World Bank Document · Santa Cruz Water SuDDil and Seweragg Proiect (Credit, 94-BO) Attached, for information, is a copy of a report entitled "Project Completion Report on Bolivia

Documnent of

The World Bank

FOR OFMICIAL USE ONLY

Report No. 8713

PROJECT COMPLETION REPORT

BOLIVIA

N. SANTA CRUZ WATER SUPPLY AND SEWERAGE PROJECT(CREDIT 948-BO)

MAY 31, 1990

Infrastructure and Energy DivisionCountry Department IIILatin America and the Caribbean Regional Office

Tis docment bas a restricted distrbution and may be used by recipients only in the performance oftheir ofcial duties. Its contents may not otherwise be disclosed witbout World Bank authorization.

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ThO WORLD SANK MOkI OMCLAL USE ONLYWashdton. DC N0433

U.S A

0sk ed omtw-4 1Clwue m Dwcw.aubatw

May 31, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on BoliviaSanta Cruz Water SuDDil and Seweragg Proiect (Credit, 94-BO)

Attached, for information, is a copy of a report entitled "Project

Completion Report on Bolivia - Santa Cruz Water Supply and Sewerage Project

(Credit 948-B0) prepared by the Latin America and the Caribbean Regional Office.

No audit of this project has been made by the Operations Evaluation Department

at this time.

Attachment

This dwcmet ban a rtg dt_ tbtiuu may bed 11by isciltn oly il the * ein o,an e of thmofficialdute In eou mayt otbiwi be diatiosd w thout Word Bank authori$m.

FOR OFFICIAL USE ONLY


BOLIVIA

SANTA CRUZ WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 948-BO)

TABLE OF CONTENTS

Page No.

Preface ............................................ iBasic Data Sheet ................................................. iiHighlights ....................................................... iv

CHAPTER I: Backgrourd .. 11.1 The Bank and the Association Lending to the Sector ..... 11.2 Sector Organization .................................... 11.3 SAGUAPAC System ........................................ 2

CHAPTER II: Project Preparation, Appraisal and Negotiation ......... 3

2.1 Origin and Rationale for the Project ................... 32.2 Project Preparation and Appraisal ...................... 32.3 Negotiations, Board Presentation and Effectiveness..... 52.4 Major Covenants of the Credit and Project Agreements ... 6

CHAPTER III: Project Execution and Costs ........................... 7

3.1 Timetable and Changes in the Project ................... 73.2 Project Costs .......................................... 93.3 Changes in Closing Date, Allocation of Credit Proceeds

and Timing of Disbursements ............................ 10

CHAPTER IV: Proiect Justification ................................. 10

4.1 Achievement of Project Objectives ...................... 104.2 Rate of Return on Investment .. 11

CHAPTER V: Financial Performance .. 115.1 Comparison of Forecast and Actual Data . . 115.2 Assets Revaluation .. 125.3 Need to Improve Future Financial Performance .. 13

CHAPTER VIs Institutional Performance ............................. 13

6.1 SAGUAPAC ............................................... 136.2 Government and CORDECRUZ . . 146.3 The Association .. 14

CHAPTER VII: Lessons to be Learned ................................ 14

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.

TABLE OF CONTENTS (CONT.)

Page No.ANNEXES

Annex 1 Major Covenants of the Credit and Project A8reements.... 162 Appraisal and Actual Timetable of Project Implementation 183 Appraisal and Forecast Project Costs . . 194 Actual and Forecast Accumulated Disbursements ........... 205 Forecast and Actual Loan Allocations . . 216 Rate of Return on Investment ............................ 227 Comparison of Forecast and Actual Income

Statements (1980-87) ....... . 238 Comparison of Forecast and Actual Sources and

Applications of Funds (1980-87) ......................... 249 Comparison of Forecast and Actual Balance

Sheets (1980-87) .. 2510 Monitoring Indicators .. 2611 Consumer Price Index .. 2712 Comments from SAGUAPAC ................................. . 28

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BOLIVIA


Preface

This is the Project Completion Report (PCR) for the Santa CruzWater Supply and Sewerage Project, for which Credit 948-BO in the amount ofUS$ 9.0 million was approved on July 12, 1979. The Credit was closed onJune 30, 1986, three years behind schedule. It was fully disbursed and thelast disbursement was on February 3, 1987.

The PCR was prepared by the Infrastructure and Energy Division,Country Department III, of Latin America and the Caribbean Regional Officeand is based, inter alia, on the Staff Appraisal Report; the Credit,Guarantee, and Project Agreements; supervision reports; a final reportprepared by the Cooperativa de Servicios P6blicos Santa Cruz Limitada(SAGUAPAC); correspondence between the Bank and SAGUAPAC; and internal Bankmemoranda.

The draft PCR was read by the Operations Evaluation Department(OED), and sent to the Borrower for comments on February 26, 1990. Thecomments from SAGUAPAC, dated April 20, 1990, have been incorporated intothe text of the PCR and also set forth in Annex 12.

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BOLIVIA

SANTA CRUZ WATER SUPPLY AND SEWERACE PROJECT (CREDIT 948-BO)

BASIC DATA SNEET

KEY PROJECT DATAAppraisal Actual

Total Proiect Cost(US5 million equivalent)(Excluding finance charges) 16.0 20.4Cost overrun (or underrun) 27.52 lLoan Amount(USS million equivalent)Disbursed (as of April 30, 1989) 9.0 9.0Cancelled (as of April 30, 1989) None NoneRepaid (as of April 30, 1989) 0.0 0.0Outstanding (as of April 30, 1989) 9.0 9.0

Date Physical CoMponents ComPleted 12182 9/87

Return on Investment 122 4.92

Institutional Performance Good Good

CUMULATIVE ESTIN&TED AND ACTUAL DISSURSDIZNTS

(US$ Million)

As of June 30, 1980 1981 1982 1983 1984 1985 1986 1987

(i) Appraisal Estimate 2.1 5.8 8.2 9.0 9.0 9.0 9.0 9.0(ii) Actual 0.1 1.6 2.7 3.8 4.1 5.7 7.6 9.0(iii) (ii) as 2 of (i) 5 28 33 42 46 63 84 100

1/ The costs are not fully comparable because some Project components wereeliminated and other added to the Project. A comparison made betweenthe components that were planned and implemented shows a cost overrunof 13.41 (para. 3.2.1).

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STAFF INPUT(Staff Weeks)

Bank FY 1978-79 1980 1981 1982 1983 1984 1985 1986 1987 1988 TotalPreappraisal 18.0 18.0Appraisal 24.9 24.9Negotiations 18.0 0.4 18.4Supervisions _ 9.7 11.2 11.4 9.5 9.0 7.4 10.7 2.6 0.1 71.6

60.9 10.1 11.2 11.4 9.5 9.0 7.4 10.7 2.6 0.1 132.9

MISSION DATA

Month/ No. of No. of Staff Date ofType of Mission Year Weeks Persons Weeks Report

Preparation 5/78 1 1 1 1Appraisal 12/78 2 4 8 3/7/792Supervision I 7/79 1 2 2 10/26/79Supervision II 1/80 1 2 2 2/15180Supervision III 8/80 1 2 2 10/21/80Supervision IV 4/81 1 2 2 7/17/81Supervision V 2/82 1 2 2 4/5/82Supervision VI 3/83 1 2 2 5/10/83Supervision VII 10/83 1.6 2 3.2 12/2/83Supervision VIII 9/84 1 2 2 11/27/84Supervision IX 11/85 1.6 2 3.2 1/15/86Supervision X 5/86 0.6 2 1.2 6/13/86

OTHER PROJECT DATAAppraisal Actual

First mention in files 3/28/78Negotiations 5/7-11/79Board Approval Date 7/12/79Loan Agreement Date 7/27179Effectiveness Date 10/29/79Closing Date 6/30/83 6/30/86Borrower: Republic of BoliviaExecuting Agency: SAGUAPACFiscal Year of the Borrower: CalendarFollow-on Project: None

CURRENCY EXCHANGE RATE3

1979 1980 1981 1982 1983 1984 1985 1986 1987

At year-end 20.0 24.5 24.5 197.9 504.9 8783.0 1692000 1923000 2.21

1/ Report was not available in the Project file.

2/ Yellow Cover issuance.

3/ Pesos bolivianos ($b) per USS through 1986, Bolivianos (BS) per US$thereafter. The Boliviano was created in January 1987, equivalent to1,000,000 pesos (Sb).

