Annex A

Ethio - Italian Cooperation

Support to the WASH sector in urban areas

Programme Implementation Document

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Support to the WASH sector in urban areasProgramme Implementation Document

Recipient country Ethiopia

Financing agency MAECI/DGCS

Title Support to the WASH sector in urban areas

Sector WASH

Type of agreement Bilateral

Financial modalities Grant and Soft loan

Executing agencies Water Resources Development Fund (WRDF) MAECI/DGCS

Proposed amount Euro 3.500.000 GrantEuro 15.000.000 Soft Loan

Duration 24 months

Proposed starting date At the entering into force of the Agreement

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INDEX

List of Acronymes...........................................................................................................................41.1 ORIGIN OF THE PROGRAMME........................................................................................5

2. PROJECT STRATEGY...............................................................................................................62.1 Overall Objective...................................................................................................................62.2 Strategic Approach and beneficiaries....................................................................................62.3 Specific Objective, Results and Activities.............................................................................8

Specific Objective....................................................................................................................8Expected Results......................................................................................................................8Indicators.................................................................................................................................8Activities and actors................................................................................................................9

3. PROJECT IMPLEMENTATION..............................................................................................103.1 Institutions and their roles...................................................................................................103.2Project management and time frame....................................................................................12

Financial mechanism.............................................................................................................12Operational Mechanism.........................................................................................................13Project implementation schedule...........................................................................................16

3.3Estimation of project costs....................................................................................................173.4 Procurement.........................................................................................................................173.5 Programmatic plan, Action plan(s), technical and financial reports...................................17

4 SUSTAINABILITY...................................................................................................................194.1 Financial sustainability........................................................................................................194.2 Economic sustainability.......................................................................................................194.3 Social sustainability and gender impact..............................................................................204.4 Environmental sustainability...............................................................................................20

5. RISKS AND ASSUMPTIONS..................................................................................................206. MONITORING AND EVALUATION.....................................................................................20

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List of Acronymes

AFD: Agence Française de DéveloppementCRISIL: Credit Rating Information Services of India LimitedEIB: European Investment BankGOE: Government of the Federal Democratic Republic of Ethiopia GOI: Government of the Republic of Italy GTP: Growth and Transformation PlanIBF: Investment Basket FundICB: International Competitive BiddingIDC: Italian Development CooperationMoFED: Ministry of Finance and Economic DevelopmentMoU: Memorandum of UnderstandingMoWIE: Ministry of Water Irrigation and EnergyNCB: National Competitive BiddingOWNP: One WASH National ProgrammePIC: Person in ChargePIM: Project Implementation ManualRWB: Regional Water BureauSC: Steering CommitteeTABF: Technical Assistance Basket FundTAMU: Technical Assistance and Monitoring UnitTWU: Town Water UtilityWB: World BankWRDF: Water Resource Development Fund

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1 ORIGIN OF THE PROGRAMME

Italy is committed to support poverty reduction and development initiatives aimed at achieving the Millennium Development Goals (MDGs) in Ethiopia and implementing the Growth and Transformation Plan (GTP) adopted in 2011 by the Country. The Italian Cooperation is also internationally committed to harmonize and align its Official Development Aid as per the principles of the Paris Declaration. Moreover, it is responsive to the Ethiopian Government’s (GOE) demand for increased aid predictability and efficiency, as well as for the adoption of aid instruments aligned to the national administrative procedures.

The GOE and the Government of Italy (GOI) signed in May 2013 the Country Programme “Ethio-Italian Cooperation Framework 2013-2015”, which includes a specific contribution to sustain the National Urban WASH system in Ethiopia through a dedicated support to the expansion of the revolving credit facility of the WRDF.

