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Translated Document AFRICAN DEVELOPMENT BANK MOROCCO DRINKING WATER QUALITY AND SERVICE IMPROVEMENT PROJECT APPRAISAL REPORT OWAS DEPARTMENT May 2016 Public Disclosure Authorized Public Disclosure Authorized

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Page 1: MOROCCO DRINKING WATER QUALITY AND …...Country and Project Title: Morocco - Drinking Water Quality and Service Improvement Project ... 1. Percentage of household health expenditure

Translated Document

AFRICAN DEVELOPMENT BANK

MOROCCO

DRINKING WATER QUALITY AND SERVICE IMPROVEMENT PROJECT

APPRAISAL REPORT

OWAS DEPARTMENT

May 2016

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Page 2: MOROCCO DRINKING WATER QUALITY AND …...Country and Project Title: Morocco - Drinking Water Quality and Service Improvement Project ... 1. Percentage of household health expenditure

TABLE OF CONTENTS

Acronyms and Abbreviations, …………............................................................................…………. i

I – Strategic Thrust and Rationale ....................................................................................................... 1

1.1. Main Development Challenges ............................................................................................. 1

1.2. Project Linkage with Country Strategy and Objectives ........................................................ 2

1.3. Rationale for Bank Involvement ........................................................................................... 2

1.4. Aid Coordination................................................................................................................... 3

II - Project Description ........................................................................................................................ 3

2.1. Project Components .............................................................................................................. 3

2.2. Technical Solutions Adopted and Alternative Solutions Considered ................................... 4

2.3 Type of Project / Instrument ................................................................................................. 5

2.4. Project Cost and Financing Mechanisms .............................................................................. 5

2.5. Project Area and Beneficiaries .............................................................................................. 7

2.6. Participatory Approach to Project Identification, Design and Implementation .................... 8

2.7. Bank Group Experience and Lessons Reflected in Project Design ...................................... 8

2.8. Key Performance Indicators ................................................................................................ 10

III - Project Feasibility ....................................................................................................................... 11

3.1. Economic and Financial Performance ................................................................................ 11

3.2. Environmental and Social Impact ....................................................................................... 11

IV – Implementation .......................................................................................................................... 14

4.1. Implementation Arrangements ............................................................................................ 14

4.2. Monitoring .......................................................................................................................... 16

4.3. Governance ......................................................................................................................... 17

4.4. Sustainability ....................................................................................................................... 17

4.5. Risk Management ............................................................................................................... 18

4.6. Knowledge Development .................................................................................................... 19

V – Legal Framework ........................................................................................................................ 19

5.1. Legal Instrument ................................................................................................................. 19

5.2. Conditions Associated with the Bank’s Intervention .......................................................... 19

5.3. Conformity with Bank Policies ........................................................................................... 21

VI – Recommendation ....................................................................................................................... 21

Annex I. Development Indicators of Morocco .............................................................................. I

Annex II. Table of the AfDB's Active Portfolio in Morocco (End-February 2016) ...................... II

Annex III. Major Related Projects Financed by the Bank and Other Development Partners

of Morocco ................................................................................................................... III

The information and data in this report were collected by the project team, led by Mr. Belgacem BENSASSI, Chief Water and

Sanitation Engineer, Project Officer, following a preparation mission to Morocco from 2 to 13 March 2015 and an assessment

mission from 23 November to 4 December 2015.

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Currency Equivalents December 2015

UA 1 = MAD 13.8232

UA 1 = EUR 1.29707

UA 1 = USD 1.37217

Fiscal Year

1st January – 31st December

Weights and Measures

1 km = kilometre = 1000 m

1 km2 = square kilometre = 1000 m2

1 ha = hectare = 10,000 m2

1 lm = linear metre

1 m3 = cubic metre

1 m3/d = cubic metre per day

1 hm3 = million cubic metres

l/s = litres per second

inhab/ha = inhabitants per hectare

l p/d = litres per person per day

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Acronyms and Abbreviations

AFD = French Development Agency

AFESD = Arab Fund for Economic and Social

Development

ARP = Abbreviated Resettlement Plan

BD = Bidding Documents

CSP = Country Strategy Paper

DWS = Drinking Water Supply

EBRD = European Bank for Reconstruction and

Development

EIB = European Investment Bank

ERR = Economic Rate of Return

ESMP = Environmental and Social Management Plan

EU = European Union

FIRR = Financial Internal Rate of Return

GIS = Geographic Information System

GIZ: German Agency for International Cooperation

IBRD = International Bank for Reconstruction and

Development

IsDB = Islamic Development Bank

ISS = Integrated Safeguards System

IWRM = Integrated Water Resource Management

JICA = Japanese International Cooperation Agency

KFW = Kreditanstalt für Wiederaufbau

[German Public Investment Bank]

MAFO = Morocco Field Office (AfDB)

MEMEE = Ministry of Energy, Mines, Water

Resources and the Environment

NHDI = National Human Development

Initiative

NSP = National Sanitation Programme

ONEE = National Electricity and Drinking

Water Authority

PAPMV = Green Morocco Plan Support

Programme

PNEEI = National Irrigation Water Saving

Programme

PP = Procurement Plan

SAP-EAU = Water Sector Adjustment Plan

SDF = Saudi Development Fund

SDGs = Sustainable Development Goals

TFP = Technical and Financial Partners

UA = Unit of Account

WHO = World Health Organisation

WTG = Water Thematic Group

Page 5: MOROCCO DRINKING WATER QUALITY AND …...Country and Project Title: Morocco - Drinking Water Quality and Service Improvement Project ... 1. Percentage of household health expenditure

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Project Information Sheet

Client Information

BORROWER: National Electricity and Drinking Water Authority (ONEE)

EXECUTING AGENCY: ONEE (Water Branch)

GUARANTOR: Government of Morocco (Ministry of the Economy and Finance)

Financing Plan

Source Amount (UA) Instrument

AfDB

68.5 million

AfDB loan

ONEE 22.5 million -

EBRD (parallel financing) 12 million -

IBRD (parallel financing) 34 million -

TOTAL COST 137 million -

Key Financial Information of the AfDB

Loan currency

EUR

Loan* Type Fully Flexible Loan

(FFL)

Interest Rate Base rate + Financing

cost margin + Lending

margin + Maturity

premium

Base Rate 6-month EURIBOR

floating rate

Lending Margin* 60 basis points (0.6%)

Commitment Charge* None

Other Charges* None

Grace period 60 months

FIRR, NPV (base-case scenario): 7.5%

MAD 95 million

ERR (baseline scenario) 15.2% MAD 217 million

*if applicable

Duration – Main stages (projected)

Approval of concept note

November 2015

Project approval May 2016

Signing of loan and guarantee agreements June-July 2016

Effectiveness of the agreements September 2016

First disbursement September 2016

Completion December 2020

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PROJECT SUMMARY

General Overview of Project

1. The project to improve water quality and the performance of DWS systems in Morocco entails

strengthening and securing drinking water supply in several towns especially Bouznika, Ben Slimane,

Youssoufia and Safi and improving water quality within the Bouregreg system (artificial aeration at SMBA

dam and ozonation at the current treatment plant) and the performance of existing DWS systems (reduce

losses, optimize operation...). The project area includes all provinces along the Rabat-Casablanca highway

and especially the provinces of Bouznika and Ben Slimane (in the economic hub of Rabat-Casablanca) and

Youssoufia and Safi provinces (in the economic hub of Doukkala Abda) which are experiencing an

economic, tourism and industrial boom. It seeks to meet the drinking and industrial water needs of these

areas up to 2030. This project, which is estimated to cost UA 137 million, is scheduled to be implemented

over a period of 48 months (2016-2020).

2. Under its Component A, the project will benefit communities in the provinces of Bouznika and

Benslimane, estimated at 120,000 inhabitants in 2015 (including over 50,000 inhabitants in rural areas) and

of Youssoufia and Safi, estimated at 316,000 inhabitants in 2015 (including 202,000 inhabitants in rural

areas). Operations under component B will benefit communities in the area that lies between Morocco’s

two major cities (Rabat and Casablanca), which is the most populated and most urbanized part of the

country, estimated at 5 million inhabitants in 2015 (including approximately 1 million in rural areas).

Needs Assessment

3. The project was designed based on priority needs defined by ONEE (Water Branch) under its

Programme Contract with the State of Morocco for 2014-2017. The need to implement the project now is

essentially driven by the necessity to improve the quality of DWS services (especially the quality of

distributed water) for a population of almost five million people (along the Rabat-Casablanca highway

which is the most crucial region of the country from the demographic and economic standpoints), especially

in summer and early autumn and all the more so during periods of drought which have become more

frequent due to the effects of climate change in recent years. It is also driven by the need to ensure the

sustainability of the drinking water distribution service of ONEE (Water Branch) throughout the territory,

improve service by ensuring its continuity and cut the operating costs of DWS systems (reduce losses,

increase storage autonomy...).

Bank’s Value-added

4. The decision by ONEE (Water Branch) to propose that the Bank participate in financing this

project is motivated by the AfDB's proven advantage in the implementation of similar projects (with fairly

emergency operations in large and medium-sized cities). Such comparative advantage is clearly illustrated

in the implementation quality of recent projects financed by the Bank in the drinking water and sanitation

sector in Morocco, the most recent ones being the DWS consolidation project along the Rabat-Casablanca

highway approved in 2010 and the drinking water consolidation project in the region of Marrakech,

approved in 2012. Efforts are still needed to improve the procurement process and the latest policy on the

procurement of goods, works and services approved by the Bank's Board of Directors in October 2015, will

contribute significantly to this objective .

5. This operation will also serve as an opportunity for the Bank to intervene in the ONEE (Water

Branch) performance improvement programme currently supported by several partners in Morocco’s water

sector, namely IBRD, KFW, AFD, EIB, EBRD...

Knowledge Management

6. The project will enhance the experience of ONEE (Water Branch) in the implementation and

operation of drinking water supply and sanitation projects in urban and rural areas. The introduction of

innovative techniques such as ozonation, improvement of the output of various networks and the selection

of more economical alternatives reflect the effort of ONEE (Water Branch) to build on its achievements in

research and development and improve its project design and implementation skills.

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RESULTS-BASED LOGICAL FRAMEWORK

Country and Project Title: Morocco - Drinking Water Quality and Service Improvement Project Project Goal: Consolidate and secure DWS in several towns and improve water quality and the performance of existing DWS systems. RESULTS CHAIN PERFORMANCE INDICATORS MEANS OF VERIFICATION RISKS /

MITIGATION MEASURES Indicator (including ISCs) Baseline Situation Target

IMP

AC

T

The socio-economic and sanitary living

conditions of the communities are

improved through securement of

drinking water in the urban and rural

areas concerned.