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BOLIVIA

S TA CRUZ WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 948-BO)

Highlights

1. Credit 948-BO (US$ 9 million equivalent) helped to finance theexpansior of the water supply and sewerage system of Santa Cruz. Watersupply works included: a) the construction of two new wells and pumpingequipment, a storage tank of 4,000 m3 and 173 km of distribution network;b) the acquisition of 258 km of pipelines, 30,000 water meters andcommunication equipment; and c) the installation of 16,000 new houseconnections. The sewerage works included: a) the construction of anoxidation pond, a pumping station, 2.2 km of main effluent channel, 2 km oftrunk sewer and 97 km of sewer lines and laterals; and b) the installationof 7,500 new house connections. The Project also included the acquisitionof 24 vehicles, and technical, administrative and management assistancecompor.ents.

2. The majority of the Project's components were completed inSeptember 1987, or about five years later than the target completion date.Due to this delay, the Project was partially successful in meeting itsobjectives of: a) providing water to an additional 108,000 inhabitants by1983 and increasing the population served from 822 in 1978 to 852 in 1983;b) providing sanitary sewer services for an additional 66,100 inhabitantsby 1983 and thus increasing the population served from 33Z in 1978 to 402in 1983; c) assuring a more even water dibtribution and pressure, and d)improving the management efficiency and financial position of SAGUAPAC.

3. At the end of 1987, there were approximately 128,000 and 60,000additional inhabitants with water supply and sewerage service,respectively, which can be attributed to the Project. The additionalinhabitants with water service were higher and the additional inhabitantswith sewerage service were somewhat lower than the targets established inthe SAR for 1983, which was the year expected for full operation of theProject. However, at the end of 1987, the total population with access towater and sewerage service had declined to 712 and 292, respectively. Thisdecline in service coverage was mainly caused by the higlh increase inpopulation experienced by Santa Cruz in the period 1978-87. The otherobjectives of the Project achieved, were the following: the water pressurehas improved, the area serviced by SAGUAPAC has water supply 24 hours aday, management efficiency has improved substantially and the financialposition of SAGUAPAC has started to get better since 1986.

4. The main reasons for delay was the hyperinflation and thedifficult economic problems faced by Bolivia in the period 1982-1985. Thesefacts seriously affected the SAGUAPAC's finances, because, due to a largeextent to these problems the costs of the Project, the operating expensesand the accounts receivable increased substantially, while tariff

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adjustments did not keep pace with the rise in operating costs. However,as was stated above, since 1986 the finances and the operating efficiencyof SAGUAPAC have improved. In 1987, the rate of return on fixed assets inoperation was the first positive one in the period (2.02), accountsreceivable were reduced to 97 days of sales, the operating ratio was 762and water losses, 27Z. This trend of improvements continued in 1988.

S. The Project faced daunting problems, because in addition tohyperinflation and country economic problems, SAGUAPAC confronted thesuspension of disbursements from the Credit account for about 13 months(para. 3.1.5) and a flood of the River Pirai that destroyed part of theworks of the oxidation pond that was under construction (para. 3.1.4). Evenunder these circumstances, the Project was completed and is operatingsatisfactorily. The problems were overcome due in large part to the skilland dedication of SAGUAPAC's management and staff, and the activecooperation of the Corporacion Regional de Desarrollo de Santa Cruz(CORDECRUZ).


BOLIVIA


I - BACKGROUND

1.1 The Bank and the Association Lending to the Sector

1.1.1 The Bank and the Association have made two lending operations tothe water supply and sewerage sector to Bolivia. The first was Loan1324-BO (US$11.5 million, 1976), which helped to finance a project designedto improve and extend water supply in 70 rural communities and two cities(Potosi and Sucre), and to extend sewerage in the city of Sucre. TheProject Completion Report for this Project was issued in September 1987,and indicated that the Project was successful in expanding and improvingwater supply services in rural areas, although there was a completion delayof about f:.ve years, the components of two cities (Potosi and Sucre) werenever implemented and the institutional objectives were not achieved. Thesecond operation, Credit 948-BO (US$9.0 million, 1979), which is thesubject of this report, was made to the Government of Bolivia, which relentthe proceeds of the Credit to SAGUAPAC. It also has to be mentioned that inAugust 1987, the Association approved a Project Preparation Facility in theamount of US$750,000, to help the Republic of Bolivia in the preparation ofthe Major Cities Water Supply and Sewerage Rehabilitation r oject. The aimof this project is to improve and expand the water and sewerage services inLa Paz, Santa Cruz and Cochabamba, and it is expected to be appraised inthe last quarter of 1989.

1.2 Sector Organization

1.2.1 The water and sanitation sector in Bolivia is complex, comprisingmany institutions. At the central government level, three ministries,Planning (MP), Urban Affairs and Housing (MUV) and Health (MH), shareresponsibilities for formulating sector policies. Although not specializedin the sector, MP is the effective head of the sector overall, as itcoordinates all external and government financing to the sector andendorses tariff adjustments. The MUV is responsible for the oversight ofthe urban sub-sector, especially for approving urban water and seweragetariffs, subject to consultation with the MP. The MH is responsible forformulating sector health and sanitation policies. Autonomous companies areresponsible for providing water and sewerage services and carrying outinvestments in the nine departmental capitals of Bolivia. These companiesare private cooperatives in Santa Cruz and Tarija, and are semi-autonomouswater utilities owned by the municipalities in the other seven Departmentalcapitals, including La Paz. The Corporacion de Agua Potable y Saneamiento(CORPAGUAS), a department of the 1NUV with a staff of about 250, isresponsible for carrying out investments and overseeing the operation ofthe water systems of towns of over 2,000 people. The Direcci6n Nacional deSaneamiento Ambiental. (DSA), a Department of the MH with a staff of about

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400, is responsible for carrying out water and sanitation investments andoverseeing the provision of services for communities of less than 2,000people and for the dispersed rural population.

1.3 SAGUAPAC System

1.3.1 At the time of the appraisal, SAGUAPAC was a decentralized publicutility under the jurisdiction of the MUV. In August 1979, it became aprivate cooperative with the same responsibilities of providing water andsewerage services to the city of Santa Cruz. It is also in charge of streetpaving activity, which is financed by contributions from the Municipalityof Santa Cruz and CORDECRUZ. The Association agreed with this change inlegal status. SAGUAPAC is owned and ultimately controlled by all the usersof services, and governed by a Board composed of members elected among andby the members of the cooperative. The decision to become a cooperative wasinfluenced by the fact that Santa Cruz has been successful in ha..dlingother publ c services (electricity and telephones) with this type ofsociety.

1.3.2 Santa Cruz (departmental capital) is built in four concentricarings", but in recent years the population has settled beyond the fourthring. The area populated is estimated at about 14,000 ha. In 1987, the cityhad a population of 577,000 inhabitants, which grew at an average rate of8.62 p.a. in the period 1979-87. This fast growth was produced by largeunemployment in other areas of the country and by the overexpectationcreated by the oil, gas and agricultural development. The populationlocated within the four inner rings of the city obtains water of very goodquality from house connections (almost all metered). The remainingpopulation obtains water mainly from shallow wells, which are oftencontaminated by latrini on account of the high water table. Water andsewerage service cover&ae in 1987 was about 712 and 29Z, respectively,which were below the targets expected at appraisal (paras. 4.1.1 and4.1.2).

1.3.3 Santa Cruz obtains its water supply from fourteen wells situatedin the north and south of the city. The average depth of the wells is 300 mand the average combined production capacity is 1400 lps (compared to 790lps at appraisal). From the wells the water is pumped into undergroundstorage tanks of 14,000 m3. Here, it is chlorinated and pumped into thedistribution networks, of about 800 km. The network consists of pipe of 50mm to 500 mm of different materials (PVC, asbestos-cement and ductileiron). As of January 1989, the number of connections was 53,000approximately.

1.3.4 Santa Cruz has separate sanitary ani storm sewer systems. Thenetwork has about 350 km of length, with diameter between 150 mm and 1200mm. Most of the sanitary sewage is conducted by gravity; however, becauseof the topography some of the sewage has to be pumped through three pumpingstations and transported to a treatment plant. Once treated, the effluentis discharged into the River Pirai. Sewerage service level is very low.People not connected to the sewerage system have bore-hole latrines, septictanks or no service at all.