Italian Development Cooperation is already supporting the revolving fund of the Water Resources Development Fund (WRDF) through the project “WASH in Small and Medium Towns” with a Grant contribution of 5,5 million Euro aimed to improve access to clean water and sanitation services in four different regions of Ethiopia. This project is currently in its final phase. During the implementation of the above mentioned project, French Development Agency (AFD) and the European Investment Bank (EIB), come together in order to find a common ground for a joint Programme with similar objectives and activities with IDC.During the joint missions organized by IDC, AFD and EIB in Addis Ababa throughout 2014 and early 2015 a common implementation approach was assessed in order to harmonize the Programme with the “One WASH National Programme” (OWNP), which remains the reference document for the WASH sector in Ethiopia. Several meetings were held both with Ethiopian and international major partners in the water sector: Ministry of Water, Irrigation and Energy (MoWIE), Ministry of Finance and Economic Development (MoFED), UNICEF, World Bank (WB) and the Delegation of the European Union. Furthermore, AFD commissioned a feasibility study, for this new Programme, to an international consultant (CRISIL) in order to assess: rules regulating the financial flow mechanism and funds management at WRDF level; it’s current capacity in terms of human resources and a consequent technical support needed and, more generally, the necessary Technical Assistance package to be put in place for the proper implementation of the Programme. All these inputs are shared between WRDF, AFD, EIB and IDC. Particular attention is given to the Project Implementation Manual (PIM) that detailes all procedures to be followed by WRDF in the implementation of all steps of the Programme and the Road Map, that suggests modification within the WRDF in order to improve the absorption capacity of the funds.IDC’s choice of implementing the Programme together with AFD and EIB is aimed at promoting a strategic action designed to maximize the impact and to reduce the operating costs related to interventions in the sector.

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2. PROJECT STRATEGY

2.1 Overall Objective

The project contributes to pro-poor development by strengthening the WASH sector county wide (MDGn.7 targets 3 and 4).To enhance ownership and alignment, Project funds will support the resources of the WRDF addressed to the improvement of a safe water and sanitation access in urban context of Ethiopia. Funds are earmarked to the activities defined in the present Project Implementation Document (PID).

2.2 Strategic Approach and target towns

The Italian Soft Loan, together with the funds provided by EIB and AFD will be disbursed in a common account denominated Investment Basket Fund (IBF), managed by WRDF. The soft loan will be then channelled by the WRDF, through on-lending agreement, to eligible TWUs which will operate on cost recovery principles and, meanwhile, foster the gradual building up of local resources so as to guarantee the sustainable development of the sector. TWUs will be selected through a technical and financial appraisal process. The appraisal will also define the maximum eligible amount of the WRDF loan and consequently the amount provided by RWBs (and other local bodies like Zone, Weredas, Municipalities) in form of a Grant in order to reach the total project amount.Each Donor will disburse the Grant component of the Programme according to the rules and regulation set out in each bilateral agreement:

EIB will support the WRDF through an International Technical Assistance for the whole duration of the Programme.

AFD will support Capacity Building Activities at all levels (WRDF, RWBs and TWUs) and sanitation campaigns.

IDC will support the recruitment of new staff when deemed needed at WRDF and RWBs levels. Will give support on logistics and IT aspects in order to guarantee an efficient management of the Programme.

Italian funds will be allocated in an account directly managed by the WRDF and called Technical Assistance Basket Fund (TABF).

According to GOE priorities, the selection of the locations for the Projects is addressed to optimize the investment in order to obtain effective and observable impacts. The selection of the towns will be driven by an equity criterion in order to have a fair allocation of resources according to the priorities of the Regions.

Cost sharing participation of Regional Governments, Town Administrations and TWUs, is of extreme importance to complete the IBF funds and match the requested amounts for the proposed water and sanitation interventions in the target towns. These funds will be streamed in a specific account called Matching Found account and managed by the WRDF. These funds will

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be then revert in tranches to the RWBs/TWUs and complemented by the tranches of the WRDF loan. WRDF will start the appraisal of different projects using a set of criteria defined below and widely explained in the Project implementation Manual (PIM):

Town population between 2.000 and 100.000 inhabitants TWUs autonomous and legally established Evidence of exploitable water sources Submission of preliminary documentation for the application to the WRDF loan Accomplishment of preliminary appraisal criteria adopted by the WRDF (see below)

The WRDF, in order to judiciously and equitably allocate resources to eligible borrowers, carries out a rigorous appraisal of the proposals submitted.The following activities will be performed and documents appraised:

Status of existing infrastructure Water demand and supply analysis Water sources identified and existing Design study and technical plan Alternative design possibilities considering also different sources of water Land acquisition/compensation Costs estimate Project timeframe Operation and Maintenance costs for the scheme Socio – Economic and Environmental study Business Plan Managerial capacity of the TWU

The international consultant CRISIL is preparing in collaboration with WRDF and Donors the Project Implementation Manual PIM and the Road Map for the change/improvement of the WRDF. These two documents will have to be approved by WRDF and Donors and will be of extreme importance for the implementation of the Programme.

