approximately 53,758 hookups, of which 93% or 50,117 are residential. The wastewater collection system provides service to approximately 53,745 connections, of which 93% or 50,107 are residential. Currently, wastewater is collected and conveyed through seven collectors that discharge untreated flows directly into a tributary of the San Pedro River, which is located north of the city of Delicias and eventually flows into the Conchos River. The water from the San Pedro River and its tributary is used for agricultural purposes. The direct discharge and filtration of wastewater into existing surface and groundwater resources represent an environmental and human health risk. Since 2008, JCAS has been paying fees to the Mexican national water commission, CONAGUA, for non‐compliant wastewater discharged at various locations in Delicias. For these reasons, the Project is a top priority for JCAS and JMAS. Furthermore, one of the long-term goals in Mexico is to treat all wastewater in the country. The goal was presented in the 2030 Water Agenda. According to this plan, by 2030, all wastewater collected will be treated.6 The proposed Project directly supports the achievement of this goal, as well as compliance with current wastewater regulations. Project Scope and Design

The purpose of the Project is to provide sustainable wastewater treatment services and improve the water quality of local water bodies by eliminating the discharge of untreated or inadequately treated wastewater. The Project consists of the design, construction and operation of the North WWTP with a total capacity of 370 lps (8.4 mgd), the West Lift Station, a force main and a cogeneration facility. The West Lift Station will have a capacity of 120 lps (2.7 mgd) and will pretreat wastewater from the southwest area of the city, prior to conveying the flows 2.8 km (1.74 miles) through the force main to the North WWTP for treatment. The North WWTP will have a capacity of 370 lps (8.4 mgd) and will also include sludge treatment and a 763-kW cogeneration facility. The Project will have a combination of primary and secondary treatment processes in order to comply with quality requirements in a cost-effective manner. The West Lift Station includes a pretreatment process with screening and aeration prior to conveying the flows to the North WWTP for additional treatment. The flows from the West Lift Station will be mixed with the other inflows to the North WWTP before entering the primary treatment process, which includes a centrifuge grit chamber, aeration and sedimentation. After primary treatment, flows will receive secondary treatment through an activated sludge process. After secondary treatment, the flows will be disinfected before discharge. All effluent will comply with Mexican standard NOM-001-SEMARNAT-1996, which establishes the maximum permissible levels of

6 Source: CONAGUA


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contaminants for wastewater discharges into national waters and territories. Any effluent that is expected to be used in public areas will comply with Mexican standard NOM-003-SEMARNAT-1997, which regulates wastewater discharges for reuse with potential for human contact. Primary and secondary sludge generated in the treatment process at the North WWTP will be combined in an aerated homogenization tank prior to anaerobic digestion. After the digestion process, sludge will be held in a temporary storage tank, with a three-day capacity, before passing through one of the two belt filter presses for sludge thickening. Waste sludge will be treated in accordance with Mexican standard NOM-004-SEMARNAT-2002 and will be disposed of, along with other debris resulting from the pretreatment process at both the North WWTP and West Lift Station, in the Delicias municipal landfill, located about 16 miles from the North plant. The North WWTP also includes a 763 kW-cogeneration facility that will use the biogas generated during the anaerobic sludge digestion process. The biogas will be captured and stored for treatment (removal of hydrogen sulfide (H2S), siloxanes, and particles; cooling; and drying) and used in a cogeneration process to generate thermal energy for the digesters, as well as part of the electricity required to operate the North WWTP. The cogeneration facility is part of the modified scope of the Project and has helped the Sponsor reduce operational costs and improve the financial feasibility of the Project. The effluent from the North WWTP will be discharged just north of the plant. The approximate location of the point of discharge is shown in Figure 2.

Figure 2 EFFLUENT DISCHARGE POINT


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The BOT Contract covers the construction, start-up, operation and maintenance of all Project infrastructure, and will be carried out in two phases: 1) a 16-month construction phase, which includes a testing period; and 2) an 18-year operation phase, which will begin upon completion of the construction phase. The operation phase consists of all operation and maintenance activities, including the removal and disposal of all solid waste and sludge generated by all the Project facilities. Table 2 presents the status of key tasks for the implementation of the Project.