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II - PROJECT PREPARATION, APPRAISAL AND NEGOTIATION

2.1 Origin and Rationale for the Project

2.1.1 The Project had its origin in discussions held in June 1978between SAGUAPAC and the Association staff during the supervision of Loan1324-BO. This mission was undertaken to study the request of the Ministryof Urban Affairs and Housing (MUV) to transfer funds allocated to thecities of Sucre and Potosi to SAGUAPAC. After studying the matter, theAssociation and the Bolivian Government agreed that it would be preferableto consider a new and separate loan. The Project was selected on the basisof the urgent needs to improve water and sewerage service in Santa Cruz; aGovernment decision not to subsidize public ser ices (including watersupply and sewerage in the city of Santa Cruz), and the advance stage ofproject preparation. The aim of the Project was to increase the servicelevels in Santa Cru,. and extend services to many of the urban poor, supportthe establishment of sound tariffs that would enable SAGUAPAC to becomefinancially independent, ard provide technical assistance and training tomake its operation and administration more efficient.

2.2 Project Preparation and Appraisal

2.2.1 The Project was prepared by SAGUAPAC staff. The sewerage part wasbased on the first stage of a master plan prepared by a consultant. Thedetailed engineering and bidding documents were done also by SAGUAPACstaff. However, to review the final design SAGUAPAC proposed to theAssociation the use of consultants, which the Association accepted tofinance from the Credit proceeds (para. 2.2.4).

2.2.2 Based on the work of the June 1978 supervision mission for Loan1324-BO (para 2.1.1), the Association decided to send the appraisal missionin December 1978. The main issues raised by the mission were the need to:a) assure the contributions of SAGUAPAC and CORDECRUZ to the Project ofapproximately US$3.9 and US$2.5 million,l respectively; b) undertakeinstitutional improvement and hire technical and management consultants forthe implementation of the Project, and c) solve the problem produced by thehigh cost of household plumbing (connection to the system and the interiorplumbing), which often resulted in delays in achieving project objectivesbecause many low-income households could not connect to the system becauseof the capital costs of the installation. 2 To deal with these issues theAssociation requested SAGUAPAC and the Government, before Creditnegotiations, to approve tariff increases and assure the contributions ofCORDECRUZ to the Project (para. 2.3.1), and as conditions ofeffectiveness, to put into effect the tariff increases, to create aplanning and an engineering unit and to enter into an agreement withCORDECRUZ by which the latter would provide funds for the Project (para.2.3.4). To solve the problem of high costs of house plumbing, the CreditAgreement included a provision for the creation of a revolving fund to

I/ Excluding US$0.6 million of contributions of land, materials andequipment made by CORDECRUZ at the beginning of Project implementation.

2/ At the time of appraisal it was estimated that the cost of labor andmaterials for the interior installation (basin, toilet and shower), andwater and sewer pipelines to the street main pipes was about US$450.

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finance connections of low-income households (para. 2.3.3). The fund wouldpermit SAGUAPAC to finance the users' installation of their plumbing andlot lines for the water and sewer system. The loans would be made to low-income families at a minimum of 10 years term and a rate of interest of 9Z.The works would be done by local plumbers, contracted by the owner, andinspected by SAGUAPAC. During Project implementation, the fund would befinanced by an initial contribution of US$50,000 from SAGUAPAC, theperiodic reimbursements from the Credit of the amounts spent by SAGUAPACfor groups of small contracts, and the repayments of the users, which wouldbe used as a revolving fund to finance additional similar facilities. Afterthe grace period of the Subsidiary Loan Agreement, another source offinancing for the fund would be the amounts withheld by SAGUAPAC on eachpayment of interest as a grant from the Government (para.2.3.2).

2.2.3 As defined in the credit agreements, the Santa Cruz Water Supplyand Sewerage Project consisted of the following components:

A- Water Supply System:

1) Completion of the Northeast well field. This includedinstallation of a deep well pump, pipelines, a ground storagetank, a pumping station of 300 hp, chlorinator and powerSUPt-*;

2) construction of two reinforced concrete storage tanks with acombined capacity of 8,000 m3 and

3) installation of about 200 km of distribution lines and about20,000 metered connections.

B- Sanitary Sewer Systems

1) purchase of land for the North sewage treatment plan;

2) construction of the North sewage treatment plant with about 25ha of oxidation ponds;

3) construction of the North sewage pumping station with acapacity of about 200 hp power supply and bypass to the RioPirai;

4) construction of the North Emissary of reinforced concrete about855 m in length and 1.5 m in diameter;

5) construction of a trunk sewer of plain or reinforced concrete600 mm and 800 mm in diameter and about 4,450 m in length; and

6) installation of sewer lines and laterals of about 60 km inlength 150 to 600 mm in diameter of clay andlor plain concretepipe and about 10,000 new house connections.

C- In-house Plumbin8 and Lot Lines

1) setting up of a revolving fund to finance the installation ofwater and sewer lot lines and in-house plumbing facilities.

D- Administration and Operation

1) purchase of data processing equipment;

2) purchase and installation of laboratory and communicationsequipment; and

3) purch - of vehicles for operation and maintenance.

E- Tech -1b Assistance

1) hiring of consultants to study and determine the next source ofwater after 1986;

2) hiring of consultants to assist SAGUAPAC to improve itsorganization and management, develop its engineering andplanning divisions;

4) training and upgrading of personnel, and

5) hiring of consulting engineers for the supervision of theProject.

2.2.4 The appraisal mission estimated that both the water supply and thesewerage components of the Project were the least-cost solutions. Theproposed ground water solutions were the closest ones to Santa Cruz andrequired no treatment other than chlorination. Thus, both capital andrecurrent ̂osts were lower than other feasible alternatives. In the sameway, the technical solution proposed for the treatment of sewage effluents(oxidation ponds) was the most economical one, since it required simpleconstruction techniques and lower operating costs. The appraisal missionestimated the cost of the Project at US$ 16.0 million (excluding interestduring construction), with foreign and local costs estimated at US$6.25million and US$9.75 million, respectively. The Project was estimated to befinanced as follows Association's Credit, US$9.0 million; SAGUAPAC, US$3.9million and CORDECRUZ, US$3.1 million. The Project included a retroactivefinancing of US$ 300,000 for consultant services for the review of th-final Project design (US$50,000) and for the purchase of a computer (US$250,000).

2.3 Negotiations, Board Presentation and Effectiveness

2.3.1 It was agx?ed that before negotiations SAGUAPAC woulds a) approvea revenue package wPich included a gradual increase in tariffs per cubicmeter of water billed from $b3.50 as of mid-1979 to 0b5.00 by June 30,1980; b) provide the Bank with a draft financing agreement wherebyCORDECRUZ would commit itself to support the Project through the provisionof not less than US$600,000 per annum, up to a total of US$2.5 million;3

c) confirmed that CORDECRUZ would continue serving the Inter-AmericanDevelopment Bank (IDB) loan, that was contracted by the former institutionin charge of the water supply and sewerage service in Santa Cruz, and thatwas used to finance part of the facilities that SAGUAPAC now operates.After all these conditions were fulfilled, the Association invited the

31 See footnote 1/ on page 3.

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Government and SAGUAPAC for negotiations, which took place May 7-11, 1979.

2.3.2 During negotiation some changes were introduced to the draftCredit Agreement, includings a) a change in the relending terms of theSubsidiary Loan Agreement, adding one year to the grace period (up to 5years), establishing an interest charge of 0.75% per annum during the graceperiod and 7.92 thereafter; providing, however, that SAGUAPAC wouldwithhold 372 of each payment of interest as a grant from the Government inorder to capitalize the fund for in-house plumbing after the grace period;and b) a reduction in the interest rate on the revolving fund for in-houseplumbing from 12Z to 9% on the unpaid balance and also to denominate theloans from the fund in US dollars instead of bolivian pesos.

2.3.3 Negotiations were substantially completed during the meeting heldin Washington; however there was one issue that required more time to beresolved. This was related to the terms and conditions of the revolvingfund for in-house plumbing (para 2.3.2), and was stirred by the concern ofthe senior administration of the Association that the agreement made duringnegotiations, that the beneficiaries of the revolving fund would bear theexchange risk, would defeat the intention that the funds be used by low-income households. Due to this concern, it was necessary to renegotiate thecorresponding section of the Credit Agreement with the Government andSAGUAPAC, which agreed with the Association's proposition that the fund bedenominated in bolivian pesos and earn an interest rate of 12X per annum.The rate of interest would be revised from time to time to maintain inconstant terms the US-dollar value of the proceeds of the Credit used bythe fund. Once this point was solved, the Board approved the Credit of US$9million to the Republic of Bolivia. The term was 50 years including 10years of grace and a service charge of 0.752 per annum. June 30, 1983 wasestablished as Credit Closing Date.