1. Percentage of household health expenditure

(contribution of water quality)

2 Net enrolment ratio for girls (in rural and urban

areas)

3. Water-borne disease rate

4. Under-five mortality rate (contribution of water-

borne diseases)

5. Maternal mortality rate

6. Unemployment rate

7. Poverty rate

53% in 2014

82.7% (rural areas) and 99% (urban

areas) in 2014

22.9% in 2011

30 per 1,000 inhabitants in 2014

112 per 100,000 inhabitants in 2014

9.2% in 2013

8.9% in 2012

Less than 50% in 2020

90% (rural areas) and 99.5 % (urban

areas) in 2020

Less than 10% in 2020

Less than 25 per 1,000 inhabitants in

2020

50 per 100,000 inhabitants in 2020

Less than 7% in 2020

Less than 7% in 2020

National statistics

National statistics

Statistics from the Ministry of Health

Statistics from the Ministry of Health

Statistics from the Ministry of Health

National statistics

National statistics

OU

TC

OM

ES

1. The drinking water production and

supply systems for the towns of

Bouznika, Ben Slimane, Youssoufia,

Safi are secured and strengthened.

2. Quality of treated water at Bouregreg

complex improved.

3. Technical performance of existing

DWS systems improved.

1.1. Access to drinking water for urban communities

in the towns concerned.

1.2. Drinking water access rate for urban

communities in the towns concerned.

2. Quality of treated water (taste and smell)

3.1. Average output of ONEE (Water Branch) water

supply networks

3.2. Average output of ONEE (Water Branch) water

distribution networks

3.3. National energy ratio

100% in 2014 (including 51%

women)

92% in 2014 (including 51%

women)

Taste threshold ≥ 1 in 2014

95.13% in 2014

73.9% in 2014

0.618 kWh/m3 in 2014

100% in 20201

95% in 2020

Taste threshold <1 in 2020

95.7% in 2020

76.5% in 2020

0.649 kWh/m3 instead of 0.723

kWh/m3 in 2020 2

ONEE reports and statistics

Reports and statistics from the Authorities

National statistics

User surveys

Risks

- Preservation and availability of water

resources as well as integrated and optimal

management of these resources.

Mitigation Measures

- Implementation of SAP-Eau and State-ONEE

programme contract (2014-2017) measures as

well National Water Strategy action plans.

OU

TP

UT

S

1.1. Bouznika DWS reinforced

1.2. Ben Slimane DWS reinforced

1.3. Youssoufia DWS reinforced

1.4. Southern Safi DWS reinforced

1.5. BC2 and BC5 pipes rehabilitated

1.1. Water flow rate available.

1.2. Water flow rate available.

1.3. Water flow rate available.

1.4. Water flow rate available.

1.5. Number of interventions per year caused by

ageing pipe

407 l/s in 2014

190.5 l/s in 2014

137 l/s in 2014

0 l/s in 2014

2 to 3

507 l/s in 2018

340.5 l/s in 2018

377 l/s in 2018

40 l/s in 2018

None (0)

Quarterly project monitoring reports

provided by ONEE, Bank supervision

reports

Reports and statistics from MENEE and

other ministries concerned

Mid-term review report and project

completion report (PCR)

Risks

- Long delays in procurement of the necessary

lands.

- Long delays in the procurement of goods and

works.

- Limited experience of ONEE (Water Branch)

in artificial aeration and ozonation

Mitigation Measures

- Selection of the conduits and locations for the

piping and facilities (excluding towns and low-

value land) and commencement of the

procurement process before start of the project.

- Clear and precise definition of the various

stages of the procurement process, and of the

documents to be used (standard bidding

document models).

2.1. Artificial aeration installed at

SMBA dam.

2.2. An ozonation section installed at

the existing Bouregreg treatment plant

2.1. Eutrohication of SMBA dam

2.2. Reduction of THM formation (following

reduced use of chlorine)

O2 = 0 mg / l and H2S from the

bottom intake in 2014

Non-availability of a bottom outlet

from the inlet water tower

THM index ≥1 in 2014

O2 ≥ 4mg/l and absence of H2S from

the bottom intakes 2018

THM index3<1 in 2018

1 Maintaining the urban access rate at 100% requires extra effort to meet the water needs of the additional population and of new economic activities (tourism, industry ...) programmed for 2020. 2 That is to say, if the project is not executed, the energy ratio will amount to 0.726 kWh/m3; in order words ONEE (Water Branch) will gain 0.074 kwh/m3 thanks to the project. 3 THMs are by-products of water chlorination formed primarily when chlorine reacts with organic substances (humic and fulvic substances) present in water (Health Canada, 1993). The recommended value by Moroccan standards is:

THM < 1.

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v

OU

TP

UT

S (

con

t’d

)

3.1. Four treatment stations

rehabilitated.

3.2. Improved metering.

3.3. Leakages sought.

3.4. Output of distribution networks

improved.

3.5. Production facilities rehabilitated:

3.5.1 Water supply piping

3.5.2 Pumping stations

3.6. Storage capacity enhanced.

3.1. Hydraulic efficiency of the treatment stations

enhanced.

3.2 to 3.4 Average output of the water distribution

networks of ONEE (Water Branch)

3.5 &3.6. Storage capacity (hours per day)

In 2014: 74.56% (Taounate), 89.62

(Mkansa), 94 (Ain Gdah) and 80%

(Kria)

73.9% in 2014

Autonomy < 12 hours in 2014 (*)

95% in 2021 for the 4 stations

76.5 in 2018

Autonomy < 12 hours in 2019

- Reinforcement of the technical support team

with the required experts from the fields of

artificial aeration and ozonation.

KE

Y A

CT

IVIT

IES

COMPONENTS RESOURCES

A. Reinforcement of DWS systems of several urban areas

A.1. Reinforcement of the Bouznika DWS system (laying of pipes, building of the pumping station and reservoirs ...).

A.2. Reinforcement of the Ben Slimane DWS system (laying of pipes, building of the pumping station and reservoirs ...).

A.3 Reinforcement of the Youssoufia DWS system (laying of pipes, building of the pumping station and reservoirs ...).

A.4 Reinforcement of the Safi DWS system (laying of pipes, building of the pumping station and reservoirs ...).

A.5 Rehabilitation of BC2 and BC5 pipes (laying of pipes).

B. Improvement of the treatment quality at Bouregreg complex

B.1. Artificial aeration of SMBA dam (installation of aerators and piping, air compression facility ...).

B.2. Installation of an ozonation system in the existing pumping station (laying of pipes, installation of ozonation equipment ...).

C. Improvement of the performance of existing DWS systems

C.1. Rehabilitation of the 4 existing treatment stations.

C.2. Improvement of metering (large calibre mechanic and electronic).

C.3. Identification of leakages.

C.4. Improvement of the output of distribution networks.

C.5 Rehabilitation of production facilities.

C.6 Reinforcement of storage capacity.

D. Technical support

D.1 Implementation studies by companies approved.

D.2 Acceptance report signed, works attachments validated, monitoring reports prepared.

RESOURCES (in UA million)

- ADB loan: UA 68.5 million.

Kingdom of Morocco (ONEE): UA 22.5 million.

EBRD & IBRD (parallel financing): UA 46 million.

(*) The establishment of new production facilities can be justified in some cases by lack of pressure or low autonomy

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PROJECT IMPLEMENTATION SCHEDULE 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

Loan approval by the Board

Signature of loan agreement

Effectiveness of the loan agreement

First disbursement

1- Technical support (AAA)

Shortlist of consultancy firms

Consultation of consultancy firms selected

Assessment of bids

Award of contracts

Implementation of services

Drafting of completion of report

2- STRENGTHENING OF DWS SYSTEMS

BOUZNIKA DWS

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

BEN SLIMANE DWS

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

YOUSSOUFIA DWS

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

SAFI DWS

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

REHABILITATION BR

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

3- QUALITY IMPROVEMENT

ARTIFICIAL AERATION

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

OZONATION

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

4- PERFORMANCE IMPROVEMENT

TREATMENT STATIONS

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

METERS (SMALL AND LARGE SIZES)

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

IDENTIFICATION OF LEAKAGES

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

DISTRIBUTION NETWORKS

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

PRODUCTION FACILITIES

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

STORAGE CAPACITY

Consultation of companies

Assessment of bids

Award of contracts

Works execution

Acceptance of works

5-. PROJECT COMPLETION

Completion report of ONEE (Water Branch)

Completion report of the Bank

20202016 2017Description

2018 2019

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REPORT AND RECOMMENDATION OF BANK GROUP MANAGEMENT TO THE BOARD OF

DIRECTORS CONCERNING A PROPOSAL TO AWARD A LOAN TO MOROCCO FOR THE

DRINKING WATER QUALITY AND SERVICE IMPROVEMENT PROJECT

Management hereby submits these reports and recommendations for a proposed loan of EUR 88.85

(approximately UA 68.5 million) to the National Electricity and Drinking Water Authority (ONEE) to

finance the Drinking Water Quality and Service Improvement Project in Morocco.

I Strategic Thrust and Rationale

1.1. Main Development Challenges

1.1.1 Morocco is a water-stressed country which constitutes the primary challenge to its development.

The rainfall is very low and water is unevenly distributed among the various regions of the

country. Drinking water production has increased threefold over the past three decades. Given the

projected trend of water needs for various uses, the storage capacity of the 140 dams should be strengthened.

Water scarcity projections are disturbing and the rate of renewable water resources per capita and per year

must rise to 625 m3/inhab/year in 2020 (the critical threshold being 1000 m3/inhab/year). Furthermore, the

quality of surface and particularly ground water has deteriorated. According to recent studies, an estimated

8% to 10% of the nitrogen used as fertilizer on farms leaches into the groundwater. Indeed, integrated water

resource management has emerged as the Number 1 environmental priority both in growth diagnosis and

in mid-term review of the 2012-2016 country strategy. This project will boost the development of

infrastructure that contributes to sustainable water management.

1.1.2 At the same time, Morocco has been experiencing steady urbanization for the past three decades.

The proportion of urban dwellers in the total population rose from 51.4% in 1994 to 60.3% in 2014, and

is projected to rise to 69% in 2050. This urbanization is partly driven by better living conditions in the

cities. Indeed, poverty remains a predominantly rural phenomenon in Morocco (14.5% compared to 4.8%

in urban areas in 2007). Access to basic services is also better in urban areas. For instance, the household

access rate to improved water sources in 2015 is 100% compared to 95% in rural areas. This is directly

reflected in the social indicators. The cities attract so many people because they are, above all, the driving

force of the Moroccan economy and are replete with opportunities for creating jobs with higher value added

and, consequently, better remuneration. Hence, cities account for over 75% of the national GDP.

1.1.3 However, regardless of this accelerated urbanization process, cities must continue to develop

inclusively. In that regard, the national “Cities without Slums” programme launched in 2004 has led to

more harmonious development of urban areas. As a result, some 54 cities were declared slum-free in 2015.

Meanwhile, the National Human Development Initiative (INDH), is implementing the “programme to

combat social exclusion in urban areas” which seeks to upgrade basic infrastructure (water, electricity,

roads,), improve access to education and health and create income-generating activities.

