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Document of The World BankReport No:?ICR00001845IMPLEMENTATION COMPLETION AND RESULTS REPORT(TF-58243 TF-58244 TF-58245)?ON AGrant IN THE AMOUNT OF (US$ 0.85 MILLION EQUIVALENT)TO THENaandi FoundationFOR AAndhra Pradesh Rural Water Scheme ProjectSeptember 19, 2011GPOBA IndiaSARCURRENCY EQUIVALENTS(Exchange Rate Effective March 28, 2011)Currency Unit = Indian rupee (INR)US$ 1.00 = 44.8397FISCAL YEARABBREVIATIONS AND ACRONYMSVice President:Isabel M. GuerreroCountry Director:Roberto ZaghaSector Manager:Ming ZhangProject Team Leader:Cledan Mandri-PerrottICR Team Leader:Josses MugabiCOUNTRYProject NameCONTENTSData SheetA. Basic InformationB. Key DatesC. Ratings SummaryD. Sector and Theme CodesE. Bank StaffF. Results Framework AnalysisG. Ratings of Project Performance in ISRsH. Restructuring I. Disbursement Graph1. Project Context, Development Objectives and Design12. Key Factors Affecting Implementation and Outcomes13. Assessment of Outcomes24. Assessment of Risk to Development Outcome25. Assessment of Bank and Borrower Performance36. Lessons Learned37. Comments on Issues Raised by Borrower/Implementing Agencies/Partners3Annex 1. Project Costs and Financing4Annex 2. Outputs by Component5Annex 3. Economic and Financial Analysis6Annex 4. Bank Lending and Implementation Support/Supervision Processes7Annex 5. Beneficiary Survey Results8Annex 6. Stakeholder Workshop Report and Results9Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR10Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders11Annex 9. List of Supporting Documents12 MAP I N S E R T D A T A S H E E TH E R E AFTER APPROVAL BY COUNTRY DIRECTORAN UPDATED DATA SHEET SHOULD BE INSERTED MANUALLY IN HARD COPYBEFORE SENDING A FINAL ICR TO THE PRINT SHOP.NOTE: The Data Sheet is generated by the systemusing the information entered in the Operations Portaleach time you use “Send Draft”, “Print” or “Submit Final” functions.1. Project Context, Development Objectives and Design 1.1 Context at AppraisalIn 2005, India was a low-income country with a gross national income (GNI) per capita of $720 compared to the world average of $6,987 at that time. The population of India in 2005 was estimated at 1,132 million, of which 71% or 766 million resided in rural areas and the rest in urban areas. An estimated 21% of communicable diseases in the country were water related, and the number of deaths due to diarrhea alone was 700,000 in a single year. Although 86 % of the population had access to improved water sources, only 18% of the rural households had access to an improved water source. The State of Andhra Pradesh (AP) where the pilot project was implemented is considered a leading reform state in India, with a clear long-term strategy toward infrastructure development laid down in its Vision 2020 document. It is the fifth most populous state in the country with approximately 80 million people, which in 2005, accounted for nearly 8% of the country’s total population. In addition, the GNI per capita in AP was below India’s average. Disparities between rural and urban development indicators in AP was noticeable, given that the rural population accounted for 73% of the state’s total and was relatively poorer. In 2005, AP had made considerable progress in its development agenda. Back in the late 1990s, the state was relatively poor and in the midst of a fiscal crisis. In 1999/2000, AP’s GNI per-capita was around US$385, nearly 22% of its population was below the poverty line, and the state’s fiscal deficit to gross state development product (GSDP) ratio was reaching the 5% mark. Since then, the state made impressive progress in all dimensions of development. Per-capita income rose to nearly US$700 in 2005, although this was still slightly below the national average at that time. During the same period, water supply coverage increased from 3% to 65% of the total population. Despite these improvements, approximately 17 million people or over 22% of the total population in the State had experienced bacteriological contamination of water at the time of project appraisal. Rural households in the coastal districts of AP were the most affected. Most of the villages in these coastal districts were dependent on irrigation canals/ponds for drinking water, which was being treated through slow sand filters and distributed through individual household taps and public taps. But due to the poor operation and maintenance of the slow sand filters and the distribution network, the quality of water available to rural households was extremely poor. For example, it was estimated that over 500,000 people lived with severe fecal contamination level of >2,000 Most Probable Number per milliliter (MPN/ml), whereas the World Health Organization (WHO) permissible limit for fecal contamination is <100 MPN/ml. Thus, at the time of project appraisal, there was a clear need for increased investment in improving access to safe drinking water for the rural poor in AP, together with creating awareness among households on the health risks posed by the consumption of unsafe water. The project was consistent with the Bank Group Country Assistance Strategy (CAS) for India, and the Government of India's Eleventh Five Year Plan (2007-2012), both of which recognize that provision of adequate infrastructure, including improved and safe drinking water, is critical to sustaining economic growth.1.2 Original Project Development Objectives (PDO) and Key Indicators The objective of the project was to provide safe drinking water to 75,000 inhabitants (earning less than US$20 per month) in the coastal areas of AP. Achieving this objective was expected to result in:Health benefits from reduced exposure to risks posed by unsafe waterEconomic benefits from reduction in medical expenses to treat water-borne diseases, increased productivity and capacity to work due to fewer water-borne disease related to days off from work (especially for mothers of children under five who are prone to diarrhea), and lower expenditure related to boiling water.Social benefits from equitable access to safe drinking water for villagers from different religions and social backgrounds Improved financial viability/sustainability of the existing water supply systems due to full participation and ownership of the beneficiary community.Transparent use of funds in the water sectorReplication of affordable village water treatment technology Key performance indicators to measure achievements included the following: number of households making upfront cash or in kind contribution for the project against number of households planned to be mobilized;number of households registered to the community safe water scheme (CSWS) represented by paid subscription fees;number of consumers actually using the CSWS represented by number of sold water coupons;number of below-poverty level (BPL) households reached with safe drinking water;number of households discontinuing use of unsafe water for drinking purpose;percentage decrease in incidences of water-borne diseases and deaths; and percentage reduction in medical/health expenditure.1.3 Revised PDO and Key Indicators, and Reasons/Justification There was no revision to the PDO and indicators.1.4 Main BeneficiariesThe project was for the development of 25 individual Community Safe Water Schemes (CSWS) targeting 75,000 people in 25 villages. Each CSWS involved the community (represented by the village council or “Panchayat”), Naandi Foundation, an NGO as grant recipient and project manager, and Water Health India (WHIN), a disinfection technology provider and operator of community village water treatment facilities, in a public-private partnership. The scheme provided a one-off subsidy linked to the provision of clean water, with subsidy payments made largely after the delivery of agreed outputs. These ‘outputs’ included construction and installation of the CSWS; registration of at least 500 households to the scheme, and three months of billed user fee consumption. The project targeted coastal districts in AP as the water contamination situation is more pronounced than in other districts in the State. Naandi Foundation, the implementing agency, together with the Panchayat authorities took the lead in determining which villages were chosen. 