The PIM will be an instrument utilized by this Programme but aim also at being the standard manual utilized by WRDF for similar project funded by other donors. It explains and describes all steps to be performed in analyzing and financing TWUs proposed projects. Particularly:

Content of the request submitted by the TWUs Preliminary selection Detailed appraisal of the projects On – lending agreement Loan disbursement Loan repayment TWUs supervision Assets classification Procurement

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Template for standard documents will be prepared in order to support the WRDF in the above mentioned activities.

The Road Map will be utilize to change the existing setting of the WRDF in a more efficient body able to manage large amount of funds in the urban WASH sector.

Following the above mentioned implementing strategy, it is essential the quality of documents presented to the WRDF by the RWBs/TWUs. Particular attention will be put on the water source that has to be identified and develop in order to guarantee a sufficient amount of water in accordance to the projected demand.Regarding sanitation activities, these will be financed by the matching fund and will be grater or equal to 10% of the total project amount.

2.3 Specific Objective, Results and Activities

Specific Objective

To improve access to clean water and sanitation services in at least 38 selected towns in Ethiopia

Indicators 80% of target beneficiaries consume a minimum of 20 l/p/d of safe water Water source is available within 0.5 Km from the home of 80% of the target beneficiaries Time per household dedicated to fetch water is reduced to a maximum of 30 minutes per

day for 80% of the target families Share of households’ income allocated for water provision is adequate to HH income and

O&M costs of the water scheme for 70% of the target beneficiaries. Open defecation is reduced by 90% in the targeted Towns Water related diseases decrease of 50% from baseline by local health facilities

Expected Results

1. Water supply networks, properly sized to the target populations, functional and sustainable in the selected towns

2. Public sanitation infrastructures and services are upgraded or newly constructed. Municipalities/TWUs are able to manage the sanitation facilities.

3. Improved capacity of target Town Water Utilities for planning, management and O&M and of WRDF for loans’ management and delivery of technical assistance to TWUs.

Indicators

Result 1

80% of the target population actually consumes a minimum of 20 l/p/d as the new water scheme starts working

Tariff strategies for sustainability of water schemes are in place and billing systems in use

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Unaccounted-for-water less than relevant national targets and international best practices (UfW<25%)

Interruptions of water supply service is less than relevant national targets and international best practices in the first 3 months of new water schemes working period

Result 2

Increase of 50% of schools and health facilities in selected areas that have adequate latrines with hand washing facilities

Communal and institutional sanitation infrastructures are used and are properly managed according to the priority stated in TWUs projects

50% of institutional structures are equipped with Rain Water Harvesting systems (RWH) in the areas of intervention

Septic tank sludge removal facilities are functional and users pay for the service

Result 3

Integration of water, sanitation and hygiene planning and monitoring at Town Administration level

TWUs are able to properly perform the water schemes financial management, provide adequate O&M assistance and repay back the loan

Municipalities are able to manage financially and operate the sanitation facilities

Activities and actors

The activities, detailed for each result, and the actors involved for the implementation of the Project are summarized in the following table:

Activities Actors involvedImplement Assist

For Result 1- Water supply networks, properly sized to the target populations, functional and sustainable in the selected townsVerify available documentation (feasibility, designs, business plans etc) for the applications to WRDF loan by the selected TWUs

WRDF RWB, TAMU

Revision or upgrading of technical documentation (feasibility, designs, business plans etc) before loan approval

RWBs, specific technical advisors

WRDF, TWUs

Set up cost sharing participation, matching fund, by the RWBs and confirmation of the selection of the towns

WRDF TWUs, RWB, MoWIE, TAMU

Prepare tender documents for consultancy services and consultancy contracts awarding