1.1.4 Consequently, the second development challenge is to avoid extremely wide disparities in access

to services between city suburbs (which have the poorest communities, including those generated by

rural exodus) and the city centres, between large cities and satellite towns (in interurban areas), and

between rural and urban areas. In fact, regular infrastructure upgrade is necessary, with priority given to

basic infrastructure. Access to drinking water in these increasingly urbanized areas is a major challenge

that has a predominant “gender” dimension because there is no sustainable access to water for the new

urban communities whose members very often come from poor backgrounds. Accordingly, this project

seeks to improve access to drinking water for poor communities in urban or rural and interurban areas,

comprising the Regions of Rabat-Casablanca, Bouzinka-Ben Slimane and Youssoufia-Safi.

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1.1.5 Apart from these two challenges, growth diagnosis at the national level has revealed market

weaknesses with regard to innovation in Morocco.

In particular, the study reveals how the public sector, through better investment coordination can be the

vector of innovation within the economy by, for instance, promoting new technologies when providing

public services. In this regard, the project seeks to promote an innovative water treatment technique

(artificial water aeration in the dam and an ozonation system in the treatment stations[1]).

1.2. Project Linkage with Country Strategy and Objectives

1.2.1 Cognizant of the importance of sustainable water management, Morocco launched the reform of

its regulatory framework in 2015. Law No. 10-95 on water resources laid the foundation for integrated

water resource management (IWRM) that is more demand-driven. The bill to revise Law No. 10-95 on

water resources, drafted in 2015, will be used to: (a) clarify and simplify the conditions for using water

resources and the public water domain; (b) integrate provisions on groundwater preservation, rainwater

management, sanitation and recycling of wastewater, management of water-related risks and water

information systems. Consequently, this project will directly contribute to the implementation of some

provisions of this revised law.

1.2.2 Furthermore, a national water strategy for Morocco (2009) was prepared with the aim of

transforming the water sector through the development of alternative resources, rational management

of demand, increased production and better consideration of environmental factors. As regards drinking

water for example, an estimated water savings potential of 120 million m3/year, is possible through the

improvement of network performance, standardization and encouragement of the use of appropriate

technology, review of the pricing system and the improvement of water use efficiency. The

operationalization of this strategy is laid out in the Programme Contract between ONEE and the State for

2014-2017 and includes this project among the priority projects identified in this contract.

1.3. 1.3. Rationale for Bank Involvement

1.3.1 The Bank has always supported the country in its sustainable water resources management. The

Bank provides such support through technical assistance, investment projects and budget support. This

support is evident in: (a) the development of water-saving infrastructure, integrated water resource

monitoring and management frameworks and tools for recycling wastewater and facilitating groundwater

recharge within the agricultural sector which is the primary user of water (over 80% of mobilized

resources); (b) the development of infrastructure to ensure the efficient distribution of drinking water and

sanitation; and (c) the development of a legislative framework for water resource protection and

management. Beyond reform support provided by Law No. 10-95 on water resources within the PAPMV

(Phase II) in 2015, SAP-EAU, completed in 2008, laid the regulatory groundwork for: (i) better integrated

water resources management; (ii) pricing regulation of water use; and (iii) the reallocation of investment

budgets.

1.3.2 The Bank has developed extensive experience in Morocco within the drinking water and

sanitation subsector. Various ADB-financed projects enabled the Bank and ONEE (Water Branch) (ex-

ONEP) to create an interaction in the processing of various files (BDs, contracts, disbursement requests,

etc...) and to consolidate their relations, which have been further strengthened by the presence of the AfDB

Field Office (MAFO) in Rabat.

[1] within the Bouregreg water treatment system which is the largest in the country (and among the 10 largest in the world) and which supplies the region

starting from Rabat to Casablanca, representing over 5 million inhabitants, for an estimated output of approximately 150 Mm3/year.)

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1.3.3 Furthermore, this project features on the list of projects approved under CSP 2012-2016 and is

fully consistent with the Bank's strategic thrust in Morocco as defined during the 2014 mid-term review

of the 2012-2016 Country Strategy. The first two components of this project, aimed at increasing water

supply (in quantity and quality), fall under Pillar II (infrastructure) which relates to reduction of spatial and

social disparities and promotion of innovation. The third component aimed at improving the performance

of existing DWS systems (search for leaks, improvement of output, rehabilitation of structures), will

support the crosscutting theme of the 2012-2016 country strategy which promotes the sustainability of water

resources. Furthermore, given its predominantly urban character, the project is consistent with the Bank's

urban strategy, especially in 2 of its 3 pillars relating to 'infrastructure' and 'governance '.

1.3.4 Lastly, this project will contribute to the implementation of the Ten-year Strategy and especially

the Bank’s High 5s. Indeed, the first component relating to the enhancement of drinking water supply in

several towns will guarantee the availability of water for several new industrial units planned, including a

new industrial zone in Bouznika. The second project component on the artificial aeration of dam water and

ozonation at the treatment station will introduce innovative infrastructure and industrialization of drinking

water production and treatment facilities and also encourages the use of appropriate technologies. The third

component on performance improvement seeks to increase the efficiency of DWS systems and ensure

sustainable and adequate water supply to vulnerable communities in semi-urban areas and the surrounding

rural areas. This will greatly enhance their living conditions given that such communities, which are

generally underprivileged, do not always have secure access to drinking water.

1.4. 1.4. Aid Coordination

1.4.1 The Moroccan Government has made substantial efforts to coordinate aid. Hence, it plans to set

up the Geographical Information System (GIS) for real-time monitoring of the operations of various

technical and financial partners (TFPs) by region, sector and amount. Donor aid is relatively well aligned

on the Government’s strategic priorities and there is no parallel project implementation unit. Several

bilateral and multilateral donors are involved in Morocco’s drinking water and sanitation sector, including

the AfDB, World Bank, EIB, EU, EBRD, AFD, KFW, JICA, IsDB, AFESD, SDF, Belgium and Spain.

Coordination between the various water sector donors is conducted through a Water Thematic Group (GTE)

co-chaired until 2015 by AFD and the EU. Since 2011, the Ministry delegate for water resources has

participated in the organisation of some meetings of this group, which is indicative of the growing

involvement of national institutions in sectoral dialogue. This thematic group meets regularly in Rabat to

discuss sector trends, focusing on country policy and strategies, intervention strategies and the activity

programme of each donor, to ensure greater coordination and harmonization of interventions in the water

and sanitation sectors. The Bank has regularly attended these meetings since the establishment of its field

office in Morocco in 2006 and since February 2016, following withdrawal of the EU from the chairmanship

of GTE, the AfDB and the World Bank take turns in chairing the GTE, alongside the Ministry in charge of

water resources and the AFD.

1.4.2 Furthermore, ONEE (Water Branch) has an investment programme designed under its 2014-2017

programme contract with the Moroccan Government. It funds this programme of the Ministry of the

Economy and Finance with the assistance of its traditional donors.

II Project Description

1.5. Project Components

The project will satisfy the drinking water needs of several towns (Bouznika, Ben Slimane, Youssoufia and

Safi) and improve the quality of water (artificial aeration and ozonation) and the performance of existing

DWS systems (reduce losses, optimize operation...). The various project components are presented in Table

4.1 below:

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Table 2.1

Project Components and Costs

Name of component / sub-

component

Cost estimate

(UA million)

Cost estimate

(EUR million)

Description of Components

A Strengthening drinking water

supply in urban communities

Sub-component A.1:

Strengthening of the DWS

systems of Bouznika (including

rehabilitation of the upstream

supply pipes) and Ben Slimane

6.1 7.9 Supply pipes and related structures

Tanks (semi-submerged and elevated)

Pumping stations

Sub-component A.2:

Strengthening of the DWS system

of Youssoufia and southern Safi

43.8 56.8 Supply pipes and related structures

Equipment for pumping stations and tanks

Power lines

B B. Improvement of water quality

at Bouregreg complex

Sub-component B.1: Artificial

aeration at SMBA dam

1.4 1.8 Artificial aeration system (aerator and

piping)

Air compressor

Power line and transformer substation

Sub-component B.2: An

ozonation section installed at the

existing treatment plant

21.0 27.2 Ozone generators and related equipment

Irrigation structures and water inflow pipes

C Improvement of the performance

of existing DWS systems

Rehabilitation of treatment

stations; Strengthening of

production facilities;

Enhancement of storage

autonomy; Improvement of

network output; Installation of

metres; Search for leaks

60.9 79.0 Rehabilitation of raw water intake

structures and piping as well as treatment

station facilities

Rehabilitation of pumping stations

Rehabilitation of water supply pipes

Storage tanks

Electrical flow metres

Mechanical metres

Leakage identification mobile metres

D Institutional support & project

management

3.8 4.9 Studies, works control and supervision

Total, including contingencies 137.0 177.7

1.6. Technical Solutions Adopted and Alternative Solutions Considered

2.2.1 Component A:

Sub-component A.1: Strengthening of the DWS System of Bouznika and Ben Slimane

- For strengthening of the DWS system of Bouznika town, a single option is available, namely

strengthening the existing water supply structures connecting the Bouregreg complex to the

town, through rehabilitation of the Bouregreg DN500 water supply piping (between BC2

and BC5) and laying of DN400 pipes, as well as increase of the storage capacity through the

construction of a tank with a capacity of 2 x 2000 m3. Moreover, an elevated tank with a

capacity of 800 m3 will be constructed to serve the upper section of the downtown area,

following expansion of the city.

- For strengthening of the DWS system of Ben Slimane town, several alternatives have been

studied for strengthening the DWS system in the downtown area and water supply to rural

areas which are (or could be) connected to the facilities in Ben Slimane town. The multi-

criteria analysis facilitated selection of the option that strengthens the DWS system in the

downtown area (through facilities that are independent of the existing system).

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Sub-component A.2: Strengthening of the DWS system of Youssoufia and Southern Safi

- For strengthening of the DWS system in Youssoufia province, the options studied differ,

depending on the design of the water supply network and the location of the intermediate

pumping station. The chosen option entails laying a water supply pipe across the city-centre

and setting up an intermediate pumping station outside the city. This option is advantageous

because: (i) it involves a shorter piping distance than the discarded option (city bypass) and

entails less land expropriation; (ii) it avoids crossing railway lines, which would be

impossible under the city bypass option; and (iii) it is cheaper than the “no intermediate

pumping station” option, in terms of investment, maintenance and repairs. Furthermore, the

chosen option has the advantage of an intermediate water storage capacity large enough to

supply water to the rural areas that lie upstream of the city.

- As regards strengthening the system in southern Safi province through high service canals,

the alternatives studied differ depending on the flow rate from existing boreholes. The

chosen alternative has the advantage of being cheaper and of strengthening the DWS systems

of all rural areas supplied by existing facilities.

2.2.2 Component B:

Sub-component B.1 - Artificial aeration at SMBA dam: Analysis of several scenarios for improving raw

water quality led to the adoption of a scenario that entails having hypolimnetic aeration around the existing

water intake structure which supplies water to the Bouregreg treatment station and the new intake structure

which supplies water to the planned Oum Azza treatment station (Annex C2). This solution facilitates the

extraction of raw water to be treated for drinking from the low-temperature and algae-free hypolimnion.