Table 2 PROJECT MILESTONES

Key Milestones Status

Land use change authorization from the Municipality Completed September 2006

Preventive Report Resolution from SEMARNAT Received May 2007

Updated discharge permit from CONAGUA Prior to operation

Operation start-up 2016

2.1.2. Technical Feasibility During the bidding process, the Sponsor presented a design proposal based on the technical and effluent quality requirements established by JCAS and JMAS in the procurement documents. In September 2014, TAD and JCAS/JMAS reached an agreement to modify the original proposal in order to have a cost-effective Project, while complying with the regulations for discharges to surface water bodies and for potential reuse. The anticipated influent and effluent characteristics for the North plant’s design are provided in Table 3.

Table 3 ANTICIPATED INFLUENT AND DISCHARGE CHARACTERISTICS*

Parameter Influent Design Effluent

Average flow (mgd) 8.4 mgd (370 lps) 8.4 mgd (370 lps)

Biochemical oxygen demand (mg/L) 350 mg/L 30 mg/L

Total suspended solids (mg/L) 300 mg/L 30 mg/L

Total nitrogen (mg/L) 50 mg/L 40 mg/L

E. Coli CFU/100 mL 1000 MPN/100 mL

* Influent characteristics as defined in the final design documents. CFU = Colony forming units; MPN = most probable number

The North WWTP has been designed to meet the discharge requirements established under Mexican standard NOM-003-SEMARNAT-1997. Its design is based on the organic and hydraulic loading of the anticipated influent and the target effluent quality to ensure that permit requirements will be met for reuse. Considerations for future expansion have also been incorporated into the designs, which will allow for the phased expansion of the plants to meet increased demand.


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Selected Technology

The following factors were taken into consideration in the selection process:

Compliance with the applicable treatment regulations for wastewater reuse.

Treatment capacity sufficient to address the city’s existing needs of 320 lps (7.3 mgd).

Capital cost, to include a combination of public funds, private equity, and long-term financing.

Operations and maintenance (O&M) costs to ensure the utility’s financial viability and sustainability.

Influent at the West Lift Station will pass through automated bar screens. The raw wastewater will be pumped to the automated pretreatment module, which includes pre-aeration and primary sedimentation for homogenization. Up to 120 lps (2.7 mgd) of pretreated wastewater will then be pumped to the North WWTP for final treatment. The treatment will continue at the North WWTP with two biological reactors equipped with aerators and two secondary clarifiers. Treated wastewater will be disinfected using ultraviolet technology. The North plant will be designed to treat excess flows due to nonstandard events in order to avoid discharge of untreated wastewater. Both facilities will also include bypass systems for extraordinary events to avoid damage to equipment, as well as a guard booth, perimeter fence, and green areas in accordance with plans and specifications. The main components of the West Lift Station are

Influent canal with automated bar screens for removal of debris.

Pretreatment module with aeration system to homogenize wastewater flows.

Bypass systems for extraordinary events.

Additional works, including guard booth, perimeter fence and green areas in accordance with plans and specifications.

Pump equipment to send up to 120 lps (2.7 mgd) of homogenized wastewater flows to the North WWTP for additional treatment.

Force main to convey flows from the lift station to the North WWTP. The main components of the North WWTP are:

Wastewater treatment:

o Influent canal with automated bar screens for removal of debris with a capacity of up to 632 lps (14.4 mgd).

o Lift station to pump the raw water to the treatment process.

o Automated pretreatment module with the capacity to treat up to 370 lps (8.4 mgd).


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o Pre-aeration and primary sedimentation in two independent modules.

o Biological treatment of the influent in two activated sludge reactors, each with a capacity of 2,800 m3 (740,000 gallons), equipped with aerators and two secondary clarifiers with a diameter of 30-meter (100-ft.).

o Disinfection using automated ultraviolet lamps to ensure the bacteriological quality of the effluent and comply with the required disinfection parameters.

o Bypass systems for extraordinary events.

o Peripheral equipment in accordance with the specifications and plans.