TWU,RWB WRDF, TAMU

On-lending agreements between WRDF and selected TWUs WRDF, TWUs, RWBs Consultants

Prepare tender documents for works and works contracts awarding TWUs, RWBs, Consultants

WRDF

Works Implementation Contractors, TWUs WRDF, RWB Works supervision TWUs, RWBs Consultants, WRDF Preliminary and final inspections of works, handover of the new water schemes WRDF, TWUs,

RWB, ContractorsConsultants , TAMU

For Result 2 - Public sanitation infrastructures and services upgraded, constructed and management set up in the selected towns

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Assess sanitation facilities in the target towns and set up priorities, design a cost recovery system and management for sanitation infrastructures

TWUs, WRDF, Consultants

RWB, TAMU

Prepare tender documents for consultancy services and assignment TWU, RWB, Consultants

WRDF

Prepare tender documents for sanitation works and works contract awarding TWUs, RWBs, Consultants

WRDF

Works Implementation Contractors, TWUs WRDF, RWB Preliminary and final inspections of works, handover of the new sanitation infrastructures and equipment

WRDF, TWU, RWB, Contractors

Consultants, TAMU

For Result 3- Improved capacity of 5 target Town Water Utilities for planning, management and O&M and of WRDF for loans’ management and delivery of technical assistance to selected TWUs.Immediately after TWU selection, monitoring and technical assistance RWB, Consultants TWUTechnical assistance trough support personal at WRDF, RWBs and TWUs level. Preparation of a capacity building training for the TWUs and for WRDF staff.

WRDF, Consultants RWB, TWUs

On the job technical assistance to the TWUs in relation to expected results 1 and 2 starting immediately after the signature of the on-lending agreement.Initially assistance to improve the management of the existing scheme until the new water scheme is build and well operated.

RWBs, Consultants TAMU WRDF

Technical and financial Workshops for the TWUs and RWBs WRDF, external Consultants

TAMU, RWB

Involvement of other donors in the project, networking, experiences sharing. Harmonization of the activities within the One WASH National Programme

WRDF, external Consultants

TAMU

Experience sharing between different TWUs WRDF TWU, TAMUSeminars, final conference and acts WRDF TAMU, RWB

During all this activities mentioned above WRDF will be constantly supported by the Italian technical assistance and by Italian experts.

3. PROJECT IMPLEMENTATION

3.1 Institutions and their roles

In line with the provisions of the Bilateral Agreement, the main actors involved in the implementation of the Programme are:

For the GOE side

The MoFED represents the GOE as counterpart of the GOI for the Programme and will sign the Bilateral Agreement.MoFED ensures that adequate internal administrative controls are in place at all levels and that such controls adhere consistently with all the parties involved in the Programme. It is represented by one delegated person in the Steering Committee.

The Ministries of Water Irrigation and Energy (MoWIE), representing the Institution responsible for the supervision of the activities. It is represented by one delegated person in the Steering Committee.

The WRDF is the main Executing Agency of the Programme. It will be responsible for allocation, implementation and account’s reporting for all, IBF and TABF funds. It will formally

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appoint a Person in Charge (PIC), whose roles and responsibilities are defined in the Bilateral Agreement. WRDF shall assess and revise the applications of the TWUs for the loan and, when necessary, it shall provide assistance to complete the required documentation with the support also of external consultants. It shall prepare and sign the on-lending agreement with the TWUs and supervise the works implementation. It shall conduct, together with RWBs and TWUs, the preliminary, intermediate and final inspection to towns’ projects. The WRDF will be in charge of the preparation of the 4 year programmatic plan and the Action plan(s) for the Italian Grant component, technical and financial reports and the instalment requests to be submitted to MAECI/DGCS according to the provisions of the Bilateral Agreement. It will give an indicative list of TWUs involved in Programme. Before the disbursement of the first tranche of the soft loan it will sign the PIM and use it as unique tools for Programme implementation. Within the first year of the Programme implementation it will approve and sign the Road Map. It is represented by one delegated person in the Steering Committee.