1.5 Original Components Component 1 – Construction, Installing, Commissioning and Operating Community Safe Water SchemesThis component involved constructing, installing and commissioning community safe water schemes (CSWSs) consisting of ultraviolet (UV) filter water plants and storage tanks, registering households to the CSWSs, operating CSWSs and verifying usage of CSWSs, in approximately 25 villages in Krishna, Guntur and West Godavari districts of Andhra ponent 2 – Promotion of Awareness on Safe Drinking WaterThis component involved undertaking campaigns and developing and implementing information, education and communication (IEC) strategies for the purpose of educating rural communities in Andhra Pradesh on the benefits of safe drinking water and promoting the use of treated water from the ponent 3 – Independent Verification, Monitoring and EvaluationThis involved engaging the services of consultants for carrying out technical verification, evaluation and monitoring of activities and outputs for components 1 and 2 of the project.1.6 Revised ComponentsThere was no revision to the project components.1.7 Other Significant ChangesThere were no significant changes to the project.2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at EntryThe project involved the development of community safe water schemes (CSWS) in response to the lack of potable drinking water in the rural coastal areas of AP. Each CSWS involved the construction, installation, commissioning and operation of a standalone UV water purification plant connected to a water distribution point from which household purchase water in jerry cans. The key factors during project preparation or issues related to quality at entry that affected implementation and outcomes can be summarized as follows:The project built on the positive experiences of “fee-for-service” community based water schemes in the State. The design reflected the lessons learned and the positive experiences of the Naandi Foundation (the lead implementing agency) in implementing similar community based water schemes on a “fee-for-service” model working at the grass root level with full community engagement. The project was also based on a fairly sound analysis of the demand and willingness to pay for improved water quality in the target rural areas.The project design was pragmatic. For years in the rural coastal areas of AP, there were no alternatives to the highly contaminated tap water from government-run piped water systems, which were poorly operated and maintained. In some areas, there was no piped system at all and people relied on contaminated rivers/canals as their source of drinking water. Therefore, a project to set up small standalone UV water purification plants as point sources for drinking water was pragmatic and fit well within the realities from both a technical and bacteriological perspective. Although the project did not involve domestic connections, it was a first step in providing safe and affordable drinking water in areas where typically the existing piped water schemes had failed largely due to broader failures in the sector, including lack of O&M capacity and incentives at the local level, and lack of a sustainable tariff structure. On the surface, this project may appear as a short-term fix since small purification plants have obvious scale limitations - i.e. their ability to provide sufficient quantities of water to a growing rural population is limited. It could be argued that a better option would have been to support improvements /rehabilitation of existing government-run water treatment systems and distribution network. However, the harsh reality in most of rural India is that water distributed to individual households through piped networks is unlikely to be potable for the foreseeable future given the massive investment required and the lack of institutional capacity. The solution is not simply fixing plants and pipes. Significant reforms are also needed to fix the highly dysfunctional institutional environment which is mostly responsible for the poor O&M of existing systems. Fixing institutions is a long term undertaking, and traditionally, in the Indian water sector, it is also a significant challenge that could not be addressed within the limited scope and timeframe of the project. The project objective was clear and realistic. The aim was simply to provide safe drinking water to 75,000 inhabitants (earning less than US$20 per month) in the coastal areas of AP. The anticipated outcomes at the household level (i.e. health, economic and social) were consistent with the project scope, duration, resources and approach, and thus the project could reasonably be held accountable for their achievement. The likelihood of achieving project outcomes was enhanced by promoting awareness on safe drinking water use, in addition to providing the actual safe water source.The project design and implementation arrangements were structured around core OBA principles – i.e. transparency and explicit use of subsidies; accountability for results; private sector participation; innovation and efficiency; monitoring of results; and sustainability – and aligned to the twin objectives of improving access to safe drinking water and creating awareness among rural households on the health risks posed by consumption of unsafe water.The project adopted a community-based public-private partnership model with strong community participation. The schemes involved the village council or “Panchayat,” Naandi Foundation, and WHIN in a public-private partnership which was operationalized through a Tripartite Agreement. The Panchayat provided a regular source of water, secure land, the community financial contribution, and electricity at a pre-agreed tariff for the CSWS. Naandi acted as the project manager. Naandi also mobilized the community towards raising the community contribution and developing a communication and awareness campaign, working with key stakeholders such as schools, community self-help groups, and health workers to change the behavioral practices of poor families regarding water. WHIN was the technology partner/operator. The company built and installed the ultraviolet (UV) filter water purification plants and the basic infrastructure needed to operate them (i.e., pumping system, storage tank, and shelter) in the 25 villages; hired and trained a plant operator for each village; and shared project implementation risks by providing Naandi with operational performance guarantees. Community participation was ensured through baseline surveys/pre-launch awareness campaigns; community contribution; community training, and use of community-based plant operators.The project incorporated sustainability into the project design. The core of the design is a performance-based subsidy linked to the delivery of pre-agreed outputs which included three months of billed water services. The output-based approach requires that tariffs paid by users for consumption cover the costs of operation and maintenance, including education and communication activities. Institutional sustainability was enhanced through the Tripartite Agreement that set out the roles and responsibilities of all actors, the education campaign that accompanies each project (and which is one of the verifiable indicators for OBA subsidy disbursement) and the mechanism to ensure mobilization/collection of user charges. Furthermore, sustainability is ensured through the continued access to drinking water by at least 50% of total households in each village. Finally, the design incorporated accountability mechanisms through output verification by an independent third party and regular reporting to Panchayat and feedback to appropriate government agencies at both the District and State levels. 