This means that the water would have optimum quality for treatment and be less costly to tap.

Sub-component B.2 - Ozonation facilities at the Bouregreg treatment station: Analysis of several scenarios

led to adoption of the option that entails building a complete ozonation section to treat water through pre-

ozonation (rather than prechlorination), (Annex C2).

2.2.3 Component C

Enhance the performance of existing DWS systems: The activities under this project were selected based

on the performance of Regional Directorates, with performance improvement operations spanning a period

of 3 years (2016-2020) and covering a large part of the Kingdom’s territory. Such operations target cities

and towns where ONEE (Water Branch) has the potential to achieve considerable performance gains,

especially in the output of distribution networks.

1.7. 2.3 Type of Project/Instrument

It is an investment project to be financed with AfDB, ONEE, IBRD and EBRD resources (parallel

financing).

1.8. 2.4. Project Cost and Financing Mechanisms

The total project cost, net of taxes and customs duties, is estimated at UA 137 million. The part to be

financed with AfDB resources is estimated at UA 68.5 million, of which UA 52.9 million is in foreign

exchange (77.2%) and UA 15.6 million in local currency (22.8%). It includes a 2% provision for physical

contingencies, 2% for price escalation in foreign currency and 3% for price escalation in local currency.

The cost was estimated based on detailed pre-project studies for Components A and B and on estimates of

the Regional Directorates for Component C.

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Table 2.2

Estimated cost per component for the part financed by the Bank (net of taxes and customs duties)

Components UA million EUR million %

F.E. L.C. Total F.E. L.C. Total foreign

exchan

ge

Component A - Strengthening drinking

water supply in urban communities

9.4 2.8 12.2 12.19 3.63 15.82 77.0

Component B - Improvement of water

quality at Bouregreg complex

17.4 3.6 21.0 22.57 4.67 27.24 82.9

Component C - Improvement of the

performance of existing DWS systems

19.2 8.1 27.3 24.90 10.51 35.41 70.3

Component D - Technical support 3.7 0.0 3.7 4.80 0.0 4.80 100.0

Total baseline cost 49.7 14.5 64.2 64.46 18.81 83.27 77.4

Provision for implementation contingencies 2.3 0.7 3.0 2.98 0.91 3.89 -

Provision for price escalation 0.9 0.4 1.3 1.18 0.51 1.69 -

Total project cost 52.9 15.6 68.5 68.62 20.23 88.85 77.2

2.4.2 The project will be co-financed by the Bank, ONEE, IBRD and EBRD (in parallel financing).

Bank financing will amount to EUR 88.85 million (approximately UA 68.5 million) representing 50% of

the estimated project cost, while ONEE, IBRD and EBRD4 will finance the remaining 50%. The Bank will

finance 100% of the tax-exclusive costs of activities to be financed by the AfDB.

2.4.3 Paragraph 4.2.2 (ii) of the policy on expenditure eligible for Bank Group financing, approved by

the Board on 19 March 2008, requires that Bank funding should not exceed 50% of the total project cost.

Furthermore, paragraph 2.1.2 (ii) of the same policy requires that the Government's contribution should be

at least 50% of the project cost, unless special circumstances justify a different percentage.

2.4.4 The Bank financing to this project is limited to 50% of the total project cost (net of taxes).

Meanwhile, the national contribution (ONEE) is limited to 16% of the total project cost (net of taxes), while

the balance is financed by the EBRD and IBRD. This limited ONEE contribution is justified by the

country’s commitment to implement its global development programme, the gradual improvement of

ONEE’s financial situation and the significant allocations made to the drinking water and sanitation sector.

The 2014-2017 programme-contract signed on 26 May 2014 between ONEE and the Moroccan

Government attests to this commitment by allocating an investment budget of approximately MAD 20

billion (approximately EUR 1.9 billion) to the DWSS sector (ONEE (Water Branch)) over the 2014-2017

period.

Table 2.3

Financing Sources

Financing sources UA million EUR million %

F.E. L.C. Total F.E. L.C. Total total

AfDB 52.9 15.6 68.5 68.62 20.23 88.85 50.0

ONEE + EBRD + IBRD 50.0 18.5 68.5 64.85 24.00 88.85 50.0

Total project cost 102.9 34.1 137.0 133.47 44.23 177.70 100

4 ONEE: UA 22.5 million ≈ EUR 29.2 million; EBRD: UA 12 million ≈ EUR 15.6 million; IBRD: UA 34 million ≈ EUR 44.1 million.

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Table 2.4

Project costs by expenditure category for the part financed by the Bank

Expenditure Categories UA million EUR million %

F.E. L.C. Total F.E. L.C. Total foreign

exchange

Works 25.9 12.1 38.0 33.59 15.70 49.29 68.2

Goods 20.1 2.4 22.5 26.07 3.11 29.18 89.3

Services 3.7 0.0 3.7 4.80 0.0 4.80 100.0

Total base cost 49.7 14.5 64.2 64.46 18.81 83.27 77.4

Provision for implementation

contingencies 2.3 0.7 3.0 2.99 0.90 3.89 -

Provision for price escalation 0.9 0.4 1.3 1.17 0.52 1.69 -

Total project cost 52.9 15.6 68.5 68.62 20.23 88.85 77.2

Table 2.5

Expenditure schedule by component (in EUR million) for the part financed by the Bank

Components 2016(*) 2017 2018 2019 2020

Strengthening drinking water supply in urban areas

1.30

2.59

4.15

5.19

2.59

Improvement of water quality at Bouregreg complex

0

3.89

6.48

12.97

3.89

Improvement of the performance of existing DWS systems 5.06 8.30 10.38 9.08 2.59

Technical support 0.39 1.04 1.05 1.03 1.30

Total base cost 6.75 15.82 22.06 87 37

Provision for implementation contingencies 0.39 0.78 1.03 1.17 0.52

Provision for price escalation 0.13 0.26 0.39 0.65 0.26

Total project cost 7.27 16.86 23.48 30.09 11.15 (*) Only applies to the 2nd semester.

1.9. Project Area and Beneficiaries

The project area includes all provinces along the Rabat-Casablanca highway and especially the provinces

of Bouznika and Ben Slimane (in the economic hub of Rabat-Casablanca) as well as Youssoufia and Safi

(in the economic hub of Abda Doukkala) for Components A and B, and practically the entire Moroccan

territory for Component C.

2.5.2 For the Rabat-Casablanca segment, the project will improve water quality (through Component B)

for the area which lies between the two major cities of Morocco, namely Rabat and Casablanca. This area

is considered to be the most populated and most urbanized part of the country and is experiencing significant

economic, tourism and industrial development (about 60% of the national industrial fabric, Bouregreg

valley project, Bouznika tourist resort...). It also has major backbone infrastructure that promotes

development (motorways, railways, airports...). The Rabat cluster consists mainly of the towns of Rabat,

Salé, Bouknadel, Témara, Skhirat, Sidi Yahia, Zaer and Rommani, while the Casablanca cluster consists

mainly of the towns of Casablanca, Mohammedia, Bouznika, Benslimane and Aïn Aouda. The beneficiaries

of the project, who were approximately 5 million inhabitants in 2015, will exceed 8 million in 2030,

including approximately one million in rural areas.

2.5.3 Furthermore, under Component A, the project will strengthen the DWS systems in the provinces

of Bouznika and Benslimane, which had approximately 120,000 beneficiaries in 2015 and will have close

to 150,000 by 2030, including over 50,000 in rural areas.

2.5.4 Similarly, Component A will strengthen the DWS system in Youssoufia province which includes

the town of Youssoufia, the three urban centres of Chemaia, Sidi Ahmed and Ighoud as well as eight rural

communes (Atiamim, El Gantour, Esbiaat, Lakhoualqa, Ras El Ain, Ighoud, Jnane Bouih and Sidi Chiker).

It will also strengthen the DWS system in Safi province (to the South) which includes the town of Tnine

Ghiate and the neighbouring douars in the rural municipalities of El Ghiate, Lamaachate and Touabet. The

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beneficiaries in Youssoufia province were approximately 269,000 inhabitants in 2015 (including 168,000

inhabitants in rural areas). The beneficiaries in Safi province (to the South) were approximately 47,000

inhabitants in 2015 (including 34,000 inhabitants in rural areas).

2.5.5 Lastly, Component C will affect virtually all Moroccan territory and the specific beneficiaries of

the portion financed by the Bank under the performance improvement programme for ONEE (Water

Branch) will be determined at the beginning of each year based on the operations selected by the Regional

Directorates of ONEE and included in this project.

1.10. Participatory Approach to Project Identification, Design and Implementation

2.6.1 The Bank's preparation and appraisal missions facilitated the holding of multiple meetings

involving all stakeholders, namely: the various departments of ONEE (Water Branch), the Water

Department of MEMEE and some development partners involved in the financing of ONEE programmes,

such as the performance improvement programme. The purpose was to listen to their concerns and factor

them into the design and execution of the project. These meetings and consultations highlighted the main

concerns of stakeholders and beneficiaries, namely to: (i) improve the quality of drinking water in areas

connected to the network; (ii) ensure water supply to several new settlements (housing areas, industrial

units...); and (iii) ensure access to affordable drinking water for disadvantaged semi-urban and rural

communities.

2.6.2 In addition to the various awareness-raising and communication campaigns carried out during

feasibility studies and design of the detailed survey plan, which acquainted the communities with the

characteristics and objectives of the project, ONEE (Water Branch) will also ensure that local communities

are informed prior to the commencement of works, through their municipalities and/or local authorities,

about the nature of the works, possible damage and related compensations and the need to organise

themselves to benefit from the project (temporary jobs, etc.). Subsequently and throughout the works, the

project contractors must maintain this consultation with local communities (this requirement will be

included in the works contract provisions). Communication must focus essentially on: (i) the nature and

duration of works; and (ii) the precautions to be taken as regards movement of project vehicles and

machinery.

2.6.3 Furthermore, information, awareness and education campaigns are necessary to avoid water

wastage and pollution. Such campaigns will focus on: (i) promoting a culture of respect for water and a

positive water use behaviour; and (ii) promoting hygiene-friendly attitudes and behaviour. Direct on-site

actions with various target groups should be promoted through communication of messages like: “drinking

water is vital to health; it is a common right; and it should be used responsibly”. The target groups are: (i)

children and youth (schools, holiday camps, facility visits...); (ii) women (women's centres, associations,

youth centres...); (iii) customers (customer guide...); (iv) the media (press day, dispatch of brochures...); (v)

public and private stakeholders; and (vi) policymakers, elected officials and other partners (information

day...). For these campaigns, consideration will be given to the variety of socio-cultural data, manners and

customs, habits and the people's readiness to participate in community actions.