Sludge digestion:

o Aerated homogenization and conditioning of the sludge in a 1,200 m3 (317,000-gallon) tank.

o Anaerobic digestion of sludge in a 3,600 m3 (951,000-gallon) tank, including sludge mixing and heating, as well as biogas storage.

o Temporary sludge storage in a 600 m3 (158,500-gallon) tank, with storage capacity for three days.

o Two belt filter presses for sludge thickening, each 2.1 m (7 ft.) wide, with one in operation and the other for backup.

Cogeneration:

o Capture of biogas produced in the digestion process.

o Biogas treatment, including removal of hydrogen sulfide, siloxanes and particles, as well as cooling and drying.

o Cogeneration of thermal energy for use in the digestion process, with an installed generation capacity of 763 kW, to produce electricity for use in plant operations.

2.1.3. Land Acquisition and Right-of-way Requirements

The Project includes two main components that will be constructed at different sites owned by JMAS. The ownership documentation has been provided for each site. The force main from the West Lift Station to the North WWTP will be located along rights-of-way of existing wastewater collectors. JCAS has indicated that no other land acquisition is necessary for the Project. The Municipality of Delicias has already authorized the land use change for both Project sites. 2.1.4. Management and Operations The Sponsor, TAD, is backed by Grupo AMDS, an internationally recognized Mexican company that operates treatment plants in nine countries: Mexico, United States, Canada, Dominican Republic, Panama, Venezuela, Colombia, Chile and Uruguay. The company has extensive


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knowledge of the international market and works with various suppliers through strategic alliances to provide the best technology, equipment and engineering services. The Sponsor has signed an agreement to abide by the obligation to submit an O&M manual before operational testing begins. Oversight for operation of the treatment facilities will be provided by JCAS, which has similar facilities operating throughout the state. CONAGUA issued water rights to JCAS for the operation of the water well supply system, which also includes discharge requirements for resulting wastewater flows. The water supply permit has been extended for current operations and will need to be updated once the designs of the wastewater treatment facilities are complete in order to incorporate the specific discharge location and quality requirements. Additionally, prior to operation of the cogeneration component at the North WWTP, the Project Sponsor will need to consult with SEMARNAT to determine whether an environmental license is necessary for the operation of the energy generation facility.

2.2 ENVIRONMENTAL CRITERIA 2.2.1. Compliance with Applicable Environmental Laws and Regulations

Applicable Laws and Regulations

Based on the Preventive Report Resolution issued by the Mexican Ministry of Environment and Natural Resources (SEMARNAT), the laws and regulations applicable to the Project are:

General Law of Ecological Balance and Environmental Protection (LGEEPA), which establishes the environmental regulatory framework, expands the strategic vision and conveys specific powers and duties to the states and municipalities, so that environmental problems can be addressed directly.

National Water Law, which establishes the regulations for water use, distribution and control.

General Law for Comprehensive Waste Prevention and Management, which identifies the criteria that should be considered by various levels of government in the generation and comprehensive management of solid waste, in order to prevent and control environmental pollution and ensure the protection of human health.

Chihuahua State Environmental Protection Law, which establishes the framework for environmental protection in the state.

NOM-001-SEMARNAT-1996, which establishes the maximum permissible levels of contaminants for wastewater discharges into national waters and territories.

NOM-002-SEMARNAT-1996, which establishes the maximum permissible levels of contaminants for wastewater discharges into urban or municipal wastewater collection systems.


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NOM-003-SEMARNAT-1997, which establishes the maximum permissible levels of contaminants for reclaimed water use in public services.

NOM-004-SEMARNAT-2002, which establishes the norms for managing, treating and disposing of sludge generated in treatment plants.