2.2 ImplementationThe project was not restructured and was never at risk. The use of output-based aid facilitated regular output reporting and independent verification that outputs had been delivered. Payments / reimbursements to the implementing agency were made on a per village basis as follows: 20 percent on plant commissioning (i.e. after a technical test has been undertaken and the plant produces water to the agreed standard); 60 percent upon verification that 500 households have been registered and paid subscription fees, and the remaining 20 percent upon verification of three months of billed user fee consumption. This disbursement profile provided a strong incentive for the implementing agency to build plants only where there is demonstrated demand and willingness to pay. The implementing agency however faced a few minor challenges which it resolved without Bank intervention. For example, although the water was extremely affordable, at?Rs. 3 ($0.06) for a 20 liter can, beneficiaries were initially reluctant to pay, and some felt that the fee being charged should include free delivery to their door. Clearly, they were not used to paying for water, not even from the existing government-run systems. This prompted the implementing agency to increase outreach and communication efforts. They also changed the mode of payment from water coupons (which were being forged/shared by some users hence affecting the revenues) to cash payment at the water collection point. Another issue encountered was customer complaints regarding the taste of the water. This was common in high salinity areas where the UV technology alone could not work effectively in removing taste. The issue was resolved by retrofitting the plants with a combined UV and Reverse Osmosis (RO) treatment system to deal with the salinity. There were also instances where installation of plants was significantly delayed due to lack of political support and delays in collecting community contributions. This however was a fact that was recognized at the design stage and therefore no disbursements were to be made until such time when all pre-agreed outputs were achieved.Overall, all project stakeholders interviewed agree that the project was implemented fairly efficiently compared to other community-based water schemes. It was simple in design, and there was a strong commitment to the objectives by all participants. The output-based approach allowed for a flexible implementation process which was constantly adapted to respond to what the implementing agency saw as the main challenges as the project progressed.Other key factors that influenced the implementation process can be summarized as follows:The project adopted rigorous selection criteria for the target villages to maximize impact on the poor. The project used various techniques to target the subsidy to the poorest households. The three project districts were chosen because of their high poverty rate and lack of access to quality water services. Within this geographical area, villages were selected based on the presence of a water source that can be purified by ultraviolet technology, and the willingness and ability of the village to adopt a fee-for-service scheme. To target individual beneficiaries in the villages, the project used the government’s ‘white ration card,’ a system that entitles low-income individuals to obtain basic commodities (e.g. rice, flour) at a reduced price. Other indicators considered include family size, construction of a house from low-cost material, limited or no possession of durable goods such as a TV, and time spent by women and children of a given household in fetching water. Naandi Foundation carried out the targeting in close collaboration with the village Panchayat. The process was verified by the independent verification agent.Use of innovative social-marketing techniques. This project had a significant awareness and behavioral change component aimed at educating rural communities regarding the benefits of safe drinking water and promoting the use of treated water. Decades of experience in the rural water sector in India and elsewhere have shown that providing a safe water source alone does not guarantee that communities will use it. Therefore, in addition to traditional health education methods, the implementing agency developed innovative ways of promoting the new drinking water sources through social marketing techniques such as branding (see Box 1) which proved to be effective in increasing the likelihood of achieving project outcomes.Box 1: The “Dr. Water” Brand“..For years, in the heart of rural Andhra Pradesh, there were no alternatives to contaminated pond water. Then, two years ago, the Naandi Foundation, an NGO with a strong presence in the state, approached the GPOBA with a proposal to set up purification plants with the technical assistance of WHIN. Capitalizing on the immense respect that doctors command in rural communities, Naandi and WHIN created the Dr. Water brand to give the water purification plants funded by GPOBA an identity. Today, for more than 16,000 families across 25 villages, Dr. Water is the water that keeps them free from disease resulting in a huge improvement in their quality of life.Shyamala, a health educator in West Godavari district, Andhra Pradesh, India, had tried for months to convince families in the region to pay a small fee for clean drinking water. “I work with women’s self help groups in 10 villages. Nothing worked anywhere– flip charts, posters, skits, and role plays. Women were not convinced about the need to use or pay for clean drinking water.”Faced with an impasse, Shyamala then hit upon a novel idea. “We connected a microscope to a projector and asked women in the village of Jagannadhapuram to apply untreated pond water samples to the glass slides. They were shocked by the microorganisms that they could see on the screen. Some women actually wept on seeing the germs that their families were routinely being subjected to.”The practical demonstration instantly changed behavior: the number of women using the clean water facility in this village grew from 20 to 390 members..”Source: GPOBA (2010). Project Feature Story, September 16, 2010SourceDelays in disbursing project funds. The project experienced delays in the disbursement of funds. The main issue was the selection of four new villages to replace those previously selected villages where the community could not afford the user contribution fee (the village contribution was a key component in the overall project design). As a result there were delays in achieving the original target of 25 plants, as these new villages came on board close to the grant closing date. Furthermore, the project engaged the services of an independent verification agent (IVA) to verify and audit the expected outputs before the grant recipient can claim any reimbursements. Unfortunately, the IVA took longer to validate the results than originally anticipated. However, despite this setback, the project successfully achieved the 25 treatment plants as per the original project objectives. Given the delays in disbursements, the Bank agreed to a grant extension request submitted by Naandi to allow for a three month period of operation validation for the plants completed close to grant closing, and thus allow for the full reimbursement to the Naandi Foundation. Another major reason for the hold-up was that more than half of the disbursements were linked to registration of households – which required a prolonged period of community mobilization.Monitoring and Evaluation (M&E) Design, Implementation and UtilizationM&E designThe grant recipient and project implementer (Naandi Foundation) had the primary responsibility for monitoring project progress, and for conducting baseline, mid-term and post-implementation evaluations to measure the impact of the scheme. Naandi retained the services of an Independent Verification Agent (IVA) paid for by the project. The IVA verified both the achievement of outputs and the eligibility of beneficiaries benefiting from the project, through a combination of physical observations, semi-structured interviews, in-depth interviews and focus group discussions with households, village elders, village administration, health workers and the plant operators. In addition, it is understood that WHIN also collected information on the performance of the plants in terms of water quality and reliability, and financial information such as water sales and operation and maintenance costs. However, this information was never systematically reported as part of the project monitoring.M&E implementationThe verification process involved the following: Baseline survey – at the beginning of the projectPhysical verification of plant – one month after Baseline SurveyVerification of ‘Below Poverty Line (BPL)’ Household registration as per the criteria – one month after the plant verificationVerification of 3 months’ billing / consumption as per the criteria – one month after checking the BPL criteriaThe IVA prepared Output Verification Reports (OVR) at each stage of the verification process. In total three OVRs were prepared for each village/plant. M&E utilizationThe above M&E system was being utilized mainly for disbursement purposes. However, the OVRs provided more than just verification. They also contained a wealth of information from the household survey which helped in tracking project outcome indicators relating to health, social and economic benefits. The survey methodology was fairly sound and the resulting data and evidence could be relied upon to come to a reasonable conclusion on the extent of achievement of project outcomes (see Chapter 3). However, the sustainability of these M&E arrangements beyond the project is questionable, as the main driver was to verify outputs for disbursement purposes and not necessarily to track outcomes.2.4 Safeguard and Fiduciary ComplianceNaandi Foundation complied satisfactorily with Bank fiduciary policy, safeguards and standard requirements. The project management staff was skilled in its tasks. Project statements of expenditure and disbursement requests were generally submitted in a timely manner, as were the audit reports, except for a few audit reports towards the end of the project which took some time due to staff changes. The procurement of consultant services and goods were conducted in full compliance with the applicable Bank procurement guidelines and principles. No safeguard issues arose during project implementation. 