1.11. Bank Group Experience and Lessons Reflected in Project Design

2.7.1 Performance in the implementation of recent projects with ONEE (Water Branch) is deemed to be

satisfactory overall. ONEE (Water Branch) is conversant with Bank policies and procedures and the studies

it conducted are of good quality. The main recommendations made in previous project completion reports

and especially the last 4 (7th, 8th, 9th and 10th DWS projects) boil down to: (i) strengthening technical support

and ensuring its availability prior to works commencement and right up to project completion; and (ii)

strengthening project supervision missions (especially the number of experts) and ensuring better

monitoring of project execution. These recommendations were taken into account in recent ongoing

projects financed by the Bank in the sector (Rabat-Casablanca DWS project and Marrakech region DWS

project) and will also be factored into the present project, with the assistance of the Bank's field office in

Morocco (MAFO). An independent appraisal of the results of 3 DWS projects financed by the Bank in

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Morocco (8thand 9th DWS projects and the Water Sector Adjustment Programme (SAP-EAU)) is underway

and the results, expected in the first half of 2016, will be factored into the implementation of this project.

2.7.2 Since the beginning of its intervention in Morocco, the Bank has financed 13 operations in the

DWSS sector, bringing the total amount of its DWSS commitments to approximately EUR 1 billion (MAD

11 billion). These projects have secured a 99% drinking water access rate in urban areas while raising the

rate in rural areas from 14% in 1990 to 94.5% currently. They have also raised the sanitation access rate in

urban areas from less than 50% in 1990 to over 70% currently. The facilities constructed under the various

Bank-financed projects have ensured sustainable drinking water supply to several towns in Morocco (Rabat,

Casablanca, Marrakech, Tangier, Tetouan, Beni Mellal, Fes, Meknes, Oujda, Settat, Khénifra, Kenitra,

Essaouira, Ouarzazate, Khouribga, Tan, Tahanaout, Azilal, ...), facilitated access to drinking water in

previously unconnected rural areas, improved community health conditions and protected and preserved

water resources.

2.7.3 The two water supply projects currently underway, have experienced difficulties related to: (i)

default by one of the works companies and delay in the land expropriation process for the Rabat-Casablanca

DWS project; and (ii) bottlenecks in the procurement process for the Marrakech water project. The 2014

and 2015 delays in the procurement and expropriation processes of the Rabat-Casablanca and Marrakech

projects stem mainly from the nature of these 2 projects, characterized by a limited number of major

structures that are somewhat technically complex and involve substantial amounts and by the expropriation

of highly valuable land located in the 3 largest cities of the country (Rabat, Casablanca and Marrakech).

2.7.4 This situation has improved significantly since the end of 2015 with (i) acceleration of the

implementation rate of the Rabat-Casablanca project after replacement of the defaulting Contractor and

revival of the stalled expropriation process; and (ii) acceleration of the procurement process, with a

commitment rate that has just reached 49%. Both projects, currently flagged for their low disbursement rate

and low commitment respectively, will be struck off the list of flagged projects in April 2016 since the

disbursement rate of the Rabat-Casablanca project will exceed 60% thanks to the ongoing processing of

payment requests and the commitment rate of the Marrakech project will exceed 50% upon signature of the

next contract expected in April 2016.

2.7.5 This specificity (technical complexity and high-value land) does not apply to the new project

covered by this report, which is rather characterized by a large number of small-sum procurements and the

acquisition of low-value lands with a smaller surface area (Annex B5).

2.7.6 Based on these achievements, the main lessons to be learnt from the partnership between the Bank

and ONEE (Water Branch) focus on the need to build the capacity of ONEE (Water Branch) staff, primarily

in monitoring and evaluation and post-evaluation of projects. In this regard, a partnership project between

the Bank’s IDEV Department and the Audit and Organisation Department of ONEE (Water Branch) was

initiated following a Bank mission conducted in December 2009 that led to the adoption of an action plan,

followed by the organisation of several seminars. The actions proposed in this plan are intended to assist

ONEE (Water Branch) in the development of an evaluation policy, a system that ensures the internal

organisation and management of appraisal missions and to develop the capacity to engage in monitoring

and evaluation and retrospective evaluation. Since then, several exchanges and capacity building missions

have taken place, with ONEE (Water Branch) experts attending workshops organised by the Bank in

Morocco and at its headquarters. The most recent exchange in which ONEE (Water Branch) participated

concerns the organisation of a regional workshop to evaluate the outcomes of DWSS projects, which led to

the publication of a report in June 2015 on the evaluation of the results of DWSS projects reflecting best

practices from Bank-financed projects in Morocco’s water sector.

2.7.7 With regard to the Bank’s overall portfolio in Morocco, the rating for 2015 remains satisfactory,

according to the Country Portfolio Performance Review (CPPR) of 2015. The monthly “Flashlight Report”

ranks the Bank's portfolio in Morocco among the most effective portfolios throughout 2015.

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This ranking of the Flashlight Report is also justified by satisfactory results in the implementation of

operations (average PI score of 2.42) and good performance in the attainment of the development objectives

(DO) of projects (average DO score of 2.6). To build on this performance, efforts must be stepped up to

improve portfolio implementation through continuous capacity building in the area of procurement for

some executing agencies and comprehensive and rigorous preparation of operations at commencement by

systematically anticipating procurements with a realistic disbursement plan within the framework of

application of the new PD 02/2015.

2.7.8 As regards fulfilment of the conditions precedent to first disbursement, performance in the

fulfilment of loan conditions remained highly satisfactory in 2015. The average loan effectiveness period

continued to decline globally from 4.9 months in 2014 to 4.2 months in 2015 (which is below the maximum

period of 6 months required by PD 02/2015).

1.12. Key Performance Indicators

In the Short Term

2.8.1 The project will ultimately yield an additional flow rate of 100 l/s for Bouznika, 150 l/s for Ben

Slimane, 240 l/s for Youssoufia, and 40 l/s for the southern region of Safi. It will also improve the output

of the supply and distribution networks of ONEE (Water Branch), from 95.13% (supply networks) and

73.9% (distribution networks) in 2014 to 95.7% and 76.5% respectively in 2018.

2.8.2 Furthermore, the project will slow down eutrophication at the SMBA dam by increasing oxygen

(O2 increase from a negligible amount to a minimum of 4 mg/l and H2S eliminated from the bottom intake

structures in 2018), and curbing THM formation at the "Bouregreg” treatment plant by reducing its value

to less than 1, in keeping with Moroccan standards.

In the Medium Term

2.8.3 The project will maintain the drinking water access rate at approximately 100% in urban areas (the

towns concerned) and increase the rural rate (provinces concerned) from 92 % to 95%. It will maintain the

drinking water access rate in urban areas at 100% by providing an additional supply of drinking water that

meets the changing needs of the regions. In other words, non-implementation of the project will reduce the

drinking water access rate by a few points in the area concerned.

In the Long Term

2.8.4 The main project performance indicator is the drinking water access rate at the national level that

will be maintained at 100% in urban areas and raised to almost 100% in rural areas by 2030.

2.8.5 Furthermore, the project will contribute to a significant reduction in the under-five mortality rate

(contribution of water-borne diseases) from 30 deaths per 1000 in 2014 to less than 25 deaths per 1000 as

from 2020 and reduce health spending as a percentage of household expenditure (contribution of water

quality) from 53% in 2014 to less than 50% in 20205.

5 According to the Ministry of Health

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III Project Feasibility

1.13. Economic and Financial Performance

Table 3.1

Key Economic and Financial Data

IRR 7.5% NPV: MAD 95 million

ERR: 15.2% NPV: MAD 217 million

Nb: The detailed calculations are found in Annex B7

3.1.1 The project has three additional investment components to: strengthen existing water production

facilities in order to supply drinking water to urban and rural communities in four provinces; rehabilitate

existing DWS systems and treatment stations; and improve water quality at the Bouregreg facility by

introducing aeration and ozonation systems. It will generate many financial, socio-economic and

environmental benefits. Furthermore, it will enable ONEE (Water Branch) to strengthen its productive base

and its financial indicators and implement its development strategy, with a view to securing drinking water

supply, improving the productivity and output of its production and distribution systems and introducing

innovative technology to improve service quality in the most developed region of the Kingdom (Rabat-

Casablanca highway), given its administrative, political, socio-economic and tourism benefits. The

project’s externalities are numerous, namely: the creation of temporary and permanent jobs; continuity of

service; optimization of investments and resources; improved output; loss reduction; and reinforcement of

the commercial, industrial, tourism and agricultural fabric of the regions concerned.

3.1.2 The project’s financial rate of return is acceptable, making it possible to service the debt and cover

recurrent expenditure. Its cumulative financial internal rate of return (FIRR) for all components amounts to

7.5% and the net present value is estimated at MAD 95 million. The profitability of the three project

components has been consolidated, taking into account the nature of the additional components, which are

geared towards the common goal of improving drinking water supply in terms of quantity, quality and

continuity.

3.1.3 The economic rate of return (ERR) stands at 15.2% with a net present value of MAD 216,958

million. This rate is calculated based on the same data used to calculate financial profitability, with a 0.9%

adjustment for costs in local currency, rollover of investment costs in foreign currency and adjustment of

the economic value of water by a coefficient of 1.1, representing the consumer surplus. Also factored into

the calculation were the value of workdays generated during project implementation and the impact of

continuing economic activities in the area supplied by the Bouregreg complex through the introduction of

new ozonation technology that will eliminate the dependence of ONEE (Water Branch) on a single supplier

of chlorine and expose it to the risk of interrupted supply.

3.1.4 Lastly, the project will strengthen the fundamentals of the structure and the financial and economic

management parameters of ONEE (Water Branch).

1.14. Environmental and Social Impact

Environmental Impact

3.2.1 The project was classified under category 2 in accordance with the Bank’s integrated safeguards

system (ISS) and based on the identified impacts which range from low to average. Summaries of the

Environmental and Social Management Plan (ESMP) and the Abbreviated Resettlement Plan (ARP)

covering all project components will be published on the Bank’s website 30 days prior to submission of the

project to the Board of Directors. The main positive environmental impacts expected from the project are:

(i) reduced use of chemical reagents (active carbon and chlorine) thanks to water aeration and the use of

ozone, thus reducing the safety and health hazards for persons handling chlorine; (ii) controlled release of

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reduced compounds (with a decrease in levels of iron, manganese, ammonia, etc.) and reduction of the

hydrogen sulphide content in the hypolimnion of the dam; (iii) reduction of eutrophication and

improvement of the ecological conditions of the dam; and (iv) better adaptation to the effects of climate

change (see section on climate change for details). The major negative environmental and social impacts

are: (i) land acquisition (see section on resettlement for details); (ii) risk of liquid waste pollution during

works on the various sites; and (iii) risk of ozone release into the air during the operational phase. Provision

has been made for appropriate mitigation measures. These are: (i) implementation of the ARP; (ii) the

inclusion of environmental clauses in the BDs for each works lot; (iii) the installation of automatic gas

leakage detectors and water quality measures. The cost of the ESMP (excluding expropriations) is estimated

at MAD 8 million and is included in the cost of works.