2.3.4 Conditions of effectiveness includedt a) to hire satisfactoryconsultants to supervise the Project and to develop modern managementsystems and procedures; b) to put into effect tariffs to obtain an averagerevenue for water and sewerage services not less than $3.50 (US$0.175) perm3 billed, c) to create a planning and an engineering unit with functionssatisfactory to the Association and, d) to sign an agreement by whichCORDECRUZ would provide SAGUAPAC funds for the Project in an amountequivalent to no less than US$2,500,0004 . The Credit became effective onOctober 29, 1979, one month later than estimated at appraisal.

2.4 Major Covenants of the Credit and Project Agreements

2.4.1 Annex 1 includes the major covenants of the Credit and ProjectAgreements. The Government and SAGUAPAC generally complied with thecovenants, except regarding the rate of return, level of accountsreceivable and losses. This was basically due to the hyperinflation thatBolivia suffered from 1982 to 1985 (Annex 11). But even under thesecircumstances, SAGUAPAC made considerable efforts to comply with thecovenants to the extent possible, and to continue with Project execution.

4/ See footnote 1/ on page 3.

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III - PROJECT EXECUTION AND COST

3.1 Timetable and Changes in the Project

3.1.1 Implementation of the Project started in October 1979 and ended inSeptember 1987, or five years later than the original completion date.Annex 2 compares actual and forecast completion dates by principal Projectcomponents.

3.1.2 The main reason for late Project completion was hyperinflation.This situation seriously affected the finances of SAGUAPAC and limited itscapacity to provide counterpart funds for the Project. Likewise, due to thecountry economic problems, Bolivia failed to service its debt with the Bankand the Association, and for this reason they suspended disbursements ofall loans to the country on two occasions (para. 3.1.5), and consequentlythe execution of the Project was slow during these periods.

3.1.3 The first two years of Project execution (1980-1981) were quitenormal. SAGUAPAC undertook in a satisfactory manner the final design andbidding process for the majority of the materials, equipment and civilworks and initiated the construction process. As of December 1981, 57.3 kmsof the water pipelines had been installed in 38 neighborhoods or 292 of theestimated target. The revolving fund for in-house connections was operatingrelatively well and a total of 1,255 connections of water and sewerage hadbeen made.

3.1.4 The period 1982-1985 was characterized by hyperinflation. In May1982, the Government, through Decree No. 18948, established a monthlyadjustment of costs for construction works in line with inflation. Theapplication of this adjustment increased the costs of the works by 10 timesas of December 1983 and 312 times as of December 1984, both incrementscompared to the costs existing in May 1982. There were also technicalproblems that hindered the development of the Project. One was the sewerageworks in three neighborhoods (Unidad Vecinal --UV--30,31 and 33). Therewere soil stabilization difficulties because of the high water table. Thisrequired work to stop from January to June 1983 to make adjustment in thedesign, which increased the costs. The other problem was that in March1983, the Pirai River flooded part of the city of Santa Cruz. The floodalso caused damage to the partially completed sewerage treatment pond. Theworks were approximately 582 completed as of March 1983, and the damagerepresented about 252 of the completed works. Due to these events, theimplementation of the Project continued at a slow pace, and in some cases,it stopped.

3.1.5 In addition to the problems mentioned above, SAGUAPAC faced thesuspension of disbursements from the Association's Credit on two occasions.The first was from January to August of 1984, and the second one, from Julyto December of 1985. The suspension was applied to all the lendingoperations of the Bank and the Association to Bolivia and it was mainly dueto failure by the Government to service the debt. It has to be mentionedthat, even under these difficult circumstances, SAGUAPAC continued with theimplementation of the Project, due to imaginative actions of its staff andan increase in CORDECRUZ's contribution to the Project, which reached US$ 6million compared to US$ 3.1 million estimated at appraisal (para. 3.2.2).

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3.1.6 On its part, the Association was flexible and agreed to theSAGUAPAC's request to create a Special Account to expedite thedisbursements of the Credit and counteract the problem created by the factthat, because the rate of devaluation was accelerated, and there was a timelag of two to three months between the payments to the contractors of civilworks and the disbursements from the Credit account, SAGUAPAC lost money onthese transactions.5 The Association also agreed to increase thedisbursement percentage for civil work from 352 to 602, retroactive toJanuary 1, 1986, on the grounds that the indirect foreign exchangeexpenditures for civil works exceeded the 352 estimated at appraisal due toaccelerated increases in foreign costs and drastic devaluation of the peso.

3.1.7 At the end of 1987. the majority of the Project components hadbeen finished and the facilities were operating satisfactorily. Theprincipal components not finished were: a concrete storage tank withcapacity of 4,000 m3, which was eliminated from the Project; a treatmentplant, which was reduced in area from 25 ha to 9 ha; and the in-houseconnections financed with the revolving fund, which was reduced to assistonly 2,734 households, instead of 8,000 estimated at appraisal. The mainreason for not finishing these components was that SAGUAPAC identified,with the Association's agreement, other works of high priority not includedin the original Project (para.3.1.8). In the case of the revolving fund forin-house connections, it has to be pointed out that because of theAssociation's recommendation (para.3.2.3), the loans to the customers wereestablished in pesos with the conditions to adjust the rate of interestperiodically. This was a reasonable arrangement for normal circumstances,but with the hyperinflation, this mechanism did not work, as the funds lentby SAGUAPAC lost practically all their value. SAGUAPAC stopped thefunctioning of the fund in 1984. However, in 1988, SAGUAPAC created amechanism for financing household connections through short-term loansdenominated in US dollar. This has been functioning adequately, except thatthe short term of the loans deters some low-income users from installingwater and sewerage service. It is expected that this situation will improvewhen the fund for in-house connections starts to receive the grant from theGovernment derived from the 372 of the interest on the Subsidiary LoanAgreement that SAGUAPAC would withhold (para. 2.3.2) beginning 1989.

3.1.8 With the elimination or reduction of some of the Projectcomponents and an increase in counterpart funds from CORDECRUZ, it waspossible to add the acquisition of equipment and the construction of twowells not included in the original Project. The construction of these wellswas included in the master plan study carried out as part of the technicalcomponent and was consistent with the appraised objectives of the Project.There were also some quantities added to the original Project components,the main ones being the following: acquisition of 58 kms of water pipes,10,000 water meters, and materials and accessories for about 5,100residential connections. The reason for these additions was that SAGUAPACconsidered, and the Association agreed, that the increment in theproduction of water and the acquisition and installation of distributionlines for water supply had a high priority, due to the accelerated growthof population experienced during Project implementation (para. 1.3.2).

5/ The Association's mission carried out in December 1985, estimated thatthrough 1985, SAGUAPAC lost about US$400,000 due to this factor.

3.1.9 As part of the technical assistance component, SAGUAPAC, with thehelp of consultants, completed the following studiest a) a revised masterplan to define the next water supply project, which the Association foundsatisfactory; b) a study of the utility's organization, with thedescription of the functions and procedures of the different departments(this study also gave the basis for strengthening the internal auditing,data processing and for creating the planning unit); c) a study ofaccounting, internal control and budgeting that helped SAGUAPACsignificantly improve the keeping accounting records and preparing oftimely reports for financial management; d) a study to develop a systemand methodology for calculating fixed charges to recover part of theinvestments, which led to the creation of the 202 surcharge on water andsewerage monthly bills that SAGUAPAC now applies, and e) preparation ofmanuals and design of procedures for customer services, meter reading,ratification and distribution of bills, installation of new connections,determination of connection fees, handling of customers' complaints, andpreparation of bidding and contract documents. SAGUAPAC also carried out atraining program, under which eight of its staff attended degreeprogram/courses/seminars/visits in urban planning, marketing, lossescontrol, engineering economics, and business administration. TheAssociation's staff who supervised the Project did not present an opinionabout the result of this program, but it seems that it was not completelysuccessful, because all the eight staff who received the training, exceptone, left SAGUAPAC. This did not affect the operation of the Companybecause the staff who left were substituted by staff with equivalentqualifications. The main reason for this high turn-over can be attributedto the low salaries that prevailed in most of the implementation period, asituation that has improved in recent years. As this seems to be a commonproblem in training programs, the Association should continue payingattention to it in order to find ways that can be recommended to theborrowers to minimize it.6

3.2 Project Costs

3.2.1 The total cost of the Project, including additional worksundertaken, amounted to US$ 20.4 million (Annex 3), as compared with theappraisal estimate of US$ 16 million. However, because of changes in theProject (para. 3.1.8), the actual cost of the Project components, defipedat appraisal and implemented, amounted to US$ 13.5 million compared to anappraisal estimate of US$11.9 million (13.4t cost overrun). The increase incosts seems reasonable taken into account the longer construction periodand the hyperinflation.