2.5 Post-completion Operation/Next PhaseThe estimated service life of the CSWS is 15 years. The CSWS requires low maintenance and WHIN has full responsibility for operation and maintenance for the initial 8 years. Thereafter, the Village Panchayat may either choose to renew the contract with WHIN or assume responsibility for continued operation and maintenance. WHIN will build local capacity for managing the scheme by recruiting and training local plant operators. These will be available to the Village Panchayat beyond the duration of the O&M contract.WHIN charges an affordable fee of $0.06 for every 20 litre can. This rate was set to cover operation and maintenance and the operator’s initial share of investment (net of subsidy). The socio-economic study conducted as part of project preparation showed that willingness to pay for improved water quality was higher than this tariff rate. Therefore, it is likely that the O&M expenses and other associated costs of the CSWS will always be well within the user fee charged thus enhancing financial sustainability.Anecdotal evidence suggests that the awareness campaign implemented by Naandi has played a critical role in creating demand for improved drinking water quality, to the extent that the community now fully appreciates the need to pay for the services (the same was also confirmed through the focus group discussions conducted during the baseline and OVR3 as a part of IVA’s verification process). Unfortunately, WHIN has not provided revenue and O&M cost data for all the plants supported by the grant. However, interviews with plant operators and field-based sales representatives suggest that about a quarter of the plants are currently breaking even. It is critical that the technical and financial sustainability of the plants be monitored and evaluated in the future as there have been concerns regarding the high capital costs of the system, and its scale limitations in terms of the ability to provide sufficient quantities of potable water to a rapidly growing rural population that is demanding higher levels of services for which they are willing to pay. Naandi was requested to report on the status of the project at the first and second anniversary of the closing of the project. The first anniversary report is still pending. Both Naandi and WHIN are interested in continuing the project, but need to identify additional sources of grant funding. The methodology developed for each CSWS can be readily applied to other villages in AP. In fact, the project has partially helped to stimulate a new sub-sector of "distributed off-grid water supply" in rural AP. This market did not escape the attention of the Rural Water Supply and Sanitation Department (RWSSD) of the GoAP, which decided to award ?BOOT contracts for water purification plants in a few villages, but which did not really take off due to various reasons, most notably the inability of private operators to access finance. RWSSD is also keen to explore options for adapting the OBA concept in improving the effectiveness and results-orientation of O&M functions for existing rural piped water schemes, with some form of private sector participation if feasible. In other words, RWSSD is more interested in scaling up the?model piloted in the project, rather than the technology. But they acknowledge that there may be cases where UV/RO water purification plants are the only technically feasible option (e.g. in fluoride affected areas).? 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and ImplementationThe relevance of the project development objective is high. It is as relevant to the country’s rural water sector development needs today as it were at appraisal. The twin focus on providing a safe water source and at the same time creating community awareness of the health risks of drinking contaminated water was highly effective in increasing the likelihood of sustainable outcomes. However, there is currently a vigorous debate on the cost-effectiveness of the UV/RO water purification plants and the sustainability of the off-grid water supply model. At one hand, the private sector and NGOs who promote these plants contend that such systems are the only way to guarantee safe drinking water to rural communities, given the dysfunctional O&M structure of existing government-run piped water schemes. They argue for a ‘dual-system’ sector structure in which existing piped systems are used for purposes requiring lower quality water (such as washing and bathing), while the UV/RO plants (which ironically also tap from the same raw water source as the existing piped systems) are used for drinking water only. The hope is that the cost would reduce as more plants are rolled out in the communities.State government agencies on the other hand maintain that the sector vision is to provide potable, continuous (24x7) water supply to rural communities via a household connection, with a minimum of 40 liters/capita/day. UV/RO plants and the off-grid model in general, are important in filling the gap in the short to medium term, but they are not substitutes to single-village or multi-village piped water schemes.There is also a technology-choice issue at play in this debate. Slow Sand Filters (SSF) – the most commonly used treatment technology in rural drinking water supply in AP – pose maintenance challenges, especially in a poor institutional environment. In a well-managed SSF, the efficiency of pathogen removal can be as high as 99.5 percent. However, the maintenance of SSF is cumbersome as cleaning of sand must be done every three months. This period comes down to 30 days in high turbidity regions or during the monsoon period. In fact, most of the SSFs do not function during the monsoon time. This recurring problem with the SSF is one of the reasons for the rapidly growing market of UV/RO plants and off-grid water supply. The RWSSD is currently exploring alternative water treatment technologies, with a view of replacing the SSF in future schemes. In addition, there is interest in adapting the OBA concept in improving the effectiveness and results-orientation of O&M functions for existing rural piped water schemes, with some form of private sector participation if feasible. This is clearly an acknowledgement that the issue is more than just a technology fix.In summary, while the project was a modest pilot intended simply to provide safe drinking water to 75,000 poor rural inhabitants (who would have otherwise continued consuming contaminated water), the way it was designed and implemented, has partially helped to ignite a wider sector discussion on issues ranging from technology choice, O&M arrangements and accountability. This is evidence of the wider relevance of the project and its achievements, which are further elaborated in the following section. 