Forced Resettlement

3.2.2 A total of 158 plots will be affected by the project mainly in the communities of Ben Slimane,

Bouznika, Youssoufia and southern Safi. Most of these plots are farmlands located within the right-of-way

of the storage/treatment facilities and some pipes. It will entail land expropriation without movement of

people (no house will be affected). A total of 160 people (essentially men) will be affected. An ARP was

prepared defining all compensation procedures and measures for affected persons. A consultation and

communication plan for stakeholders will underpin implementation of the project in general and of the ARP

in particular. For certain components such as the Safi DWS, the compensation for landowners has already

been deposited at the CDG (Caisse de dépôt et de management) in accordance with the regulations in force.

The cost of the ARP (expropriations) is estimated at MAD 16 million and shall be borne by ONEE.

Compensations shall be carried out in accordance with the provisions of §5.2 of this report.

Climate Change

3.2.3 As regards climate, the project is classified in category 2, considering the overall vulnerability of

Morocco’s water sector. Since the project does not provide for the construction of water mobilization

structures, and considering that adaptation measures have already been taken vis-à-vis existing structures,

this risk is low for the project. Nevertheless, the project has included activities that will mitigate climate

change and boost climate resilience, in line with Morocco’s climate change policy objectives adopted in

March 2014. With regard to adaptation, the main innovation resides in the fact that artificial aeration will

make it possible to tap millions of litres of water which would otherwise be unusable due to the seasonal

decline in water quality. Indeed, at the end of spring and during periods of severe drought, a significant

amount of water becomes almost anoxic and sometimes covers almost the entire hypolimnion for a few

months. Artificial aeration helps to solve this problem and ensure steady supply regardless of climate

variability. Hence, the improvement of network performance will ensure better optimization and use of the

resource. Lastly, as regards mitigation, the improvement of system performance and the efficient operation

of the aeration and ozonation systems will yield a net positive energy balance, relative to the no-project

situation. The details are presented in Annex B8.

Monitoring of ESMP and ARP Implementation

3.2.4 For the environment component, the Environment Division (DE) of ONEE (Water Branch) will

collaborate with the works control bureau and the technical directorates concerned to monitor the

implementation of ESMP measures by works companies. The ARP will be monitored by the Directorate

for Legal and Lands Affairs (DAJ) in collaboration with the Regional Directorates concerned. The

Directorate for Cooperation and Communication (DCC) will be responsible for the implementation and

monitoring of the communication component. These institutional stakeholders possess the requisite

experience and expertise and have successfully implemented several DWS projects financed by the Bank

and other development partners. Lastly, the expert in the monitoring and evaluation of technical assistance

will contribute to monitoring and evaluation under the environmental and social component. The project

coordination team shall forward the ESMP implementation monitoring reports to the Bank every quarter.

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Social Aspects

3.2.5 Given the rapid development of city suburbs (or new neighbourhoods in the big cities), regular

drinking water supply is not always ensured for the often disadvantaged communities. With the rise in land

prices, the spontaneous development of peripheral slums increases pressure on water resources. Hence, the

project will seek to strengthen and secure access to drinking water for these vulnerable communities in

urban areas or rural areas close to the city. Such secure access to drinking water will have a positive impact

on hygiene and especially health, especially contribution to a significant decrease in water-borne diseases

and a resulting increase in family savings. It will also help to reduce absenteeism in schools and the

workplace.

Job Creation

3.2.6 The project will create new jobs during the works phase (a few hundred) and operational phase, in

maintenance activities (dozens). It will also boost economic activities in the regions concerned. In the

industrial and tourism sectors, water supply will encourage the establishment of industrial and tourism units,

which will in turn boost local job creation in the provinces concerned (especially in Bouznika and Ben

Slimane where indirectly created jobs are estimated to be in the hundreds).

Gender Aspects

3.2.7 This project will have a direct impact on women, who represent 51% of the Moroccan population

and are the primary users of water for housework, gardening and small-scale stockbreeding, especially in

rural areas. In the majority of cases, it is mainly women and children, especially girls, who have to fetch

water. This water fetching duty and the shortage of facilities in rural areas often leads girls to drop out of

school. The literacy rate is nearly 80% for rural women in Morocco and is among the highest in the North

African sub-region. From the health perspective, regular and permanent water supply: (i) obviates the need

to store water which is a vector of diseases and thus help to reduce health expenditure which puts enormous

strain on family budgets; (ii) contribute to drastically reduce water-borne diseases, thus relieving women

of the burden of caring for sick children; (iii) helps to improve maternal and infant health; and (iv) saves

time and reduces the drudgery of fetching water for women and girls in rural and semi-urban areas, thus

creating time for other pursuits such as literacy and income-generating activities.

3.2.8 Secure drinking water supply and the installation of individual connections (ICs) in homes will

help create a change in activity profiles. Hence, division of labour becomes equitable in the household since

women no longer have to fetch water, although they still remain in charge of household chores. It also

reduces household chores for girls.

3.2.9 From the economic perspective, securing drinking water supply in semi-urban communities will

help to create opportunities for undertaking income-generating activities such as market gardening and

small-scale stockbreeding. This will help to increase the still low proportion (about 30%) of women

engaged in productive activities, and afford them greater financial autonomy thus improving their social

status.

3.2.10 The project includes gender-specific measures, especially the targeting of women as actors in

ensuring the rational use and saving of the resource, as well as introduction of the "gender module" in the

training of professionals who will conduct community awareness campaigns in the project areas. Moreover,

the project makes no provision for gender-based discrimination in its activities throughout its

implementation. The budget for implementing gender activities is estimated at MAD 4.5 million and is

covered by the ONEE counterpart contribution.

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Sustainable Development Goal (SDG)

3.2.11 The project will significantly contribute to the achievement of Morocco’s SDG goals, especially

Goal 6 to "ensure access to water and sanitation for all and ensure the sustainable management of water

resources" and Goal 13 to "combat climate change and its impacts". The project will also contribute to the

achievement of some of the other SDGs relating to the elimination of poverty, the improvement of health

and education and the promotion of sustainable industrialization that encourages innovation.

3.2.12 By paying special attention to the needs of women, girls and vulnerable communities in terms of

drinking water access, the project will indirectly contribute to the achievement of other SDGs, such as Goal

5 to "achieve gender equality and empower all women and girls" and Goal 10 to "reduce inequality within

and among countries". It will improve the drinking water access rate in disadvantaged localities such as

semi-urban and rural areas (Appendix B8).

IV Implementation

1.15. Implementation Arrangements

Institutional Arrangements:

4.1.1 ONEE (Water Branch) is the project’s executing agency. The Technical and Engineering

Directorate (DTI), assisted by the Directorate for Asset Management (DPA), the Directorate for Universal

Access to Drinking Water (DEP) and the Centre Regional Directorate (DR3), will be responsible for

managing all technical aspects of the project, in close collaboration with the Directorate for Supplies and

Contracts (DAM) as regards the procurement of goods, works and services; the Directorate for Finance

(DFI) as regards the project’s accounting and financial management and general coordination with the

Bank; the Directorate for Sanitation and the Environment as regards monitoring measures that mitigate

project impact on the environment; the Directorate for Legal and Lands Affairs (DAJ) as regards land

expropriation; and the Directorate for Cooperation and Communication (DCC) for implementation of the

communication plan.

4.1.2 The DTI will ensure the technical management of the project and shall, to that end, appoint a

General Project Coordinator who will be supported by officials designated by the other directorates (DPA,

DEP and DR3) and assisted by an engineering consultant for works coordination, monitoring and

supervision within the context of technical support to project implementation. An organisational chart was

prepared for the Project Coordination Unit that defines the duties of the various units and persons tasked

with management of the project and the implementation of its various components (Annex B3). This chart

shows that the Project Coordination Unit has adequate key staff for project management in accordance with

Presidential Directive PD 02/2015.

Procurement Arrangements

4.1.3 Consultancy services for technical support as well as international competitive bidding (ICB) for

the design and construction of the artificial aeration and ozonation systems will be procured in accordance

with Bank rules and procedures (May 2008, revised July 2012), using the Bank’s standard bidding

documents (SBDs). Meanwhile, works worth less than UA 6 million as well as the supply and installation

of goods worth less than UA 500,000 shall be procured in accordance with the provisions of the letter of

agreement signed on 31 May 2013 between the Kingdom of Morocco and the Bank on the use of country

procedures. Hence, works related to the laying of pipes, civil engineering, electricity power lines,

rehabilitation of treatment plants, production and network structures, as well as the supply and installation

of equipment (pumping stations, metres, flow metres, searching for leaks) will be procured through national

competitive bidding (NCB) using standard BDs jointly prepared to that end by the Bank and the Kingdom

of Morocco.

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4.1.4 ONEE (Water Branch), through the Directorate for Supplies and Contracts (DAM) and the

Purchase Services of the Regional Directorates, shall be responsible for the procurement of goods, works

and services under the project as detailed in Annex B5. During project preparation the procurement capacity

of ONEE (Water Branch) was evaluated. This evaluation revealed that ONEE (Water Branch) has the

resources and experience in this area, meaning that the risk is low. The resources, capacities, expertise and

experience of ONEE (Water Branch) are detailed in Technical Annex B5.

4.1.5 Pursuant to Presidential Directive PD02/2015 and to ensure the effective commencement of the

project after its approval, the Procurement Plan (PP) was developed by ONEE (Water Branch) (Annex B5).

Furthermore, the borrower has requested and obtained advance procurement action (APA) from the Bank

for the procurement of technical support (Component D) and some goods and works (Components A and

C) pursuant to the provisions of Article 1.9 of the Rules and Procedures.

Disbursement Arrangements

4.1.6 AfDB loan resources shall be disbursed in accordance with the applicable provisions of the Bank's

disbursement handbook. ONEE (Water Branch) is familiar with the Bank’s disbursement rules. In light of

the activities and the large number of contracts involved, disbursements shall be made following the special

account and direct payment methods. The reimbursement method may be used if necessary and a single

method shall be applied to each contract. A disbursement letter shall be forwarded to ONEE (Water Branch)

upon approval of the project by the Bank.

Financial Management

4.1.7 ONEE (Water Branch) shall report to the Bank on the project’s implementation and financial

management. Its financial management, as the executing agency, was evaluated in accordance with Bank

guidelines, taking into account the assessment of Morocco's fiduciary risk, the financial management

system used and the experience acquired by ONEE’s financial directorate (DFI) in the management of

similar ongoing projects (Rabat-Casablanca DWS project and the Marrakesh Water Project). This approach

led to the conclusion that the initial overall financial management risk is deemed moderate by the Bank.

However, ONEE (Water Branch) should continue the regular and efficient use of the existing financial

management elements reiterated in the action plan presented in Annex B4.