The National Bank of Ethiopia, acting as administrator of the IBF account into which, all Development Partners involved (IDC, AFD and EIB) shall pool financial resources and TABF account for the IDC Grant component, both in Euro and Birr.

The Regional Water Bureaus (RWBs) will act as co-financing agencies and implementing bodies in support of the TWUs. They will assure the availability of exploitable water resources for the TWUs projects and will provide, if needed, assistance during the implementation of the final design of the water supply scheme in collaboration with the WRDF. Assist, if needed, the TWUs during the procurement process. The RWBs will assist the TWUs in setting up their management structures and will be involved in the training courses addressed to the TWUs. The Town Administrations and their Water Boards will assist the TWUs in the supervision of the works. They will be involved in the water tariff assessment and in the development of strategies to be adopted in the business plan. They will sign an agreement with TWUs on roles and responsibilities on the sanitation facilities management. This agreement will be stipulated and sign before commencement of any project work activity.

The Town Water Utilities (TWUs) will be the final recipient of the loans delivered by the WRDF and the main Implementing Agencies. They are accountable to the Town Water Boards under a performance agreement or contract for the operation and maintenance of the water supply systems and responsible for the management of the water supply schemes. Ad hoc trainings will be organized by WRDF and RWBs in order to strengthen the technical and financial capacity of the selected TWUs. Together with the WRDF staff, they shall implement the tenders, supervise the works and participate in all the monitoring and evaluation missions, in line with provisions defined in the PIM.

A Steering Committee (SC) will be the guarantor of the governance of the Project and the relevant decision making body. Its roles and responsibilities are defined in the Agreement.

For the GOI side:

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Agence Française de Développement-AFDEuropean Investment Bank-BEI

GOE(MoFED)

Bilateral agreement

GOI MAECI/DGCSMoU

Italian expert support

Bilateral agreement

The Directorate General for Development Cooperation of the Italian Ministry of Foreign Affairs and International Cooperation (MAECI/DGCS), representing the GOI for the Agreement and acting as Financing Agency for the Loan and Grant.

The Italian Development Cooperation/Local Technical Unit (IDC) representing MAECI/DGCS in Ethiopia for the implementation of this Agreement. It is responsible for the supervision of the bilateral cooperation activities between Italy and Ethiopia.

Artigiancassa S.p.A, the Italian Financial Institution appointed by GOI to sign the Financial Agreement with MoFED. Artigiancassa will act as lender for the Loan on behalf of GOI providing all the transfers requested by MoFED and receiving the repayments with the Financial Agreement.

The Technical Assistance and Monitoring Unit (TAMU). In order to facilitate an effective implementation of the Programme, a TAMU shall be established at IDC level to monitor WRDF operations. The TAMU will be staffed with Italian Experts designated by MAECI/DGCS, in agreement with WRDF, local experts and support personnel. The PIC will be the direct counterpart of the TAMU. The PIC and the Italian expert will work in regular consultation and agreement for the daily activities of the Programme.

3.2Project management and time frame

Financial mechanism

The Programme will be carried out in a cooperative manner between the different stackeholder: WRDF, RWBs, TWUs, IDC, AFD and EIB.The Italian Soft loan funds, will be part of the IBF and practically will contribute to WRDF revolving funds mechanism, aimed at giving soft loans to Town Water Utilities for implementing Project activities. These soft loans shall be regulated by dedicated on-lending agreements between WRDF and TWUs. In the long term, the loans will be returned by TWUs to WRDF accordingly. WRDF will then use the same funds as part of its revolving mechanism to support other TWUs according to sector priorities.WRDF will also manage the funds in the TABF account. These funds will be used for staffing, according to the needs, WRDF, RWBs and TWUs and also for logistic and IT components. Part of the funds will be allocated for external consultants responsible for TWUs projects revision. All procurement procedures at any stage and/or level of the Programme will be regulated by the WB guidelines. In case of International Competitive Bidding (ICB) procedure AFD will give no-objection at all stages of the procurement process. In case of National Competitive Bidding (NCB) procedure, donors will conduct an ex-post review based on the auditing report once new tranches are requested.This methodology and the Programme implementation modalities are set in order to ensure the ownership of Ethiopian Institutions in the management of the Project and to limit donors’ role to supervision of financial flows and monitoring of results. The overall picture of the Financial Mechanism of the Project is described in the chart below:

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Operational Mechanism

Selected towns are eligible to apply for concessional loans’ financing from the WRDF once they have functional Water Boards and Town Water Utilities and once they have prepared a business plan, as well as detailed studies for water schemes expansion. If the above mentioned requirements are not completed or partly missing, WRDF, if needed, will hire ad-hoc consultants in order to assist TWUs to accomplish all the documents necessary for loans’ applications.