3.2.2 The detailed sources of financing are presented below:

6/ Periodical revision of salaries and conditions of work, andauthorization to the staff to have some short-term consultantassignments outside the firm, are some of the options that could beexplored.

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Appraisal and Actual Sources of Project Financing(in million of US$)

Appraisal Actual

IDA 9.00 9.00

CORDECRUZContributions 3.10 6.02Loans 0.00 1.50

SAGUAPAC 3.90 4.1116.00 20.63

3.3 Changes in Closing Date, Allocation of Credit Proceeds and Timingof Disbursements

3.3.1 The closing date was extended five times, the last time to June30, 1986, and upon the request of SAGUAPAC, the Association agreed to afinal disbursement date at December 31, 1986, in order to allow time tosettle the pending bills related to civil works of the sewerage components.Annexes 4 and 5 compare actual and forecast accumulated disbursements andallocation of Credit proceeds by categories.

IV - PROJECT JUSTIFICATION

4.1 Achievement of Project Objectives

4.1.1 The Project aimed to: a) provide water to an additional 108,000inhabitants by 1983, increasing the population served from 82Z in 1978 to85Z in 1983; b) provide sanitary sewer services for an additional 66,100inhabitants by 1983, t-aus increasing the population served from 33Z in 1978to 40Z in 1983; c) assure a more even water distribution and pressure, andd) improve the management efficiency and financial position of SAGUAPAC.

4.1.2 The Project was partially successful in meeting its objectives.Even though at the end of 1987 the population with water and sewerageservices had increased by 128,000 and 60,000 inhabitants, respectively(both figures close to the number of inhabitants to be served establishedin the SAR), these targets were only achieved by the end of 1987, i.e. witha delay of about four years. By that time, the percentage of populationwith access to water had declined to about 712, and with access tosewerage, to 291; both percentages were lower than the targets of the SAR.This decline in service coverage was due to the high increase in populationexperienced by Santa Cruz in the period (about 8.62) and lower number ofconnections accomplished as of the end of 1987 (paras. 1.3.2 and 4.2.1).The other objectives of the Project achieved were the following: the waterpressure has improved, water service is provided around the clock,management efficiency has improved substantially and the financial positionof SAGUAPAC has started to improve since 1986.

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4.2 Rate of Return on Investment

4.2.1 Annex 6 shows a reestimation of the rate of return on investmentof 4.92, compared with 122 at appraisal. 7 The reason for this differencecan be attributed to higher project costs (para. 3.2.1). lower sales andhigher operating costs than estimated at appraisal. The lower number ofconnections is one of the major factors for explaining the low rate ofreturn. The number of water and sewerage connections in 1987 were 51,000and 21,000, respectively. These data on connections have been used toestimate the benefits during the life of the Project, and they seem to below, if it is taken into account that the targets of the SAR for 1987 werehigher than these figures.8 SAGUAPAC's staff believe that the Projectallowed the construction of all the basic facilities and that withrelatively small investment in distribution lines, about 10,000 newconnections could be installed in a short term. This undoubtedly wouldincrease the rate of return of the Project. There was no informationreadily available to calculate the rate of return with this scenario. Italso has to be borne in mind that the rate of return has been estimatedusing the tariffs as a proxy of economic benefits of the Project. Since allbenefits due to improved sanitation and nutrition are not fully reflectedin tariffs, the resulting rates of return understate the economic benefitsof the Project.

V - FINANCIAL PERFORMANCE

5.1 Comparison of Forecast and Actual Data

5.1.1 Annexes 7 through 10 compare the appraisal and actual forecastincome statements, sources and applications of funds, balance sheets andperformance indicators of SAGUAPAC for the period 1980-1987. SAGUAPAC'sfinancial performance during the period was inadequate, mainly due tohyperinflation and the high pace of devaluation of that period. The keyfinancial indicators deteriorated (Annex 10). The rate of return on fixedrevalued assets in service was negative during all the construction period(1980-1987), except in 1987, which seems to have been a turning point inthe financial performance of the utility. The operating ratio was over 1002during 1980-85, higher than the appraisal estimate. This ratio was 97Z in1986 and 762 in 1987. This last value was close to the level estimated inthe SAR for 1983.

5.1.2 SAGUAPAC's average combined revenues from water a..d seweragecharges, at mid-1979 prices, remained at about the same level of Sb3-1 perm3 billed from 1980 to 1983. Thereafter, it began to increase, reaching$b6.0 per m3 billed in 1987. This represented an average annual increase of102 in real terms for 1980-87. However, average operating costs were higherthat average revenues, and also increased at a high rate (7.4Z p.a), from$b4.5 per m3 billed in 1980 to $b7.4 per m3 billed in 1987. This structural

71 It was not possible to estimate the rate of return following the exactmethodology employed in the appraisal report, because some of theassumptions utilized were not explicitly stated. Nonetheless, an efforthas been made to follow to the extent possible an equivalentmethodology.

8I The connections estimated in the SAR for 1987, weret 65,527 for waterand 30,031 for sewerage.

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imbalance gave SAGUAPAC a negative operating income throughout 1980-87.with revenues insufficient to cover operating costs. In recent years theutility has been improving its financial performance by continuing toincrease the tariffs in real terms while adjusting the operating costs at arate slightly lower than inflation. In 1986 and 1987, for instance,SAGUAPAC was able to cover its cash operating costs with its operatingrevenues. SAGUAPAC's income statements for past selected years aresummarized below:

Summary of Income Statements(in million of $b pesos)

1980 1983 1986 1987RevenuesWater 40 328 5,046,339 7,585,000Sewerage 19 168 2,765,037 4,049,000Other 5 3 22,894 40,000Total Revenues 64 499 7,834,270 11,674,000

Operating CostsO & M and other 65 732 7,607,445 8,868,000Depreciation 20 57 4,754,630 5,521,000Total Operating costs 85 789 12,362,075 14,389,000

Net Income -21 -290 -4,527,805 -2,715,000Net Income (Excl. Depreciation) - 1 -233 226,825 2,806,000Exchange Rate 24.5 504.9 1,920,000 2,210,000($b per USS)

Operating Ratio9 100 147 97 76

5.1.3 Two other factors that contributed to the financial constraints ofSAGUAPAC were the high level of accounts receivable and somewhat high levelof system losses. The accounts receivable were high throughout the Projectimplementation period, increasing from 133 days of sales in 1980 to 259days in 1984, thereafter beginning a declining trend reaching 97 days atthe end of 1987. This was a result of the extreme dedication that SAGUAPAChas devoted to improve its operating efficiency. However, the level ofaccounts receivable of 1987 was still higher than the SAR's target of 60days. The system losses kept an average level of about 302 during theperiod and were generally above the estimated target of the SAR. In 1987the losses were 27Z, similar to the target established in the SAR for 1986,which was the last year of the financial forecast.

5.2 Assets Revaluation

5.2.1 Section 4.03 of the Project Agreement required SAGUAPAC torevalue its assets by the end of each fiscal year, beginning from 1979. TheAssociation was generally unsatisfied with the assets revaluation made bySAGUAPAC, because it was normally lower than the rate of inflation.However, this situation improved in 1985 when the revaluation was based on

9/ Ratio of cash operating expenses to total revenues (definition used inSAR). Some differences that appear when calculating this ratio are dueto rounding off.

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a technical assessment prepared by consultants. In 1986 and 1987, theassets revaluation was done using the index of variation in the exchangerate at the beginning and at the end of the year. which the Associationconsidered satisfactory.