Environmental standards associated with the construction of the Project are also referenced in the SEMARNAT resolution. In general, the construction of a cogeneration plant is subject to federal environmental clearance in accordance with Mexico’s General Law of Ecological Balance and Environmental Protection. However, under this law, cogeneration facilities of less than 3.0 MW do not require federal environmental authorization. Environmental Studies and Compliance Activities

In accordance with the LGEEPA, JCAS submitted a Preventive Report to SEMARNAT outlining the possible environmental impacts resulting from the implementation of the Project. SEMARNAT issued a Resolution to the Preventive Report in 2007, in which it approved the construction and treatment activities of the North WWTP for a period of 20 years and the West Lift Station for a period of 25 years. According to the resolution, none of the possible effects were found to have a significant impact. The sites for both facilities have been previously impacted and are currently used for agriculture, so there will be no adverse impacts to the biodiversity of the area. Nevertheless, JCAS proposed mitigation measures in the Preventive Report to reduce the impacts of each environmental component of the Project. Federal laws require that wastewater be treated in accordance with current standards. Currently, wastewater is collected and discharged without treatment. In order to comply with federal law regarding national waters, JCAS continually renews its permits for rights to discharge untreated wastewater to receiving water bodies. The original wastewater discharge permit was issued by CONAGUA in November 1994 for ten years and expired in 2004. The permit will be updated with CONAGUA for the discharge of treated wastewater, using the North WWTP as the point of discharge. Pending Environmental Tasks and Authorizations

The only pending environmental authorization is the updated discharge permit from CONAGUA. Compliance Documentation

The following authorizations have been obtained for the Project:

Preventive Report Resolution 08CI2007HD010 (West Lift Station)

Preventive Report Resolution 08CI2007HD012 (North WWTP) 2.2.2. Environmental Effects/Impacts Untreated wastewater discharges in the Project area are a potential source of disease-carrying organisms that contaminate the soil, surface water and groundwater. The inappropriate disposal


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of untreated wastewater in the area results in contaminated flows to the San Pedro River, which are intercepted during dry weather and conveyed to local agriculture land to irrigate crops. Mechanized wastewater treatment processes consume large amounts of energy. The Project is expected to offset the demand on traditional energy sources by using the biogas generated on site. The Project provides an opportunity to displace greenhouse gases (GHG) and other pollutants produced by traditional hydrocarbon-based energy generation, while providing a safe and reliable energy alternative for the new wastewater treatment facilities. The anticipated environmental benefits from installing 370 lps (8.4 mgd) of wastewater treatment capacity and 763 kW of renewable energy generation capacity are:

Eliminate 320 lps (7.3 mgd) of untreated or inadequately treated wastewater discharges.7

An expected displacement of approximately 1,461 metric tons/year of carbon dioxide equivalent (CO2e), 0.16 metric ton/year of sulfur dioxide and 2.68 metric tons/year of nitrogen oxides. 8

Existing Conditions and Project Impact – Environment

The proposed Project will eliminate untreated wastewater discharges, contributing to improved environmental conditions and reducing the potential contamination of surface and groundwater in the surrounding area. The discharge of untreated and/or inadequately treated wastewater poses a risk to the natural environment:9

Increased levels of organic matter in the receiving water body decreases dissolved oxygen (DO) in the aqueous environment as the organic matter breaks down. Reduced DO levels are detrimental to the health of aquatic plants and animals that need DO to live;

Microbial pathogens can have negative impacts on public health and the health of the ecosystem;

Sedimentation from sewage can degrade native vegetation and soil; and

Sewage increases turbidity, cutting off light to plants and animals. Although not all of the treated effluent will be reused, the new treatment facilities are designed to treat all wastewater flows to comply with Mexican standard NOM-003-SEMARNAT-1997, which establishes the maximum permissible levels of contaminants for non-potable reclaimed water use and is more stringent than the quality requirements for discharge into a national water body. Overall, the Project is expected to have a positive impact on the environment.