4.1.8 Financial Management Arrangements: ONEE (Water Branch) shall ensure the financial

management of the project through its Directorate for Finance (DFI), which is composed of six (6)

divisions, 4 (four) of which are directly or indirectly involved in the project, namely: the legal accounting

and taxation division, the financing division, the management accounting division and the cash-flow

division. Hence, the financial management of the project will be fully integrated into that of the executing

agency which operates through the following formalized mechanisms: (i) budget planning of investment

activities carried out by the technical directorates involved; (ii) monitoring of project budget execution by

the technical directorates involved and the management control division; (iii) an internal control process

which includes a formal expenditure control channel; (iv) the production of quarterly reports with detailed

project status statements; (vi) an information system composed of several applications integrated into SAP

implemented since 2007 (SAP/FI, SAP CO) and non-accounting statements which jointly generate interim

financial statements (statements on commitments and payments per contract) and annual financial

statements of the project (TER...); and (vii) external audit of ONEE and the funds granted by the AfDB and

ONEE’s counterpart contribution by an independent audit firm. These mechanisms, which are outlined and

formalized in ONEE’s procedures manual, guarantee transparency, traceability, asset protection and

reliable financial information on the funds invested in project implementation. Nevertheless, project audit

reports are not always submitted to the Bank on time. Similarly, the problem of non-accounting statements

remains, despite the reliability of financial information.

Furthermore, the budgetary risk and the existing control environment are monitored by the Ministry of the

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Economy and Finance, the Court of Auditors and the ONEE Board of Directors which brings together the

representatives of various ministries. Thus, considering the level of fiduciary risk, the project will receive

a single supervision mission per year to review its financial management.

Audit Arrangements

4.1.9 The financial statements of the project prepared by the finance division will be audited each year

by an external and independent audit firm, generally recruited for a period of three years. The audit shall

be conducted in accordance with IFAC’s International Standards on Auditing (ISA) and the Bank’s terms

of reference (ToRs) agreed upon with to ONEE (Water Branch). The audit report of the project, along with

Management's letter on internal control, should be forwarded to the Bank not later than 6 (six) months after

closure of the fiscal year concerned. Moreover, on account of its statute of establishment, ONEE shall be

subject to several financial controls by the State (State comptroller, the Ministry of the Economy and

Finance) and possible control by the General Inspectorate of Finance (IGF) and the Court of Auditors.

1.16. Monitoring

The physical implementation of the project is expected to cover a period of 48 months, from 2016 to 2020.

This schedule is deemed reasonable, given the nature of the works and the experience gained by ONEE

(Water Branch) in the execution of similar works.

4.2.2 ONEE (Water Branch), which is the executing agency, shall have the primary responsibility for

monitoring project implementation and shall prepare quarterly project status reports covering all aspects of

implementation, in the format recommended by the Bank. These reports shall essentially evaluate project

status; expenditure; commitments and disbursements by component, by expenditure category and by

financing source; the main issues; and recommended solutions. After the implementation period and during

the operational phase, ONEE (Water Branch) has adequate structures to manage and monitor project

outcomes. It will establish a database, references and statistics for monitoring and evaluation of the various

performance indicators according to its standard formats.

The Bank will monitor project implementation through its supervision missions, progress reports and the

financial statements of ONEE (Water Branch). The assistance of the Bank’s Field Office in Morocco

(MAFO) will strengthen the management and monitoring of project implementation, especially in the areas

of technical management, procurements, disbursements and financial management. At the end of the

project, ONEE (Water Branch) will prepare a project completion report that will serve as the basis for a

more comprehensive and joint report of ONEE and the Bank, on the performance of the project and of

various stakeholders.

4.2.4 This is a project financed in parallel by the Bank, ONEE (Water Branch), IBRD and EBRD.

Consultation with other donors on monitoring of the components not financed by the Bank will take place

under the coordination of ONEE (Water Branch) teams from the various directorates involved in the project.

4.2.5 The project implementation schedule is presented at the beginning of the report. Project activities

are scheduled to be completed in September 2020. The planned project implementation schedule is summed

up as follows:

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Duration Stages Monitoring Activities/Feedback Loop

2015 - 2016 Technical studies Validation of studies by ONEE (Water Branch)

2rd quarter of 2016 Consultation of the IC and

procurement of certain

goods and works

Launch of consultations and procurement of goods

and works through APA

May 2016 Project approval AfDB Board of Directors

2nd quarter 2016 - 2nd

quarter 2017 (*)

Launch of BDs for goods

and works

Preparation by ONEE (Water Branch) and formal

approval by the Bank

2016 - 2017 Evaluation of bids Preparation by ONEE (Water Branch) and formal

approval by the Bank

2016 - 2017 Award of contracts Preparation by ONEE (Water Branch) and formal

approval by the Bank

2017 - 2020 Execution of works Execution by contractors and acceptance by ONEE

(Water Branch)

2016 - 2020 Monitoring of works Execution by IC and acceptance by ONEE (Water

Branch)

December 2020 Completion report Joint preparation by the Bank and ONEE (Water

Branch) (*) Some BDs relating to the activities of Component C (outlined in the annual programme) will be launched in 2018 and 2019.

1.17. Governance

4.3.1 ONEE (Water Branch) constantly improves on its management, organisational and monitoring

procedures. The current organisation chart establishes the principle of effective decentralization for the

benefit of the regions, which enjoy great autonomy in the design, implementation, monitoring and operation

of projects. Indeed, the regions carry out several specific functions such as studies, proposal of new projects,

development and launching of competitive bidding, partial human resources management, conduct of

communication campaigns, preparation of periodic reports and close commercial management, thus

ensuring greater transparency in the accomplishment of public service missions.

4.3.2 Governance risks are low, given the increasingly favourable evaluation of the effectiveness and

reliability of control, organisational as well as internal and external audit systems set up by ONEE (Water

Branch). For the above reason, it has benefitted from support control, rather than ex-ante control exercised

by the State; this is a favour routinely extended to entities that have confirmed their performance in internal

control, budget execution and effective and optimal resources management. Furthermore, to strengthen the

control framework, ONEE (Water Branch) pursues a risk management policy that is based on the mapping

of preventive and curative risks, monitored by the various departments and bodies of ONEE.

1.18. Sustainability

4.4.1 The sustainability of these future investments depends essentially on the capacity of ONEE (Water

Branch) to manage the project and to monitor, maintain and operate facilities optimally and continuously.

ONEE (Water Branch) has executed several projects to the Bank’s satisfaction. Its performance has been

proven and strengthened over the years thanks to an enabling environment and a sufficient number of

competent technical staff at the central and regional levels. The various components of the project disburse

sufficient financial resources to cover recurrent expenditure, repair and maintenance of the various

structures constructed. ONEE (Water Branch) is characterized by a constantly balanced financial situation

and guaranteed autonomy as described in the retrospective analysis and financial projections (Annex B7).

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4.4.2 Moreover, the reforms made in the DWS sector such as the merger with the Electricity Branch and

the establishment of a common programme-contract with the State augurs well for the steady and balanced

development of the sector. A Monitoring and Evaluation Committee chaired by MEF and made up of

representatives of signatory Ministries will monitor the commitments of the programme contract. In

addition, an independent firm will establish and present the six-monthly reports to the said Committee.

4.4.3 The project's sustainability is also ensured through reforms and programmes initiated by the

Government of Morocco mainly through the Water Sector Adjustment Programme (SAP-EAU) co-

financed by the Bank, the World Bank and the European Union; the National Irrigation Water Saving

Programme (PNEEI) and the National Sanitation Programme (PNA). These reforms, which have already

been implemented for the most part, will lead to integrated water resource management, erosion control in

catchment areas, rehabilitation of the DWS distribution and irrigation networks to reduce losses, the

promotion of new irrigation techniques to save water, the development of adequate sanitation services,

reduction of the pollution rate.

Billing System

4.4.4 Ultimately, project sustainability is based on a water billing system that seeks to reconcile the

interests of consumers and various stakeholders so as to ensure continuity of service. The rates are based

on a national equalization system to ensure social equity. Progressive pricing makes things easier for low-

income communities and encourages large consumers to use drinking water economically.

4.4.5 The billing of drinking water and sanitation recently underwent a major development through the

law published in Official Gazette No. 6275 of 22 July 2014, which became effective on 21 August 2014.

The pricing structure, presented in Annex B7, is determined based on the distinction between production

and distribution and a differentiation between towns, excluding the cities managed by ONEE (Water

Branch) which are subject to a national billing system focused on usage categories (domestic, industrial,

tourism). Changes made in the pricing structure relate to restructuring of the consumption bands (moving

from 4 to 5 bands) and consideration of the social character of the first band. In addition to the pricing

structure, two types of surtaxes have been incorporated in order to contribute to equity between users in

large cities and those in smaller localities and rural areas (to finance the supplementary operational costs in

smaller towns and part of the investments in rural DWS). All these measures have increased the

affordability of water for the poorest segments of Morocco’s population.

1.19. Risk Management

4.5.1 The potential project risks concern: (i) the non-preservation and sustained suspension of water

supply, as well as the absence of integrated and optimal water resource management; (ii) the time limit for

acquiring the project lands; (iii) the time limit for procuring goods, works and services; and (iv) the limited

experience of ONEE (Water Branch) in the field of artificial aeration and ozonation (specific risk under

Component B).

4.5.2 The preservation and sustainable availability of water resources as well as integrated and optimal

water resource management are some of the main goals of the SAP-EAU measures jointly funded by the

Bank, the European Union and the World Bank. These measures establish the quality standards for surface

water and the water used for DWS. These standards set the threshold values for water discharged into the

sanitation systems and into the natural environment as well as the values for liquid effluents from various

industrial and artisanal sectors. Furthermore, implementation of the action plans of the national water

strategy and the programme-contract (2014-2017) between ONEE and the State help to ensure the

integrated management of water resources.

4.5.3 The sometimes significant delays in procuring the land needed to lay the pipes and build the

facilities, could constitute a risk to the timely implementation of the project. However, preliminary studies

and the environmental impact study have shown that the lands to be acquired are: (i) State property (public

works, municipalities...); or (ii) of low value (agricultural land located far from settlement areas). The

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piping pathways and sites for the various facilities are deliberately located far from all existing settlement

areas such that no constructed property will be affected. Furthermore, taking account of the lessons learnt

from projects currently being implemented with ONEE (Water Branch), it was agreed that only operations

whose parcelling plans have been finalized, whose land has been identified for expropriation and whose

expropriation procedure has been launched, would be retained.

4.5.4 The sometimes significant delays in procuring goods, works and services, could constitute a risk

to the timely execution of the project. However, based on the lessons learnt from ongoing projects, this risk

will be mitigated by ensuring that the various stages of the procurement process and documents to be used

(standard BDs...) are accurately defined in the project appraisal report and the Procurement Plan (PP).

4.5.5 The limited experience of ONEE (Water Branch) in the field of artificial aeration and ozonation

will be offset by strengthening the technical support team with artificial aeration and ozonation experts.

1.20. Knowledge Development

4.6.1 The introduction of innovative techniques such as ozonation, improvement of the output of various

networks and the selection of more economical variants reflect the effort of ONEE (Water Branch) to build

on its research and development achievements and develop its skills in project design and implementation.