3.2 Achievement of Project Development Objectives The objective of the project was to provide safe drinking water to 75,000 poor inhabitants (earning less than US$20 per month) in 25 coastal villages of AP. The project has delivered results on the ground by providing safe water access through construction and installation of 25 UV water purification plants in 25 villages in Guntur, Krishna and West Godavari districts. By grant closure, all water plants were fully operational and serving a total of 16,104 poor households (or 77,878 people), which is 29 percent higher than the original target of 12,500 BPL households. Household surveys conducted after grant closure found that 98 percent of the households reached by the project still continue to use water from the new plants for drinking purposes (i.e. they have not reverted back to existing contaminated sources). This implies a high community awareness of the health risks of contaminated water, and evidence of the effectiveness of the awareness campaign which complemented the hardware component. Evidence from household surveys also suggests that the project has led to health and economic outcomes (see Table 3.1), which can be reasonably and directly linked to the project outputs.Table 3.1 – Evidence of Health and Economic Benefits from Household SurveysBefore the projectAfter the projectAverage time spent collecting water was estimated at 61 minutesIncidence of water borne diseases in children and adults was 68 percent and 84 percent respectivelyOn an average a family was spending around Rs.300-400 for treatment on these diseases for a single visitAverage time spent collecting water estimated at 20-22 minutes which shows that there was a time saving of around 40 minutes per trip of fetching of water.Overall, the incidence of water borne diseases has dropped by 85 percent (figure collaborated by health workers in the village health centers)Household savings on medical expenses alone was Rs 650-750 a year. Source: TNS India (2011). Assessment of the Community Safe Water Scheme in Andhra Pradesh. Presentation to the World bank Team, February 20113.3 EfficiencyThe total project cost was $970,000 compared to $1.25 million estimated at appraisal. This was because the actual unit cost of installing the UV plant turned out to be 16 percent lower than what was estimated at appraisal.An ex-post economic analysis of the project was carried out. Based on the key benefits (derived and expected) from the project, at a project cost of $970,000, the analysis at grant closing yielded a positive and significant NPV of $4.4 million and an overall IRR of 71 percent (against an IRR of 73 percent at appraisal). The economic benefit of the revenue generated from water sold alone at the established tariff rate is also significant with NPV of $2.5 million and an IRR of 38 percent (against 31 percent at appraisal). When the net benefits (over and above their willingness to pay) of time cost saved to fetch water are added, the IRR increases to 49 percent and with added net benefits from improved health, the overall IRR reaches to 71 percent. The ex post financial analysis reveals that the operators will be able to cover its operating costs and with a profit margin only starting year 2012. With available data on revenue generation and O&M costs as of 2010, the measures being taken to improve consumption and revenue, as well as other relevant information (see Annex 7), it is expected that the a total of 23 schemes under operation by the operator will generate enough revenue to cover the cost with a profit margin starting 2012 and in the 15 year of its useful life. The FRR is estimated at 23% (against 64% at appraisal) when taking into account the subsidy from the grant; and it is estimated at 3.5% (against 6% at appraisal) without the subsidy. 3.4 Justification of Overall Outcome RatingRating: Highly SatisfactoryThe overall outcome of the project is rated as highly satisfactory on the basis of the high relevance of the project, the level of achievement of the PDO, the efficiency of investments made, and household’s continued use of the water sources for drinking purposes as revealed by the household surveys conducted before the ICR mission.The project has delivered more than the expected results through an innovative partnership between Naandi, WHIN and the community, and through a financing mechanism that fosters transparency and accountability for results, innovation and efficiency and sustainability. The implementation approach also promoted participatory community involvement and building capacity in the villages for managing the services. The project shows how potable water schemes can be designed in a sustainable way, with real and direct impact for the community. It enabled over 75,000 poor people to have a safe water source, as without the water purification plants the alternative would have been to drink water from contaminated rivers or from the existing piped water systems whose treatment facilities (and?distribution networks in general)?are dysfunctional, and therefore provide unsafe water fit only for other purposes such as washing. The project also demonstrated that rural households are indeed willing to pay more for clean drinking water.3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social DevelopmentThe project targeted mainly BPL households (at least 500 households per plant), as this is the main reason for the OBA capital subsidy grant. However, this does not mean that other better off households could not access the water plants. The project retained an independent verification agent to ensure that the targeting criteria of the project were met for the initial 500 households registered. Thus, the project has reached the poor population at the grassroots level, people who otherwise would not have been reached through public sector agencies.The poverty impact of improving access to safe drinking water within a reasonable distance is well documented. Access to potable drinking water helps to reduce both the medical expenditure associated with water borne diseases and the time spent in collecting water (see for example Table 3.1). While the former has an immediate impact on disposable income, the latter frees time for more productive activities or, in cases where children are responsible for collecting water, for education. (b) Institutional Change/Strengthening The project relied heavily on the proven track record of the grant recipient (Naandi) and the implementing agency (WHIN) in planning and implementing community-based water schemes. There was no involvement of State government institutions/agencies. Naandi and WHIN worked with the village Panchayat in a tripartite agreement, which helped to strengthen the role of the village Panchayat in service delivery and its capacity to engage with the private sector. Some of the village Panchayats delegated their responsibilities to functional committees from among its members and also co-opted new ones to not only generate demand for safe water, but also in promoting hygiene practices at personal, home and community level. Regular monthly meetings of Functional Committee/User groups were convened to discuss and make decisions on a wide range including protection of raw water source and its catchments, and setting water charges.(c) Other Unintended Outcomes and Impacts (positive or negative)The project has contributed to the development of a new sub-sector of "distributed off-grid water supply" in rural AP. As a result of this project and other NGO/private sector initiatives, the State government has taken interest in this mode of supply, especially in areas with very high fluoride levels in the ground water. The State government has experimented with BOOT contracts for UV/RO water purification plants, with investments entirely raised and made by the private sector. Five 10-year contracts were awarded to five different firms (including WHIN) covering two to three districts per contract. However, some of the firms backed out of the contracts due to failure to raise the required capital or because some of the villages contracted were too small to be viable.The project has also partially contributed to stimulating a wider sector discussion on issues related to appropriate water treatment technology for rural water supply, institutional arrangements for O&M, and improving accountability and transparency in service delivery.4. Assessment of Risk to Development Outcome Rating: ModerateThe risk that the development outcomes will not be maintained is moderate. Some of the key measures taken to enhance the likelihood of sustainable outcomes included an extensive community awareness campaign on the health risks of drinking contaminated water, strong community participation, and a modest user fee to cover the costs of operation and maintenance of the plant and other associated expenditures.Both WHIN and Naandi have already adopted similar initiatives across the State, and there is sufficient commitment to scale up. In fact, Naandi Foundation has recently incorporated a private company (Naandi Water) to help drive the roll-out of similar CSWS schemes in other districts in AP, as well as other States. WHIN is also currently engaged in an expansion drive. Over the past few years the company has instituted a number of changes including changes to its business model, blending technologies, increasing its education and awareness campaigns and a series of changes into its product offerings which has brought in substantial cost savings. In addition, investors in the company are long term investors, including IFC, who are prepared to provide the patient capital required for this new sector.However, the off-grid water supply model is largely unregulated in India. The village Panchayats set the price for the water purification services provided by the system operators or NGOs, and in some cases provides the land and subsidized