The description of the operational mechanism adopted in the Programme is based on the standard working modality of the WRDF for loans’ concessions and follows the PIM prescriptions.

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The following list summarizes all the operational steps to be followed by WRDF for a complete loan cycle management:

1. Receipt of applications for loan and related project documents 2. Initial screening 3. Pre-appraisal 4. Appraisal5. Selection of eligible TWUs6. Revision and approval by the WRDF Director General7. Notification to applicants 8. Negotiation 9. Loan agreement (on-lending agreement preparation and signature) 10. Loan disbursement11. Monitoring and evaluation of projects 12. Billing and loan repayment

The WRDF will appraise the towns’ proposals in three stages in order to screen viable projects:

1. Office level appraisal – desk assessment; 2. Project site level appraisal; 3. Comparison with similar projects of the same nature and size

These stages cover the major aspects of a project: technical feasibility, implementation arrangement and management, economic and financial, social desirability and environmental impact assessments. Once a project proposal is considered eligible, the WRDF notifies the approval of the loan to the TWU. Then on-lending agreement is signed.This on-lending agreement is regulated by a number of terms & conditions, established by the WRDF in compliance with its mandate and the PIM, as follows:

Interest rate: supposed to be 3% but regularly revised by MoFED Grace period: max 5 year Repayment period: up to 25 years for long-term loan. It differs from project to project

depending on the size of the investment and the terms of agreement. It depends on TWUs’ capacity of repayment established during the project appraisal.

The maximum amount that a WRDF loan can cover for a project, vary from 30% for towns between 2.000 and 20.000 inhabitants and 80% for towns between 20.001 and 100.000 inhabitants. This is in line with the principals of the One WASH National Programme.

Commitment from RWBs, Zone and Woreda WBs, TWU, Municipality on the matching fund.

Loan rescheduling: under WRDF’s Board Management approval

After signature of the on-lending agreement, TWU, with the assistance of the RWB if needed, can start the bidding process for works construction goods and services. The procedures to be

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Payment request from contractor/supplier

Revision and approval from work supervisor

Revision and approval from RWB/TWU

Payment to contractor/supplier

followed are the one from the WB and WRDF will supervise all the steps and endorse/approve them.The TWUs have the mandate to control and supervise, with the assistance of the RWBs, the quality of the supplies/works.Payments to contractors/suppliers are directly made by TWUs, assisted by RWB if needed, upon prior request from the contractor/supplier. WRDF will disburse the Loan amount in tranches and according to a disbursement schedule presented by the TWU to the WRDF. The payment mechanism to contractors/supplier is shown in the diagram below:

The sanitation component will be part of the TWU project and will follow the same procurement and payment mechanism, utilizing the funds allocated in the Matching Fund.

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Project implementation schedule

MonthActivities 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Entry into force of the Bilateral Agreement XTOR preparation and recruitment on staff at WRDF and RWBs levels X X

TOR preparation and procurement process for logistic goods (vehicles, computers,…) X X

TWUs projects appraisal and field visits X X X X X XDefinition of the matching fund and selection of eligible TWUs X X X X

On – lending agreement between WRDF and selected TWUs X X

Disbursement of the matching fund from RWBs and other local authorities involved in the on-lending agreement.