5.3. Need to Improve Future Financial Performance

5.3.1 The need to continue improving SAGUAPAC's financial performance isgreater than in the past, because the population has increasedsubstantially in the recent years and service coverage has declined. Forthese reasons, SAGUAPAC needs to expand the water and sewerage service,which will demand a large amount of resources as counterpart funds to theexternal loans that SAGUAPAC is seeking. It is also necessary to beginamortizing the Subsidiary Loan Agreement with the Government in October1989. The original grace period of this loan ended in July 1984, but theGovernment, with the Association's agreement, extended it to August 1,1987. The extension of the grace period was done because the Governmentwanted to compensate SAGUAPAC for various external problems, such ashyperinflation and the suspension in the Credit disbursements, whichdelayed the Project execution and affected SAGUAPAC's finances. For thesame reasons, a second extension in the grace period to April 1, 1988, wasagreed in July 1987. SAGUAPAC has asked the Government for a thirdextension of the grace period to allow it to begin repaying the SubsidiaryLoan Agreement in October 1989. The Government is studying this request.

5.3.2 According to recent Bank reports, SAGUAPAC's present water andsewerage tariffs do reflect long-run marginal cost, and are affordable bythe urban poorl with minimum cross-subsidy. Therefore, future improvementin SAGUAPAC's finances will most likely come from increases in efficiencyand the volume of sales.

VI - INSTITUTIONAL PERFORMANCE

6.1 SAGUAPAC

6.1.1 Throughout the Project's implementation SAGUAPAC made substantialimprovement in its organization and has evolved into a well-managed utilitywith high-quality staff. It operates the water supply and sewerage systemof Santa Cruz, which in 1987 had a population of about 577,000 inhabitants,with modern technical standards. But there is still room for improving itsoperating efficiency.

6.1.2 As noted (para. 3.1.9), SAGUAPAC carried out studies under theproject to improve its organization, the accounting and internal controlsystem, the procedures for billing, connections, handling of customers'complaints and bidding procedures. These studies were implemented, and theAssociation and SAGUAPAC agreed that they were important elements forimproving its operating and financial efficiency.

101 The bill for 15 m3lmonth of water with surcharge for sewerage servicerepresents less than 1Z of the household income prevailing among thelowest-income segment in the Santa Cruz area. This low percentagereflects the high incomes prevailing in Santa Cruz compared to thenational average.

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6.1.3 Though the Project suffered from financial problems, basicallycaused by hyperinflation, that delayed its commissioning by about fiveyears, SAGUAPAC acted satisfactorily under the circumstances in carryingout the Project. The efforts of SAGUAPAC's management and staff wereimportant factors in successfully completing the Project. The betterment inSAGUAPAC's management can be noticed in the improvement that has occurredin 1986 and 1987 in key indicators like accounts receivable. energy losses,operating ratio and in the timely preparation of accounting, operationaland budget reports to management.

6.2 Government and CORDECRUZ

6.2.1 The Government's performance was satisfactory, except regardingthe approval of SAGUAPAC's ta-4ffs, which was done with delay. However, theGovernment was flexible in extending the grace period of the SubsidiaryLoan Agreement to help SAGUAPAC with for the external problems that itsuffered with the hyperinflation and the suspension of Creditdisbursements. CORDECRUZ's performance was satisfactory, its contributionsto the Project were timely and above the amount estimated in the SAR (para.3.2.2). It also cooperated from its own resources with a US$1.5 millionloan to SAGUAPAC for the Project financing.

6.3 The Association

6.3.1 The performance of the Association can also be judged assatisfactory. It was flexible and timely in accepting changes in theproject scope and in assessing compliance with covenants when SAGUAPACencountered difficult problems due to the hyperinflation and the suspensionof disbursements. The decision to continue sending supervision missions,even though the disbursements were suspended, can be regarded as positive,because the Association's staff continued advising the utility on differentaspects of the Project's implementation, such as the revision of biddingdocuments, as well as encouraging efficiency in SAGUAPAC's management andstaff, who were receptive to all the Association's advice.

VII - LESSON TO BE LEARNED

7.1 The commitment of SAGMtPAC to the Project and the skills of itsstaff were the driving forces to complete the Project and to achieve, to agreat extent, its objectives, in spite of the difficult economic conditionsfaced by Bolivia during part of the implementation period, coupled with thesuspension of the Credit disbursements (on country grounds), from Januaryto August 1984, and from July to December, 1985. The problems were overcomedue to the skill and dedication of SAGUAPAC's management and staff whoworked tenaciously to solve the difficulties produced by hyperinflation.which brought along staggering increases in construction expenditures andoperating costs, the shortage of cash and the high level of accountsreceivable.

7.2 Due to the same causes explained above, the Government andSAGUAPAC failed to meet some of the covenants of the Credit Agreement. TheAssociation was flexible in assessing the compliance with covenants andcontinued sending supervision missions, even in the period when thedisbursements from the Credit were suspended. This can be regarded aspositive, because the Association continued advising the utility in

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different aspects of the Project implementation as well as encouragingefficiency in SAGUAPAC's management and staff, which at the end, wereimportant elements that helped to complete the Project satisfactorily.

7.3 In the worst period of hyperinflation (1983-85), due to thedrastic and accelerated devaluation of the Bolivian peso and the lag of twoor three months between the payments made to the contractors of civil worksand the disbursements from the Credit account, the value of the pesoequivalent received by SAGUAPAC was significantly reduced. To counteractthis problem the Association agreed to create a Special Account to expeditethe disbursements of the Credit, which proved to be very useful.

7.4 Seven of the eight SAGUAPAC staff members who received trainingfinanced with the Credit proceeds are no longer working in the utility. Thecause for this high turn-over was not analyzed by the Bank's staff whosupervised the Project. It was most likely due to the low salaries existingin the period, a situation that has improved in recent years. As this seemsto be a common problem in training programs, it shouid be studied carefullyby the Bank and the Association, in order to find ways that can berecommended to the borrowers to minimize this problem.

ANNEX 1- 16 - Page 1 of 2

BOLIVIA

SAGUAPAC

PROJECT COIQLETION REPORT (CREDIT 948)

Maior Covenants of the Credit and Prolect ?.greements

The performance of SAGUAPAC and the Government under the majorcovenants of the Credit and Project Agreements of the Santa Cruz WaterSupply and Sewerage Project was generally satisfactory, except as noted:

Credit Agreement

1) Section 3.01 required the Government to i) cause SAGUAPAC toperform in accordance with the Project Agreement and take all actions,including the provision of funds necessary to enable SAGUAPAC to performsuch obligations, ii) relend the proceeds of the Credit to SAGUAPAC under asubsidiary loan agreement to be entered into between the Borrower andSAGUAPAC.

Proiect Agreement

2) Sections 2.01 and 3.02 required SAGUAPAC to carry out theProject and manage its affairs with due diligence and efficiency and inconformity with appropriate administrative, financial, engineering andpublic utility practices and under the supervision of qualified andexperienced management

3) Section 2.02 required SAGUAPAC to employ consultantssatisfactory to the Association to prepare bidding documents and evaluatethe bids received, and for carrying out the Part E of the Project.

4) Section 2.03 required SAGUAPAC to prepare a training programby March 31, 1980, present such program to the Association for comments andcarry out the program agreed with the Association.

5) Section 2.05 required SAGUAPAC to establish by January 1,1980, a revolving fund to finance the installation of water and sewer lotlines, house connections, in-house plumbing facilities and meters. Thesefacilities would be financed by loans to beneficiaries over a period of notmore than ten years at a rate of interest of not less than 122. This rateshould be revised periodically to ensure that the fund had at all times anamount not lower than the equivalent in pesos of the proceeds of the Creditallocated to the fund. (Partially met, para. 3.1.7).

6) Section 2.07 required SAGUAPAC to prepare a progress report onthe execution of the Project including monitoring indicators satisfactoryto the Association.

7) Section 3.05 required SAGUAPAC to prepare and furnish to theAssociations i) not later than December 31, 1979, a statement of SAGUAPACpersonnel policy and ii) not later than March 31, 1980, a statement of theprocedures to be followed for the internal auditing.

ANNEX 1-17 - Page 2 of 2

8) Section 3.06 required SAGUAPAC to establish and maintain aplanning unit and an engineering unit with functions satisfactory to theAssociation.

9) Section 3.07 required SAGUAPAC to prepare and furnish to theAssociationt i) not later than December 31, 1980, a survey of the wastewater disposal and sanitation problems, and ii) a program to solve theproblems identified.