electricity to run the plants. But their capacity to monitor the performance of the service is limited. Moreover, despite the rapid growth of the off-grid water market in the last few years, uncertainties still remain regarding the long-term sustainability of the model, in light of the rapidly growing rural populations who continue to demand access to higher levels of service for which in many cases, they are willing and able to pay for.5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: SatisfactoryThe project preparation ensured a high likelihood of meeting the project development objective. The selected grant recipient and implementing agency had demonstrated an excellent track record and a proven capacity to deliver the outputs. The selection of competent implementing agencies was instrumental to ensuring the project’s success. As the output-based approach resulted in funding only being disbursed after independent verification of output delivery, the risk to the Bank was at all times low.The output-based nature of the project shifted the demand risk and other operational risks to the recipient and implementing agencies. This ensured a very strong ownership and helped to ensure that the project development objective was reached. The use of an independent verification agent ensured that progress was constantly monitored and the Bank was regularly updated on the number of outputs delivered.During project preparation the task team assessed the recipient’s procurement and financial management capacity. As this capacity was found satisfactory the project relied on the recipient’s and implementing agencies’ procurement and FM arrangements, resulting in a more efficient project implementation. Using existing capacity of the service provider to procure inputs for the project helped to reduce transaction cost and to speed up implementation. The fixed reimbursement on verified outputs effectively protected the Bank against procurement and FM-related risks. (b) Quality of Supervision Rating: Satisfactory The fact that grant disbursements were conditional on the delivery of agreed outputs ensured that project implementation focused on results rather than on inputs. A high quality of performance reporting was assured, as disbursements were conditional on the Bank receiving output verification reports (OVRs) prepared by an independent verification agent. The use of the recipient’s procurement and FM systems, ensured through regular audits by a reputable audit firm, is considered best practice. With this set-up and the small size of the project, the Bank team did not have a significant presence in the field in form of implementation support/supervision missions. India-based staff of the Water and Sanitation Program (WSP) – a partnership between the World Bank and the United Nations Development Program – provided supervision support with regards to the selection of the IVA and during the preparation of this ICR. In addition, WSP’s AP State co-coordinator provided coordination, logistical and advisory support during project identification, design and implementation. Whereas this was a small pilot project implemented by an NGO and a private operator, there was merit in continuously engaging with State agencies (especially RWSSD) regarding the benefits of the approach in general and the potential for wider application. The Bank team working on preparation of the Andhra Pradesh Rural Water Supply and Sanitation (AP RWSS) project (which became effective in 2009) had detailed discussions with GoAP on the OBA pilot and the possibility of scale-up of the model in water quality affected areas as part of the AP RWSS project. However, for reasons already explained in section 3.1, these discussions did not go far. Nevertheless, GoAP went ahead (without Bank support) and experimented with BOOT contracts for UV/RO water purification plants which, as already explained earlier, did not work. (c) Justification of Rating for Overall Bank PerformanceRating: SatisfactoryOverall, Bank performance is rated as satisfactory on the basis of satisfactory performance in ensuring quality at entry and quality of supervision, as justified above. 5.2 Borrower Performance(a) Government PerformanceRating: SatisfactoryGovernment involvement in this project was only at the local village council or Panchayat. The State Government was not involved in this project, although they endorsed Naandi’s grant application to GPOBA. The performance of the village councils is rated as satisfactory on the basis of its strong supporting role during project preparation and implementation in each of the villages targeted. Their buy-in was essential, since they provided access to land, the raw water source and electricity at a pre-agreed tariff for the treatment plant and mobilized the community to support the project. However, their involvement in monitoring the performance of the operators has been limited, largely due to lack of capacity.(b) Implementing Agencies PerformanceRating: SatisfactoryThe two implementing agencies were Naandi Foundation (the grant recipient and project manager) and WHIN (the operator). The two agencies were selected for their capacity and proven track record in implementing similar community-based water schemes. The performance of both agencies is rated as satisfactory. Both demonstrated a strong commitment and knowledge of working at the grass roots level and developing a sense of community ownership necessary to enhance the sustainability of the project.Both Naandi’s and WHIN’s efforts in creating awareness of the health risks of drinking contaminated water, through innovative social marketing tools is considered best practice, and further demonstrated the commitment to go an extra mile to achieve the project development objectives.Both agencies however fell short of adequately complying with the grant agreement provisions related to timely submission of final audit reports and project closing reports. There have also been significant delays on the part of WHIN in providing the required information on the financial and technical performance of the schemes, with the result that it was not possible to carry out a meaningful financial analysis ex post. (c) Justification of Rating for Overall Borrower PerformanceRating: SatisfactoryOverall, the performance of the village councils, grant recipient and implementing agency is rated as satisfactory on the basis of the justification provided above. At the time of grant closing, the grant recipient had complied with all the provisions of the grant agreement, except the submission of a project closing report.6. Lessons Learned The design and implementation of the project offers the following key lessons that might be useful in shaping future projects of this nature:Rural households are willing and able to pay for clean drinking water. This has been a consistent lesson emerging from many Bank-supported rural water supply and sanitation projects in India. However, in most cases this demand has to be created through community awareness campaigns. In this project, paying a cost recovery tariff was a new concept for the beneficiaries, which for decades have been accustomed to expecting free service delivery from the government. The shift in payment behavior was made possible by the community awareness and social marketing campaigns carried out by the implementing agencies, and a high level of transparency and accountability ensured through the OBA approach.A win-win strategic partnership between the grant recipient and the technology provider/operator is critical to success. The role of the Naandi Foundation as grant recipient, administering the project and interfacing with the implementing agency and the Panchayat through a tripartite agreement, has been instrumental for the success of the project. Naandi provided support in selecting communities and in targeting beneficiaries. Throughout the project Naandi conducted visits to beneficiary communities, trained and facilitated community-based health promoters, managed awareness campaigns and helped clarify issues relating to project implementation with the implementing agency. The partnership resulted in a win-win situation whereby WHIN benefited from increased demand generated by Naandi’s safe-water education campaigns, and Naandi benefited from linking its traditional health education work to new and reliable clean water supplies. However, as operators increase their capacity in using the community approach, the need for tripartite agreements between the operator, an NGO and the village Panchayat becomes less necessary. In such a case a direct contractual agreement between the Panchayat and the