X X

Preparation of programmatic plan, Action Plan and Semi Annual Report X X X X X

Preparation of bidding documents and selection of the contractors/supplier X X X X X X X X X X

Works construction and works supervision X X X X X X X X X X X X X X X X X XTechnical inspection and hand-over X X X X XCapacity building activities for WRDF, RWB and TWUs X X X X X X X X X X X X X X X X X X X X X X X

Technical and financial reports, final report X X XRequest for disbursement of Grant component XRequest for disbursement of Soft Loan component X X X

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3.3 Estimation of costs for IDC Grant Component

The following table refers to the estimation of Programme costs (in Euro) for the IDC Grant component. The utilization of the IDC Grant component is subjected to the presentation and approval of an Action Plan(s) prepared by the WRDF as described in the Bilateral Agreement and in par. 3.5 of this document.The Grant component will be disbursed in a single instalment from MAECI/DGCS following the condition detailed in the Bilateral Agreement also budget reallocations are allowed under the regulations defined in the Bilateral Agreement.

Implementing body: WRDF, RWB, TWU Cost estimate in €1. Human Resources:(staff at WRDF and RWBs level, Drivers, per diem for WRDF, RWBs TWUs and drivers)

958.400

2. International Consultancy Firm Budget line managed by EIB in close coordination with WRDF

3. Equipment and supplies(Laptop, Printer, Internet connections, Vehicles, Office furniture, Equipment for O&M activities at TWUs level)

1.270.200

4. Local office(Car insurance, fuel and car maintenance, Stationeries)

86.400

5. Operational costs(Ad hoc software at WRDF and TWUs level (loan management and billing system), Workshops and seminars, TWUs support for projects revision)

1.185.000

5.1 External support to the WRDF and hygiene and sanitation campaigns Budget line managed by AFD in close coordination with WRDF

GRAND TOTALIDC Technical Assistance package

3.500.000

In addition to the funds transferred to MoFED/WRDF, the Programme resources include additional technical assistance provided and directly managed by the MAECI/DGCS. An Italian Expert will provide technical assistance to WRDF during the whole implementation of the Programme. He/she will represent a dedicated link among IDC and the institutions involved in the Programme in order to overcome specific capacity gaps at different level.

3.4 Procurement

All bidding procedures (including pre-qualifications when applicable) to be launched in the Programme shall be carried out at local level by TWUs/RWBs with the assistance, supervision and no-objection of WRDF/RWBs, according to the provisions of the Bilateral Agreement. Procurement regarding activities carried out at WRDF and RWBs level will be performed following the same provisions stated in the Bilateral Agreement.

3.5 Programmatic plan, Action plan(s), technical and financial reports

The technical and financial documents necessary for the implementation of the Programme are:

1. A four-year programmatic plan

2. Annual Operational Plan

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3. An Action Plan (AP) relative to the IDC Grant component

4. Joint financial and technical report every six months.

The four year programmatic plan must be prepared by the PIC in collaboration with the support staff at WRDF and include financial plan according to a detailed description of activities to be executed, expected results and implementation times. The budgeted expenses must be grouped for each component of the Programme (town water systems rehabilitation/extension including sanitation, WRDF/RWBs technical assistance, training, and consultants), type of funds (loan or grant) and type of procurement (consultancy contracts, works, goods, services and other miscellaneous expenditure). In the four year programmatic plan, the cost sharing commitment from Ethiopian institutions must be described and the plan of disbursement set up. It must be prepared and submitted to the SC according to the modalities detailed in the Bilateral Agreement.

The annual operational plan will be prepared on the basis and with the same content of the four year programmatic plan. It will focus on the activities to be carried out in the specific year. Excluding the first, other annual operational plans, will be supported by the audit report.

The Action Plan will be prepared on the basis and with the same content of the four year programmatic plan. It will focus on the activities to be carried out with the IDC Grant component. This document is condition precedent to the utilization of the IDC Grant funds.

The Six month report shall include two sections, detailed here below, reporting the cumulative status of the Project, in terms of activities (Physical performance), procurement and disbursement (Financial performance). Both sections shall make reference to the approved annual operational plan. The Physical performance section shall describe:

the implemented activities compared with the planned activities in the annual operational plan

the obtained results compared to the expected results the actual time of implementation compared to planned times problems and constraints encountered during the implementation of activities and

measures taken and/or recommendations for corrective measures plan of activities for the subsequent six-months period

The first section shall also include a specific report produced by the PIC on the performance, the efficiency and the effectiveness of the technical assistance provided to the Project. This report will be also used by the SC in order to evaluate the possibility of adjusting the technical assistance for the remaining period of the Programme, if deemed necessary.