7 Discharge is calculated as 80% of the drinking water delivered (400 lps) based on a production volume of 632.02 lps

less physical losses (36.7%). 8 The carbon dioxide equivalent for a gas is derived by multiplying the tons of a certain greenhouse gas, such as

methane, by the associated global warming potential. 9 Source: http://www.water-matters.org/node/104

http://www.water-matters.org/node/104


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Mitigation of Risks

Although implementation of the Project will have no significant adverse impacts on the environment, mitigation measures were established to address temporary, minor impacts during construction. Potential impacts during construction include fugitive dust and other emissions from vehicle and equipment exhaust affecting the air shed, as well as increased noise levels near the work areas. The proposed mitigation measures include the following:

Application of treated wastewater to reduce fugitive dust emissions.

Vehicle maintenance and tune-ups to reduce emissions.

Placement of warning signs to prevent potentially hazardous situations.

Separate management of urban and special solid waste and disposal in accordance with existing Mexican standards and state regulations.

In summary, the mitigation measures include best management practices and compliance with local ordinances to reduce the temporary impacts of construction activities. Natural Resource Conservation

The Project contributes to natural resource conservation by reducing environmental deterioration and the risks of groundwater and surface water contamination. The reuse of the reclaimed wastewater for public areas will reduce the demand on potable water for irrigation purposes. Additionally, using byproducts of the treatment process to generate energy on site will reduce demand on traditional energy sources, as well as the volume of solid waste for disposal. No Action Alternative

The no‐action alternative was not considered viable since existing wastewater discharges are untreated and do not comply with environmental regulations. The lack of wastewater treatment jeopardizes the health of residents in Delicias and surrounding areas due to their possible exposure to raw wastewater and the associated risk of disease. Existing Conditions and Project Impact – Health

Waterborne diseases are caused by pathogenic microorganisms that are transmitted as a result of inadequate wastewater disposal practices and unsafe water supplies. An individual can become ill after drinking water that has been contaminated with these organisms, eating uncooked foods that have been in contact with contaminated water or through poor hygiene habits that contribute to the dissemination of diseases by direct or indirect human contact. According to the World Health Organization Water, Sanitation and Hygiene Links to Health FACTS AND FIGURES – November 2004 edition, sanitation projects can have the following benefits to human health:

Improved sanitation reduces diarrhea morbidity by 32%.

Access to safe water and sanitation facilities and better hygiene practices can reduce morbidity from ascariasis by 29%.


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The construction of the wastewater conveyance and treatment infrastructure in Delicias will reduce health risks that may be associated with the lack of wastewater treatment. The proposed Project will allow JMAS to treat 100% of the wastewater collected in the city of Delicias in compliance with existing federal and state laws. Transboundary Effects

The effluent discharges are located over 100 miles from the Rio Grande and the international border; therefore, no transboundary impacts are anticipated. Other Local Benefits

The Project is expected to generate both permanent and temporary jobs in the border region as a result of the construction and operation of the facilities. Employment of personnel for construction activities would provide a temporary beneficial impact on local businesses and the regional economy through increased expenditure of wages for goods and services. Finally, the Project will also play an important role in making Delicias a more resilient city by mitigating risks and preparing for the future.10

2.3. FINANCIAL CRITERIA The total cost of the Project is estimated at $257.62 million pesos, which includes costs related to design, construction and equipment, supervision, financing costs and value-added taxes (VAT). TAD has requested a NADB loan for up to $80.00 million pesos to complete the financing of the Project. Table 4 presents a breakdown of total Project costs, as well as the sources of funds.

10

Resilience is defined by the Rockefeller Foundation as, "the capacity of individuals, communities, institutions, businesses and systems within a city to survive, adapt, and grow no matter what kinds of chronic stresses and acute shocks they experience."


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Table 4 PROJECT COST AND SOURCES OF FUNDS

(Millions of pesos)

Uses Amount %

Construction and supervision $205.28 79.68

Value-added taxes (VAT) 33.90 13.16

Indirect costs* 6.62 2.57

Other costs** 11.82 4.59

TOTAL $257.62 100.00

Sources Amount %

NADB loan $80.00 31.05

JMAS/JCAS 35.09 13.62

Federal funds (FONADIN) 69.17 26.85

Equity 73.36 28.48

TOTAL $257.62 100.00

* Commissions, insurance, bonds and letter of credit fees. **Bank commissions and other costs during construction.