operator is likely to be more efficient.Small grant-financed pilot projects can stimulate discussion on wider sector issues, but Bank teams must be flexible enough to respond quickly and appropriately. This project partially contributed to stimulating a wider sector discussion on issues related to appropriate water treatment technology for rural water supply, institutional arrangements for O&M, and improving accountability and transparency in service delivery. However, the Bank team missed an opportunity to engage with the line State government agencies (such as the RWSSD) regarding the potential benefits of the OBA approach in general and the potential for wider application.Appropriate application of the Bank’s fiduciary procedures to an output-based arrangement minimized the fiduciary risk to the Bank without encroaching on the implementers’ freedom to use its own systems to deliver outputs. The project has confirmed that paying on outputs effectively transfers procurement and FM-related risks to service providers.7. Comments on Issues Raised by Grantee/Implementing Agencies(a) Grantee/Implementing agenciesThe Grantee (Naandi Foundation) did not have substantive comments on the ICR(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)The private operator (WHIN) did not have substantive comments on the ICRAnnex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent)ComponentsAppraisal Estimate (USD millions)Actual/Latest Estimate (USD millions)Percentage of AppraisalComponents 1 and 2 – construction, Installing, commissioning and operating community safe water Schemes and promotion of awareness on safe drinking water1.250.97178%Independent Verification 0.050.03469%Total Baseline Cost??1.301.00577%Physical Contingencies 0.000.00 N/APrice Contingencies 0.000.00 N/ATotal Project Costs?1.301.00577%Project Preparation Costs0.0750.06485%Total Financing Required??1.3751.08579% (b) FinancingSource of FundsType of Co-financingAppraisal Estimate(USD millions)Actual/Latest Estimate(USD millions)Percentage of Appraisal Trust Funds0.000.00N/A Global Partnership on Output-based Aid0.850.83498%Community Contribution0.250.1768%Commercial borrowing0.200.1995%Annex 2. Outputs by Component Component 1 – Construction, Installing, Commissioning and Operating Community Safe Water Schemes Component 2 – Promotion of Awareness on Safe Drinking WaterThis component involved undertaking campaigns and developing and implementing information, education and communication (IEC) strategies for the purpose of educating the targeted rural communities on the benefits of safe drinking water and promoting the use of treated water from the CSWSs. As awareness creation was not an OBA output, data on number of campaigns carried out and number of people reached was not systematically tracked and therefore was not available at the time of the ponent 3 – Independent Verification, Monitoring and EvaluationThe Independent Verification Agent produced 3 reports per village (i.e. OVR 1, II and III). This translates into a total 75 reports for all the 25 villages. Annex 3. Economic and Financial AnalysisEconomic Analysis The project at completion provided safe drinking water to some 16,104 (against the original target of 12,500) poor households (or 77,878 people) in 25 coastal villages of Andhara Pradesh (AP). The project provided significant short and long-term benefits with many positive spillover social and economic impacts at the individual and community levels. Health and environmental benefits and cost saving from medical and health related expenses are the largest benefits of any water supply and sanitation project, but they are difficult to quantify in entirety. A benefit-cost framework using a “with” and “without” project methodology has been used to calculate the Economic Rate of Return and the Net Present Value (NPV) of the project, ex post. The economic analysis covers a project life of 15 years. Cash flow is discounted at 12%, which is the estimated cost of capital. A conservative inflation rate of 6% per annum is assumed for cash flow analysis. Without project situation is what would have been prevailed without the project vis-a-vis factors such as population increase, continued exposure to contaminated water, and economic growth. The quantifiable economic benefits include: (i) water sold at flat tariff rate established by the operator which comprise of economic value of incremental water consumptions by households with access to safe water; (ii) health benefit of the project for the beneficiaries; and (iii) potential time cost saving for collecting water from distance. The economic value of cost of time saved is estimated using the opportunity cost of labor or the income foregone in other income generating activities; which is considered benefits to the households and the society. The ex post economic analysis yield a positive and significant NPV of Rs.199 million (or US$4.4 million) and an overall IRR of 71% (against IRR of 73% for ex ante economic analysis at appraisal). The economic benefit of the revenue generated from water sold alone at the established tariff rate is also significant with NPV of R.113.9 million (or US$2.5 million) and an IRR of 38% (against 31% at appraisal). When the net benefits (over and above their willingness to pay) of time cost saved to fetch water are added, the IRR increases to 49% and with added net benefits from improved health, the overall IRR reaches to 71%. Financial AnalysisThe ex ante financial analysis at appraisal revealed that project was financially sustainable from the operator’s perspective. The ex post financial analysis reveals that the operators will be able to cover its operating costs and with a profit margin only starting year 2012. The reasons are: (i) of the 25 schemes constructed 23 are operated and maintained by the operator (2 are operated by the communities); (ii) of the 23 schemes in operations at the project closing in 2010, only 11 covered direct O&M costs and remaining sites did not generate enough revenue to cover operating costs; (iii) plant constructed were in operation only 8 hours a day; (iii) consumption in 9 sites was low due to bad taste of water; and (iv) in 3 sites community is small and therefore insufficient volume of water produced and consumed. All these issues are being addressed, schemes are being upgraded to be operated more efficiently with better quality water, and operational hours of the schemes are being increased to cater increasing demand. With available data on revenue generation and O&M costs as of 2010, the measures being taken to improve consumption and revenue, as well as other relevant information, all 23 schemes are expected to generate enough revenue to cover the cost with a profit margin starting 2012 and in the 15 year of its useful life. The FRR is estimated at 23% (against 64% at appraisal) when taking into account the subsidy from the grant; and it is estimated at 3.5% (against 6% at appraisal) without the subsidy. Annex 4. Grant Preparation and Implementation Support/Supervision Processes (a) Task Team membersNamesTitleUnitResponsibility/SpecialtyLending/Grant PreparationCledan Mandri-PerrottSr. Infrastructure SpecialistFEUFSTask Team LeaderMustafa Zakir HussainInfrastructure SpecialistFEUFSInfrastructure SpecialistJuri SekiguchiConsultantFEUFSConsultantLuis TineoSr. Procurement SpecialistGPOBASr. Procurement SpecialistPriyanka SoodConsultantGPOBAConsultantKumaraswamy SankaravadiveluProcurement AnalystSARPSProcurement AnalystRanjan SamantarayConsultant (Environment)SASESConsultant (Environment)Suryanarayan SatishSenior Social Development SpecialistSASESSenior Social Development SpecialistAtul DeshpandeFinancial Management SpecialistSARFMFinancial Management SpecialistShellka AroraLegal AssociateSARIMLegal AssociateICR Josses MugabiWater & Sanitation SpecialistSASDUICR Team LeaderDaniel CoilaInformation OfficerGPOBAInformation/Data retrievalShideh HadianSr Infrastructure EconomistSASDUEconomic/Financial Analysis(b) Staff Time and CostStage of Project CycleStaff Time and Cost (Bank Budget Only)No. of staff weeksUSD Thousands (including travel and consultant costs)LendingFY065.3623.70918 FY076.8839.92773Total:12.2463.63691Supervision/ICR FY092.2811.35776 FY106.9323.52481 FY119.3866.68742 FY123.715.33612Total:22.29116.90611 Annex 5. Beneficiary Survey Results(if any)Not applicableAnnex 6. Stakeholder Workshop Report and Results(if any)Not applicableAnnex 7. Summary of Grantee's ICR and/or Comments on Draft ICR The Grantee did not submit their own ICR and did not provide substantive comments on the Bank ICR. However, the private operator (WHIN) provided s short report in response to a number of question posed by the Bank team during the ICR mission. The full original text of the report is provided below.