The Financial performance section shall describe:

the amounts credited to the MoFED dedicated account and the WRDF account; the evidence of fund coming from Ethiopian institution for cost sharing participation;

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the budget allocated in terms of Budget lines as agreed in the annual operational plan for each activity;

actual and committed expenditures by activity, compared with the planned; the remaining balance in the WRDF account the updated disbursement plan submitted with the previous six month report, considering

the actual activities carried out and the updated activity plan. problems and constraints encountered, if any, during the implementation of activities and

measures taken and/or recommendations for corrective measures. Financial plan for next period.

At the end of the Project the last six month report produced, shall serve as Final Technical and Financial Report. It will contain technical information such as the description of the specific objective and obtained results, the analysis of impact and effectiveness indicators, the eventual deviation from planned activities and the output of the projects and the implementation time. Regarding the financial section it will include the description of all the executed expenses for each budget line compared to the planned ones and will describe all introduced changes. The report should provide all the elements necessary to evaluate the Programme.

4 SUSTAINABILITY

4.1 Financial sustainability

The Programme will operate within the OWNP where several international agencies are strongly committed to achieve the GTP objectives.The existing national sector dialogue between the Government of Ethiopia and development partners is unanimously considered as the correct approach to ensure the coordination during the implementation phase of different initiatives and to promote the ownership of sector objectives by federal and decentralised local institutions.An appropriate appraisal of every single TWU project will be done focussing on the Tariff strategy and the TWU Business Plan. This will also indicate the exact amount of the loan disbursed by the WRDF and make sure that TWUs are able to pay back the loan. During all phases of the project TWUs will be supported in order to improve their capacity in managing the existing and the new water scheme financially and technically.The participation of Ethiopian institutions in the cost sharing of the TWUs Projects (Matching fund) and the continuous support to the RWBs involved is another important factor that contributes to the financial sustainability of Programme results.

4.2 Economic sustainability

The economic sustainability of Programme results, will be guaranteed through the benefits generated within the target population by new safe water sources and sanitation infrastructures. The Programme will also increase the physical and economic sustainability of urban water and sanitation services by supporting a sustainable demand-driven model of service delivery and cost recovery. The final users/beneficiaries will show a greater willingness to pay for the services with a more reliable efficient and ramified system.

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4.3 Social sustainability and gender impact

The project will create a social benefit to the town communities by strengthening socioeconomic development through reduced incidence of water-borne diseases, cost of treatment and the productivity losses as a result of illness. It will increase equity in access to water and sanitation services by increasing coverage to all urban population and it will reduce costs of accessing water for the urban poor. Furthermore the reduced time spent to collect water should increase opportunities for engagement in productive activities and increasing incomes, especially for women who are the main actors involved in domestic water management and hygiene practices.

4.4 Environmental sustainability

From the environmental point of view, the activities to be developed will give adequate attention to the equilibrium of water resources between demand and availability, avoiding over exploitation of springs and wells, and sizing infrastructures in order to release water for ecological needs.All TWUs projects will have an Environmental Impact Assessment that will be evaluated during the project appraisal. Mechanism for land compensation due to project construction will be put in place and will be in line with the OWNP.

5. RISKS AND ASSUMPTIONS

If the Town Water Utilities cannot afford to present adequate documentation for the application to WRDF loan, WRDF could hire ad-hoc consultants to support TWUs in completing all the requirements necessary. If TWUs/RWBs do not assure evidence of exploitable water sources necessary to supply the proposed water networks, WRDF can provide an extension of 1 year in order to accomplish the necessary studies.

6. MONITORING AND EVALUATION

Monitoring and Evaluation activities will be performed according to the modalities established in the Bilateral Agreement. Day to day monitoring activities will be jointly performed by WRDF staff and Italian Expert together with RWBs.Whenever deemed appropriate, WRDF and IDC can ask an external independent evaluation. Relevant TORs of the mission must be approved by both parties.

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