The proposed payment mechanism is consistent with financial structures for BOT contracts implemented in Mexico. Once construction is completed and the project becomes operational, JMAS will deposit a portion of its revenue into an irrevocable trust (the “Trust”), which will serve as the source of payment for TAD’s services. The amount deposited will cover the debt service, the company’s return on investment, fixed operation and maintenance costs, and variable operation and maintenance costs. TAD will bill JMAS on a monthly basis. JMAS’ obligations under the BOT Contract will be guaranteed by a revolving, contingent and irrevocable line of credit, at all times equal to three (3) months of TAD’s billing. The State of Chihuahua and JMAS will be jointly liable for all obligations associated with the line of credit. Additionally, the line of credit will be backed by the federal tax revenue (“participaciones”) of the State of Chihuahua. NADB performed a financial and risk analysis of JMAS as the source of payment and of the State of Chihuahua as the guarantor. The cash flow projections indicate JMAS and the State of Chihuahua can undertake the financial obligations under the BOT Contract. However, the analysis indicates that JMAS needs to improve its operating results by either increasing its service revenue or reducing operating costs or both; otherwise its capacity to fund its capital investment plan may be jeopardized, and the contingent line of credit may have to be utilized. Considering the Project’s characteristics and based on the financial and risk analysis, the proposed Project is financially feasible and presents an acceptable level of risk. Therefore, NADB proposes providing a market-rate loan of up to $80.0 million pesos to Tratadora de Aguas de Delicias, S.A. de C.V.


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3. PUBLIC ACCESS TO INFORMATION

3.1. PUBLIC CONSULTATION BECC released the draft project certification and financing proposal for a 30-day public comment period beginning May 8, 2015. The following documents were made available upon request:

Preventive Report Resolution 08CI2007HD010 (West Lift Station)

Preventive Report Resolution 08CI2007HD012 (North WWTP)

Land use change authorization The 30-day public comment period ended on June 7, 2015, with no comments received.

3.2. OUTREACH ACTIVITIES In addition to the public consultation required for BECC certification, BECC conducted a media search to identify public opinion concerning the wastewater treatment project in Delicias. Links to news articles related to the Project are provided below:

http://eldiariodechihuahua.mx/El_Estado/2014-12-02/Presentan-la-cronolog%C3%ADa-de-la-construcci%C3%B3n-de-las-plantas-tratadoras/94d4d0645daab531f2c9c62c40b2e105 (Published December 2, 2014, provides an overview of the anticipated construction schedule for the Project.)

http://elpionero.com.mx/notas.pl?n=56616&s=c (Published September 29, 2013, provides an anticipated construction start date pending local legislative approval following project modifications to make it financially feasible.)

The Project was awarded to the Sponsor through a competitive bidding process in August 2008, and has been in development for more than six years. The Sponsor has been working with the stakeholders to develop a cost-effective option that addresses the problem of untreated wastewater discharges, and periodic updates have been provided to the public. Since the Project will solve the problem of untreated wastewater discharges, no community concerns about the Project have been identified. No opposition to the Project was detected in available media coverage or through the Project outreach activities. The Project Sponsor has met all public consultation requirements in order to comply with applicable environmental clearance and funding program processes.

http://eldiariodechihuahua.mx/El_Estado/2014-12-02/Presentan-la-cronolog%C3%ADa-de-la-construcci%C3%B3n-de-las-plantas-tratadoras/94d4d0645daab531f2c9c62c40b2e105



http://elpionero.com.mx/notas.pl?n=56616&s=c

Documents

WASTEWATER TREATMENT INFRASTRUCTURE IN DELICIAS, …server.cocef.org/CertProj/Eng/BD 2015-17 Delicias... · WASTEWATER TREATMENT INFRASTRUCTURE IN DELICIAS, CHIHUAHUA 1. ELIGIBILITY