10) Section 4.02 required SAGUAPAC to audit its accounts andfinancial statements by independent auditors acceptable to the Associationand furnish to it a certified copy of such statements not later than fourmonths after the end of each fiscal year.

11) Section 4.03 required SAGUAPAC to revalue its fixed assets inservice by November 30, 1979, and thereafter revalue such assets at the endof each fiscal year. (Met with delay, para. 5.2.1).

12) Section 4.04 required SAGUAPAC to obtain by June 30, 1980,revenues averaging $b5 per cubic meter of water supplied and billed, and b)an annual rate of return on net revalued fixed assets in service of notless than 1.5S in 1980, 52 in 1981, 5.52 in 1982 and 6Z in 1983 andthereafter. (Rate of return was not met, para. 5.1.1).

13) Section 4.05 required SAGUAPAC not to undertake anyinvestment, other than the investments for the Project, that would exceedthe equivalent of US$ 500,000 per annum.

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BOLIVIA AIZNX 2

SAGUAPAC

SANTA CRUZ WATER SUPPLY AND SEWERAGE PROJECT


Appraisal and Actual Timetable of Project Implementation

SAR Actual DifferenceEstimate Completion (in Months)

Water SupplyPurchase of Pumps and Accesories 12/80 8/86 68

Installation of Pumps 12/80 1/87 73

Storage tack and Pumphouse 4,81 6/87 74

Purchase of Pipe and Accessories 4/82 6/87 62

instalation of Pipe 8/82 6187 58

Water Meters 12/81 9/85 45

Purchase of Pumping Equipment,Accesories and Civil Works for2 wells -- 4/87

Sever SystemTreatment Plan and Bypass 4/82 8/86 52

Purchase of Pumps and Equipment 2/81 6/85 52

Construction of Pump Station 4/81 9/87 77

Construction of Emissary 5/81 9/87 76

Construction of Trunk Sewer (d-e) 10/81 3187 65

Construction of Network 12182 10/86 46

Other ComponentsHousehold Plumbing and Connectionsl 12182 9/87 57

Data Processing 2 12/79 6/81 18

Vehicles 12/79First Group 8181 20Second Group 6185 66

Laboratory 12/80 NA

Master Plan 12/81 9185 45

1/ SAGUAPAC made 2,734 water and sewerage connections, compared to 8,000estimated at appraisal.

2/ Include peripheral and accesory equipment.

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ANNEX 3(Fl le:Costn) BOLIVIA

10-May-9011:27 PM SAGUAPAC


PROJECT COMPLETION REPORT (CREDIT 848-80)

Approisal and Forecast Project Costs 1/(thousand of current US *)

_______Appraisal _ --- Actual---------Local Foreign Total Local Foreign Total

Water Supply____________

Punping system volls and storage tank 86s 782 1090 901 864 1265Distribution networks 900 1565 2284 480 1891 2821Water meters 17 407 428 21 382 858Communications equipment 0 14 14 0 18 18Vehicles 0 136 186 22 249 271Wells and parts for water pumps 0 0 0 371 186 06oPipelInes for well interconnection 0 0 0 0 204 204Equipment for moetr testing and

meters' parts 0 0 0 128 123

Sub-Total 1266 2648 3981 1746 8881 6076

Administration 627 0 627 766 0 766Technical Assistance 0 825 826 U5 0 66Consultants 0 122 122 77 245 822

Total Water 1915 8000 06os 2646 857 6222_ - - _ -- --- _----- - - - - - -- _-- - -- -_- -- -- -

Seworage

Treate.it plant 462 6s 580 1T92 0 1792Pumping station, laboratory andem ssary 644 886 1010 769 176 984

Trunk sewer and networks 4921 618 5784 9821 0 9821Sewer cleaning equipment 0 0 0 2 14 16

Sub-Total 6027 1247 7274 11904 169 12008

Administration 1057 0 1057 768 0 766Technical Assistance 0 186 186 52 0 52Cons ultants 0 217 217 111 15 126

Total Sewerage 7064 1599 6668 12685 205 18W40

Other Components

Land 800 0 8oo 80o 0 800Household plumbing 822 1218 1540 887 467 608Data processing equipment 182 880 471 11 41 62

Total Otbor Components 764 1S55 2811 646 506 1156

TOTAL PROJECT COSTS 0758 6247 16000 18128 4269 20417

1/ Actual costs have been converted Into US dollars at the official exchangerate prevailing at the tim of each transaction.

ANNEX 4

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BOLIVIA

SAGUAPAC

SANTA CRUZ WATER SUPPLY AND SEVERAGE PROJECT

Actual and Forecast Accumulated Disbursements(In Million of US$)

Actual Actual Disbursement as aIDA Total percentage of AppraisalFiscal year Disburse- Appraisal Estimate (up to latestand Semester ments Estimate half-year)

1979/80December 31,1979 0.6 0 0June 30, 1980 2.1 0.1 5

1980181December 31,1980 4.1 0.1 2June 30, 1981 5.8 1.6 28

1981/82December 31,1981 7.0 2.4 34June 30, 1982 8.2 2.7 33

1982/83December 31,1982 8.8 3.5 40June 30, 1983' 9.0 3.8 42

1983/84December 31,1983 9.0 4.1 46June 30, 1984 9.0 4.1 46

1984/85December 31,1984 9.0 4.6 51June 30, 1985 9.0 5.7 63

1985/86December 31,1985 9.0 5.9 66June 30, 1986 9.0 7.6 84

1986/87December 31,1986 9.0 8.7 97June 30. 1987 9.0 9.0 100

ANNEX 5

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BOLIVIA

SAGUAPAC

PROJECT COMPLETION REPORT (CREDIT 948-BO)


Forecast and Actual Loan Allocation(in USS)

Category Forecast Actual

(1) Equipment, Materials and Vehiclesfor parts A, B, and D of the Project 3,000,000.00 3,762,366.00