**********Background: WHIN entered into contract with Naandi in 2007 to construct and operate 25 Community Water systems in the state of Andhra Pradesh. The projects were to be funded through a mix of community contribution, GPOBA funding, bank Loan / WHIN Contribution. The 25 plants are spread in 3 districts of the state, namely, Krishna, Guntur and West Godavari. All the 25 CWS plants (the sites are listed in Annexure) were operational in 2010 and WHIN received the agreed GPOBA Contribution from Naandi (last tranche received in Nov 2010). WHIN has deployed UVW technology constructed all the 25 sites. In 2009-10, WHIN has used its own funds to retrofit 5 sites (Machavaram, Obulesunipalle, Nuzendla, Nutakki and Ikkuru) with RO technology due to high TDS content in the raw water. The prevailing price points for water are 15 paise / litre for UV plants and 20 paise / liter for RO plants. Of the 25 CWS constructed, 22 were under WHIN operation at the end of 2010. Community has taken over operations of two CWS (Tetali & Telaprolu). The Community had taken over a third plant (Marteru), which it has handed back to WHIN in Q4 2010. WHIN has recently started operating the Materu facility as of the beginning of 2011. Responses to questions in mail dated 25th Feb 2011 1. Actual amount of community contribution realized from the 8 villages (from which you collected community contribution) Per our records, we have not received any contribution from the communities of the 8 villages. Naandi discontinued collecting from the local communities in those 8 villages, and WHIN was unsuccessful in collecting the dues from the community, partly because the facility was already built and partly because of confusion with Naandi’s departure (e.g. certain of the communities claimed that they had paid Naandi, a claim that WHIN could not verify). Therefore, WHIN ended up funding the community shortfall in those 8 communities. 2. The amount of private capital contributed to the project Please refer to the table below for the breakup of the funding for the 25 plants. In addition, WHIN has also provided funding of approx. Rs [1.2 Mn] for RO augmentation. 3. Average yearly O&M costs for each plant, and for all the 25 plants, 2007- 2010 data, where applicable. WHIN groups into O&M costs of a CWS into 4 categories as follows: Direct O&M expenses: Wages of operator, utility expenses, consumables, repair & maintenance and insurance Interest costs : interest payable on the bank loan allocated to a site Allocated O&M expenses: includes allocated wages of WHIN staff who manage the plants (sales, service, quality teams) Corporate costs: Allocated WHIN corporate costs [and interest on WHIN contribution] Please refer to the Table 1 in the Annexure for direct O&M expenses of the plants for period of 2007 – 2010. 4. Average yearly water sales (in both m3 and $$) for each plant, and for all the 25 plants The portfolio performance during 2007-2010 is summarized as chart above. Please refer to the Tables 2 & 3 in the Annexure for site-wise data. As can be seen in the chart, 11 of the 22 sites that WHIN has been operating are covering their direct O&M expenses. The remaining 11 sites are not covering their direct O&M expenses for the following key reasons: In Pedakallepally, water is not available throughout the year, thus hampering operations In Obulesnapalli, Sanarudravara and Ravipadu NTR respectively, the community is too small and therefore sufficient volumes are not processed through the WHC to ensure profitability In Khaza, Pasivedula, Pulipadu, Valluru, Kodamanchali, Tadinada and Nuzendla the community does not like the taste of water (due to high TDS level) and therefore uses other sources of water 5. No. of plants already breaking even out of the 25 plants The portfolio of 22 plants has started meeting all direct O&M expenses in 2010. Please refer to the chart above. Of the 22 plants under WHIN operation in 2010, 11 sites have covered the direct O&M expenses. The other milestones for profitability are coverage of interest costs, allocated overheads and WHIN corporate costs, which these 11 sites are expected to attain in [2012]. Of the 11 sites where Revenues in 2010 were insufficient to meet the direct O&M expenses, 9 sites are planned to be upgraded to RO technology which will improve the taste of the water (which is a big driver for community adoption) and drive consumption. The RO technology up-gradation is expected to be completed by the end of 2011. The remaining 2 sites - Obulesnapalli and Sanarudravaram - will not be upgraded as they require other interventions, which may include handover of the CWS to the community or relocation of CWS to a different village. 6. Summary table of key performance indicators for all the plants (reliability, quality, production, hours of operation, water losses, etc) Plants are operational for at least [8] hours each day – 4 in the morning and 4 in the evening.. Where the demand is higher, operational hours are increased to cater to the demand of the community. * WHIN tests the quality of water produced at each plant twice a month at 15 day interval – one at the plant using a field test kit which yields the proximate analysis and the other at its lab in Vijayawada where the water is tested for [20] parameters. The water tested for compliance with WHO standards and IS 10500 (Potable drinking water standards are prescribed by Bureau of India Standards ** Out of the total universe of samples tested for all the GPOBA funded WHCs, only 10 samples were defective in 2008, 0 were defective in 2009 and 7 were defective in 2010. All sites, which tested negative, were re-sanitized for issue redressAnnexures: Table 1: Site wise annual direct O&M expenses for 2007 – 2010 in Indian Rupees The sites are listed in the order in which they commenced operations. Three sites were taken over by the local community in early 2010, one of which has been handed back to WHIN for operation Marteru was taken over by Community in and was handed back to WHIN in Q42010. Telaprolu and Tetali were taken over by community in [early 2010] and are under community operation. WHIN continues to be in discussion with the local community to retake operations of the facility In the instance where the community took over the plant, WHIN continued to incur O&M. This is because the plant was taken in March. Thus, for the months of January, February and March, O&M costs were incurred Average per site O&M expenses have reduced by 30% between 2008 and 2010 due to (i) better procurement strategies for consumables and (ii) optimization of consumables, Repairs & maintenance processes and (iii) optimization of the operator pool. Table 2: Site wise annual Revenue (User Fees) for 2007 – 2010 in Indian RupeesThe sites are listed in the order in which they commenced operations. Marteru was taken over by Community in [early 2010] and was handed back to WHIN in Q42010. Telaprolu and Tetali were taken over by community in [early 2010] and are under community operation. Avg revenue per site has increased 4 times between 2007 and 2010. Machavaram was fitted with RO in [second half of 2010] hence a significant improvement in revenue over 2009. Table 3: Site wise annual volume dispensed for 2007 – 2010 in litres The sites are listed in the order in which they commenced operations. Marteru was taken over by Community in [early 2010] and was handed back to WHIN in Q42010. Telaprolu and Tetali were taken over by community in [early 2010] and are under community operation. Overall Volumes dropped after 2008 due to change in user fee from 7.5 paise / Liter to 15 paise / Liter and increased competition offering RO and Ozonized water. Annex 8. Comments of Co-financiers and Other Partners/Stakeholders Not applicableAnnex 9. List of Supporting Documents Mandri-Perrott (2008). Output-based Aid in India: Community Water project in Andhra Pradesh. OBApproaches Note 21 (October 2008). GPOBA/World Bank, Washington DC.World Bank (2009). Andhra Pradesh Rural Water Supply and Sanitation Project. Project Appraisal Document. World Bank, Washington DCWorld Bank (2004). Country Assistance Strategy for India. World Bank, Washington DCMAP I N S E R T M A PH E R E AFTER APPROVAL BY COUNTRY DIRECTORAN ORIGINAL MAP OBTAINED FROM GSD MAP DESIGN UNIT SHOULD BE INSERTEDMANUALLY IN HARD COPYBEFORE SENDING A FINAL ICR TO THE PRINT SHOP.NOTE: To obtain a map, please contact the GSD Map Design Unit (Ext. 31482)A minimum of a one week turnaround is required ................
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