4.6.2 Knowledge development is strengthened by the involvement of several departments at the central

and regional levels in the project design process, the selection of technical alternatives and the optimization

and rational operation of investments. The policy practised by ONEE (Water Branch) of outsourcing certain

tasks creates opportunities for young entrepreneurs to be trained, to acquire knowledge and to put it into

practice through the creation of their own businesses, thereby strengthening the emergence of small private

economic structures in the interest of regional development, while enabling ONEE (Water Branch) to save

on repair and maintenance costs.

4.6.3 ONEE (Water Branch) has a website that facilitates the sharing of experiences inside and outside

the country and a training centre that plays a role in disseminating knowledge and research, as recognized

by WHO. ONEE (Water Branch) is a reference in Africa's DWSS sector through its close links with

universities, research centres and counterpart entities (water operators and others). ONEE (Water Branch)

provides training an assistance operates in 15 African countries. Through collaboration and monitoring of

this project, the various units of the Bank will not fail to share expertise and lessons on ozonation technology

and to factor them into future operations in other African countries.

4.6.4 Technical support will contribute to the transfer of know-how and knowledge in the area of project

monitoring and implementation. It will be underpinned by specific expertise in the fields of the

environment, monitoring and evaluation and new technologies. Periodic project reports will be published

on the website of ONEE (Water Branch).

V Legal Framework

1.21. Legal Instrument

An AfDB loan agreement will be signed between the Bank and ONEE, complete with a guarantee from the

Kingdom of Morocco.

1.22. Conditions Associated with the Bank’s Intervention

The AfDB loan is granted subject to the following conditions:

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Conditions Precedent to Grant Effectiveness

The AfDB Loan Agreement will become effective on the date of its signature by the Borrower and the

Bank. The effectiveness of the guarantee agreement is subject to the fulfilment by the Guarantor, to the

satisfaction of the Bank, of the conditions under Section 12.01 of the General Conditions Applicable to

Bank Loan and Guarantee Agreements (sovereign entities).

Conditions Precedent to First Disbursement

In addition to the effectiveness of the AfDB loan agreement and guarantee agreement, the first disbursement

of AfDB loan resources is subject to fulfilment by the Borrower, to the satisfaction of the Bank, of the following

conditions:

(i) Fulfil the conditions under Section 12.02 paragraph (a) sub-paragraphs (i) and (ii) of the

General Conditions

(ii) Provide the Bank with proof of the appointment of the Project Coordinator whose experience

and professional qualifications have been deemed acceptable beforehand by the Bank; and

(iii) Provide to the Bank proof of the opening of a Special Account in a bank acceptable to the

AfDB to receive AfDB loan resources.

Other Conditions

The Borrower shall, to the satisfaction of the Bank:

(i) Provide: as the works progress, and, in any event, before any works begin in an area concerned:

(a) evidence of compensation for project affected persons in this area, in accordance with the

Abbreviated Resettlement Plan (ARP), the Environmental and Social Management Plan

(ESMP) and the Bank’s relevant rules and procedures, in particular, its Involuntary

Resettlement Policy, its Integrated Safeguards System; and/or if, for reasons beyond the

Borrower’s control, compensation is not possible, either in whole or in part (b) evidence of

deposit of such compensation funds in a dedicated account at the Caisse de Dépôts et de Gestion

or any other authorized financial institution acceptable to the Bank;

(ii) Forward to the Bank, at the end of each quarter, a quarterly environmental and social monitoring

report, resulting from implementation of the ESMP and ARP including as appropriate, the

inadequacies and corrective actions taken or to be taken. This report could be part of the

quarterly project implementation report.

Commitments

The Borrower undertakes, to the satisfaction of the Bank, to:

(i) Implement the project, the ARP and the ESMP and have them implemented by its contractors

in accordance with: (a) the Bank's rules and procedures; (b) national legislation; and (c) the

recommendations, requirements and procedures contained in the ESMP and ARP;

(ii) Not start any works in an area concerned without the project affected persons in this area having

been fully compensated; and/or without the money allocated to such compensation having been

deposited in a dedicated account with the Caisse de Dépôts et de Gestion or any other authorized

financial institution acceptable to the Bank;

(iii) Provide to the Bank any documents reasonably needed for monitoring implementation of the

project.

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21

1.23. Compliance with Bank Policies

The project complies with all applicable policies, in particular Bank policies, guidelines and procedures on

environmental and social management. It is a category 2 project. The ESMP summary was prepared and

published on the Bank’s website and the cost of implementing the mitigation measures has been

incorporated into the project costs.

VI Recommendation

It is recommended that an ADB loan, not exceeding a total amount of EUR 88.85 million, be awarded to

ONEE complete with the guarantee by the Kingdom of Morocco to finance the Drinking Water Quality and

Service Improvement Project, in accordance with the terms and conditions set forth in this report.

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I

Annex I Development Indicators of Morocco

Year Morocco Africa

Develo-

ping

Countries

Develo-

ped

Countries

Basic Indicators

Area ( '000 Km²) 2014 - 30 067 80 386 53 939Total Population (millions) 2014 33,5 1 136,9 6,0 1,3Urban Population (% of Total) 2014 58,1 39,9 47,6 78,7Population Density (per Km²) 2014 75,0 37,8 73,3 24,3GNI per Capita (US $) 2013 3 020 2 310 4 168 39 812Labor Force Participation - Total (%) 2014 50,7 66,1 67,7 72,3Labor Force Participation - Female (%) 2014 27,0 42,8 52,9 65,1Gender -Related Dev elopment Index Value 2007-2013 0,828 0,801 0,506 0,792Human Dev elop. Index (Rank among 187 countries) 2013 129 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population)2008-2013 2,6 39,6 17,0 ...

Demographic Indicators

Population Grow th Rate - Total (%) 2014 1,5 2,5 1,3 0,4Population Grow th Rate - Urban (%) 2014 2,1 3,4 2,5 0,7Population < 15 y ears (%) 2014 27,9 40,8 28,2 17,0Population >= 65 y ears (%) 2014 5,0 3,5 6,3 16,3Dependency Ratio (%) 2014 48,3 62,4 54,3 50,4Sex Ratio (per 100 female) 2014 97,8 100,4 107,7 105,4Female Population 15-49 y ears (% of total population) 2014 27,6 24,0 26,0 23,0Life Ex pectancy at Birth - Total (y ears) 2014 71,2 59,6 69,2 79,3Life Ex pectancy at Birth - Female (y ears) 2014 73,0 60,7 71,2 82,3Crude Birth Rate (per 1,000) 2014 22,5 34,4 20,9 11,4Crude Death Rate (per 1,000) 2014 6,3 10,2 7,7 9,2Infant Mortality Rate (per 1,000) 2013 26,1 56,7 36,8 5,1Child Mortality Rate (per 1,000) 2013 30,4 84,0 50,2 6,1Total Fertility Rate (per w oman) 2014 2,7 4,6 2,6 1,7Maternal Mortality Rate (per 100,000) 2013 120,0 411,5 230,0 17,0Women Using Contraception (%) 2014 68,1 34,9 62,0 ...

Health & Nutrition Indicators

Phy sicians (per 100,000 people) 2004-2012 62,0 46,9 118,1 308,0Nurses (per 100,000 people)* 2004-2012 89,0 133,4 202,9 857,4Births attended by Trained Health Personnel (%) 2009-2012 73,6 50,6 67,7 ...Access to Safe Water (% of Population) 2012 83,6 67,2 87,2 99,2Healthy life ex pectancy at birth (y ears) 2012 61,0 51,3 57 69Access to Sanitation (% of Population) 2012 75,4 38,8 56,9 96,2Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2013 0,2 3,7 1,2 ...Incidence of Tuberculosis (per 100,000) 2013 104,0 246,0 149,0 22,0Child Immunization Against Tuberculosis (%) 2013 99,0 84,3 90,0 ...Child Immunization Against Measles (%) 2013 99,0 76,0 82,7 93,9Underw eight Children (% of children under 5 y ears) 2005-2013 3,1 20,9 17,0 0,9Daily Calorie Supply per Capita 2011 3 334 2 618 2 335 3 503Public Ex penditure on Health (as % of GDP) 2013 2,0 2,7 3,1 7,3

Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2011-2014 117,5 106,3 109,4 101,3 Primary School - Female 2011-2014 114,5 102,6 107,6 101,1 Secondary School - Total 2011-2014 68,9 54,3 69,0 100,2 Secondary School - Female 2011-2014 63,4 51,4 67,7 99,9Primary School Female Teaching Staff (% of Total) 2012-2014 55,1 45,1 58,1 81,6Adult literacy Rate - Total (%) 2006-2012 67,1 61,9 80,4 99,2Adult literacy Rate - Male (%) 2006-2012 76,1 70,2 85,9 99,3Adult literacy Rate - Female (%) 2006-2012 57,6 53,5 75,2 99,0Percentage of GDP Spent on Education 2009-2012 6,2 5,3 4,3 5,5

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2012 18,0 8,8 11,8 9,2Agricultural Land (as % of land area) 2012 0,7 43,4 43,4 28,9Forest (As % of Land Area) 2012 11,5 22,1 28,3 34,9Per Capita CO2 Emissions (metric tons) 2012 1,2 1,1 3,0 11,6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :

UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

avril 2016

0

10

20

30

40

50

60

70

80

90

100

20

00

20

05

20

08

20

09

20

10

20

11

20

12

20

13

Infant Mortality Rate( Per 1000 )

Morocco Africa

0

500

1000

1500

2000

2500

3000

3500

20

00

20

05

20

07

20

08

20

09

20

10

20

11

20

12

20

13

GNI Per Capita US $

Morocco Africa

0,0

0,5

1,0

1,5

2,0

2,5

3,0

20

00

20

05

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Population Growth Rate (%)

Morocco Africa

01020304050607080

20

00

20

05

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Life Expectancy at Birth (years)

Morocco Africa

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II

Annex II Table of the AfDB's Active Portfolio in Morocco (End-February 2016)

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III

Annex III Major Related Projects Financed by the Bank and Other Development Partners of

Morocco

1. The list of the main projects funded by the Bank and other development partners in the DWSS sector

is presented in Appendix-A.

2. The table presenting the various operations of major donors in Morocco’s DWSS sector as of

December 2015, is presented below (in EUR million).

Major water sector

donors

AfDB World

Bank

JICA KFW AFD EU IsDB EIB Belgian

Cooperation

GIZ Swiss

Cooperation

Total

Total (in EUR million) 589.33 530.95 481.00 422.62 384.50 270.15 270.12 70.00 45.60 21.78 4.30 3,090.35

% 19.07 17.18 15.56 13.68 12.44 8.74 8.74 2.27 1.48 0.70 0.14 100.00

0,00

100,00

200,00

300,00

400,00

500,00

600,00

700,00

BAD BanqueMondiale

JICA KFW AFD UE BID BEI CoopérationBelge

GIZ CoopérationSuisse

Intervention des principaux Bailleurs de Fonds & des Partenaires Techniques au développement dans le secteur de l'eau au Maroc à fin décembre 2015 (millions

d’EUR).