(2) Civil Works 2,100,000.00 3,929,460.02

(3) Goods and Services for Part C ofthe Project 2,000,000,00 782,587.96

(4) Consultants' Services andTechnical Assistance 400,000.00 525,005.93

(5) Unallocated 1,500,000.009,000,000.00 8,999.419.91 1

1l The balance of $580.09 was cancelled.

~~~~~~~~~2 -., - 22 - AMX 6

(Ff l:ROR3-*q) DOLIVIA0O-JuI-8908:54 PM AUPAC

PROJECT COMPLETION REPORT (CR.948-OW)


Rate of Retuen oInv etment(mli Ion of Sol viones as of md-loU?)

Revenue fromCapital TOTAL Terlffs Other MOTAL Net

Years Expand. 0 & V COSTS Water Sewerage Revenues IIENITS 8nfits

6/ cX / d/ e/107010n 1.1 1.7 0.0 -1.11061 4.2 4.2 0.0 -4.21912 7.0 0.5 J.1 0.8 o.$ 0.2 1.8 -8.61083 3.9 0.0 4.5 1.0 0.8 0.3 1.6 -8.01904 5.5 0.8 0.1 1.3 0.7 0.4 2.4 -8.71to" 9.5 1.1 10.0 1.6 0.8 0.5 2.0 -7.01908 10.0 1.2 11.2 1.9 0.0 0.6 5.2 -7.910? 2.2 1.4 3.0 2.a 1.2 0.7 4.1 0.4lo" 1.4 1.4 2.3 1.2 0.7 4.1 2.6i10 1.4 1.4 2.3 1.2 0.? 4.1 2.01900 1.4 1.4 2.8 1.2 0.7 4.1 2.01991 1.4 1.4 2.8 1.2 0.7 4.1 2.01092 1.4 1.4 2.3 1.2 0.7 4.1 2.61093 1.4 1.4 2.3 1.2 0.? 4.1 2.61034 1.4 1.4 2.8 1.2 0.7 4.1 2.61995 1.4 1.4 2.8 1.2 0.7 4.1 2.010S6 1.4 1.4 2.3 1.2 0.7 4.1 2.0109 1.4 1.4 2.3 1.2 0.7 4.1 2.610031 1.4 1.4 2.8 1.2 0.? 4.1 2.6199g 1.4 1.4 2.3 1.2 0.7 4.1 2.62000 1.4 1.4 2.8 1.2 0.7 4.1 2.62001 1.4 1.4 2.8 1.2 0.? 4.1 2.62002 1.4 1.4 2.8 1.2 0.7 4.1 2.62003 1.4 1.4 2.3 1.2 0.7 4.1 2.62004 1.4 1.4 2.3 1.2 0.? 4.1 2.62005 1.4 1.4 2.3 1.2 0.? 4.1 2.02000 1.4 1.4 2.8 1.2 0.7 4.1 2.62007 1.4 1.4 2.8 1.2 0.? 4.1 2.02006 1.4 1.4 2.8 1.2 0.7 4.1 2.62000 1.4 1.4 2.3 1.2 0.7 4.1 2.62010 1.4 1.4 2.8 1.2 0.7 4.1 2.62011 1.4 1.4 2.8 1.2 0.7 4.1 2.02012 1.4 1.4 2.3 1.2 0.7 4.1 2.02018 1.4 1.4 2.8 1.2 0.7 4.1 2.02014 1.4 1.4 2.3 1.2 0.7 4.1 2.02015 1.4 1.4 2.8 1.2 0.? 4.1 2.02016 1.4 1.4 2.3 1.2 0.7 4.1 2.02017 1.4 1.4 2.8 1.2 0.7 4.1 2.6

Rate of Return (0) 4.90

.1 Exclude financial charges.b/ Calculated with mid-1997 0 A M costs of 3S.0.17/*3 for water end 9s.0.10/m3 for

se erage.c/ Calculated with oid-1907 tariff of Bs.0.6/m3.d/ Calculated with mid-1907 tariff of 8s.0.4/m3.*/ correspond to the surcharge for recovery of investment of 20% of the water

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le Water Syply17-Is Population aemd (thouaaoe) 247.0 2e.$ 26.0 272,0 207.0 .8 812.0 20.1 09.0 8107.s 8S.8 S78.6 896.7 410.219 Ppulatbon aeved ( 62.0 e6.0 68.0 e2.0 6a.0 79.0 84.0 76.0 8s.0 72.0 79.0 76.0 7a.0 71.020 Total crmeatiom (tlwaade) 86.0 07.1 88.0 89.0 41.0 40.7 46.0 42.2 48.0 4a.9 4S.7 47.a 49.6 61.821 metered ceficlnen (thaUaand) 22.0 #4.0 26.0 - S2.0 - 42.0 - 46.0 42.6 44.0 4S.2 48.i 80.122 Me. operating mater. (Vtosmde) 2D.0 - 24.0 56.2 So.0 - 42.0 - 46.0 - 41.1 89.8 43.9 47.220242e S_werage2-I27 Population erved (thougande) 96.0 99.6 94.0 101.4 110.0 100.0 180.0 118.4 1S8.0 113.5 104.2 1W0.4 18.1 166.420 PSoulation rFvrd M 80.0 88.1 81.0 01.0 83.0 29.0 8e.0 20.0 40.0 7.0 a2.0 a0.0 20.0 290.029 Total comecttem (towma*d) 18.0 14.0 14.0 14.5 16.0 14.7 10.0 1S.2 22.0 18.2 18.6 1U.6 10.1 2D.880S1 FinancIal

S2-'88 Average wat tariff (b/aS) 8.0 0.7 8.3 4.0 4.6 6.4 7.6 6.1 26.0 880.0 88 t.07 8347.0 46676.084 Avrg r-en (Sb/mM 4.1 0.0 6.8 6.7 7.0 7.0 11.7 9.0 89.4 818.9 10781.1 804961.4 710400.088 Uaccounted-for water ) 4S.0 41.0 80.0 86.0 20.0 20.0 81.0 27.0 84.4 27. 82.9 20.1 20.9So Opeoratng rat. Cs) 1/ 82.0 79.0 100.0 70.0 101.0 67.0 1US.0 64.0 147.0 l 15.0 07.0 7J.007 Curent ratio MI) 11.0 4.0 4.7 8.8 4.0 S.4 4.1 6.0 2.0 1.9 8.0 0.1 0.18* DabtiAbt,Squit (5) 20.0 29.0 1.0 81.0 8.0 29.0 49.6 24.0 67.0 8S.0 12.0 14.0 20.0at Rate of trn () 2/ - 1.8 -8.8 6.1 -2.S 0.7 -7.0 6.1 -14.2 -8.2 4.8 .2.0 1.0

40 Ac_octe Reseivable (da) 169.8 182.6 117.0 12.0 7.7 242.2 68.0 201.0 210.4 196.0 100.4 96.94142 1/ RatbO Of Operain UPWAGe (eX4lud41g deprecIation) to peratin reven t .40 2/ Ratio of Income befote interest plus nn-_0oeratIng revANu to avrg fisad ieset orSatIOR.

- 2T - AN (EX 11

(Ffit:0cZ) WLVIA

Os67 W SAOUWAC

SUTA CRUt WATER U It AMD 51A0E PROJECT

PJECT COWLET?UN REPORt (CRUIT 96440)

Co2wwr Price IX(1066100)

Mid-igya T..e-.nd Vaoiation

1610 #06 4261979 454 622 451#10 70T 771 241661 608 on 251962 1528 21 toy18 576? Ism 811664 6O6 MM24 2m1665 6026642 cum846 01711:6 40N7006 51248s sI"7 5442624 5702000 11

16000 22

- 28 -

COMMENTS FROM SAGUAPAC ANNEX 12(Unofficial Translation) Page 1 of 2

Translation of Incoming Telex

Santa Cruz, April 20, 1990Telex No. 028/90

TO : Mr. Rene A. RibiActing ChiefOperations Evaluation Department

ATTN: Mr. Alexander NowickiChief, OEDROperations Evaluation Department

REF : Loan 948-BO: Project Completion Report

We wish to inform you that we are basically in agreement with the ProjectCompletion Report for the "Santa Cruz Water Supply and Sewerage Project" preparedby the World Bank's OED Department. Certain differences on points of fact havealready been clarified with the staff of OED, and it has been agreed that thenecessary corrections will be made to the text. For our part, we wish to drawspecial attention to and express our thanks for the assistance extended toSAGUAPAC by Bank officials during execution of the project; this was undoubtedlyan important factor in the project's having been brought to such a satisfactoryconclusion, to the benefit of the city of Santa Cruz de la Sierra.

Regards,

Ing. Carlos Medrano ViruezGeneral Manager, SAGUAPAC

Note: References to OED in the text above are erroneous; these referencesshould actually be to the Infrastructure and Energy Division, CountryDepartment III, of the Latin America and the Caribbean Regional Office.

- 29 - ANNEX 12

Page 2 of 2

COOPERATIVA DE SERVICIOS PUBLICOS SANTA CRUZ LTDA "SAGUAPAC"

ATTN: Mr. George ManiatisActing Chief, OEDD2Operations Evaluation Department

FROM: Ing. Carlos Medrano V.General Manager, SAGUAPAC

SUBJECT: Proiect ComDletion Reiort (Credit 948-BO) - Your Telex of April 24.

In response to the above telex and further to our earlier communication of April20, 1990, we reiterate our agreement with the aforementioned Project CompletionReport for the "Santa Cruz Water Supply and Sewerage Project." Our commentsrelate to the following points:

1. Page (iii) - Note 3The Boliviano was created in January 1987.

2. Page (iv) - Para. 1 - second (a)The sewerage works included 30 km of lateral sewers in addition to 67 kmof collectors.

3. Page (2) - Para. 1.3.2The urban area of the city of Santa Cruz was redefined at 14,338 hafollowing the 1983 floods. The figure quoted in the report -- 17,000 ha-- was correct up until 1982.

4. Pa&e (7) - Para. 3.1.4The adjustment factor for costs of construction between May 1982 andDecember 1984 resulted in a 312-fold increase in costs. In terms of theofficial dollar, the increase was calculated at 6 times for the sameperiod, from beginning to end. It must be noted that this escalationclause did not have as pronounced an effect on the project's costs indollars as a whole, but only on the percentage indicated in the report.

5. Page (11) - Para. 4.2.1The number of water and sewerage connections in 1987 was 51,300 and 20,800,respectively.

6. General CommentAs a general comment, we should like the report to indicate that the costsin local currency, both capital costs and financing costs, have beenconverted into dollars at the official rate of exchange.

Regards,

Ing. Carlos Medrano ViruezGeneral Manager

Documents

World Bank Document · Santa Cruz Water SuDDil and Seweragg Proiect (Credit, 94-BO) Attached, for information, is a copy of a report entitled "Project Completion Report on Bolivia