FILE COPY

DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATIONAL DEVELOPMENT ASSOCIATION

Not For Public Use

Report No. 146a-TH

APPRAISAL OF THE

BANGKOK WATER SUPPLY PROJECT

THAILAND

June 8, 1973

Asia Projects DepartmentPublic Utilities Division

f This report was prepared for official use only by the Bank Group. It may not be published, quoted |or cited without Bank Group authorization. The Bank Group does not accept responsibiity for theaccuracy or completeness of the report.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

Currency Unit Baht ($)US$1.00 = $20.80$ 1.00 = US$O.048$ 1 million US$48,077

MEASURES ATD EQUIVALENTS

mm = millimeter (0.03937 inches)cm = centimeter (0.3937 inches)m = meter (39.37 inches)kmn = kilometer (0.62 miles)cn2 = square centimeterkm2 = square kilometer (0.386 square miles)!13 = cubic meter (220 Imperial gallons or 264 US gallons)gallons = US gallons (0.833 Imperial gallons or 3.785 liters)1 = liter (0.220 Imperial gallons or 0.264 US gallons)1/cd = liters per capita per day1/sec = liters per second (19,000 Imperial gallons per day or

22,800 US gallons per day)m3/sec = cubic meters per second (19.0 million Imperial gallons

per day or 22.8 million US gallonsper day or 86,400 m3/day

m3/day = cutbic meters per day,C _ = gallons per minutek;/cn2 k kilograms per square centimeter (14.22 pounds per square

inch)

ABBREVIATI0!S ANND ACPONYTIS

.0.13 = Asian Development BankM= letropolitan Water Works Authority

CD)i = Ca-ip, Dresser & MrlcKee International Inc. (USA)= Booz, Allen and Hamilton International Inc. (USA)

~P-'TJ = Provincial Water Works Division of thePublic and Municipal Works Department

S}1 = Sanitary Engineering Division of theDenartment of Public Hlealth

IeAII) = United States Agency for InternationalDevelopment

:7.ST?'i. = -lational Economic and Social Development BoardMIT =ERBlack and Veatch International (USA)

FTSGAL YEAR

October 1 - Sen,tember 30

THAILAND

APPPAISAL OF THE BKNGKOK WATER SUPPLY PROJECT

Table of Contents

Page No.

SUNMARY AND CONCLUSIONS ........................ ii

I. ITTRODUCTIO ....... ............................1

II. THE SECTOR ........ ............................. 2

General ...................... 2Sector Development ................. 3Sector Organization ................. 4Sector Financing .................... 4

III. T1EE PROJECT .................................... 5

Description .................... 5Cost Estimates ............................ 6Loan Amounts .............................. 8Detailed Design, Construction Supervision

and Project Management ................. 8Procurerment and Construction .............. 9Disbursements and Closing Date ............ 10Land Acquisition and Rights-of-Way ........ 11Ecological Aspects ..... ................... 11

IV. JUSTIFICATIONI .................................. 12

Existing Situation .......... .. ............ 12Water Supply Requirements for the Future 12Expected Results of Project ............... 13Least Cost Solution .......... .. ........... 13Return on Investment ........... ........... 14

This report is based on the findings of Bank missions consisting ofMessrs. P. Callejas, P. Jacob, P.C. Kapur and V. Nwaneri whiclh visitedThailand in July and November 1972. 'Tr. Callejas visited again in Marclh 1973.

-2-

Page No.

V. T11E BORROWER ................................... 15

The Borrower ............... ............... 15Ilistory of Operations .................... . 15Organization and Management ............... 15Operation of the System ................... 17Financial Management ........... ........... 17IMetering, Billing and Collection .......... 17TManagement Consultants .................. .. 18Audit ..................................... 19Insurance ................. ................ 19

VI. FINiANiCIAL ASPECTS ....... ....................... 19

Introduction ....... ....................... 19Financial Position - Past and Present ..... 19Financing Plan ........ . .................... 21Financial Projections ..... ................ 23Tariffs and Rate Covenant .... ............. 24Debt Limitation ...... ..................... 24

VII. AGREEMENTS REACHED AND RECOMMENDATION .... ...... 25

LIST OF ANNEXES AND MAPS

Annex

1. Population Data and Projections2. Population and Area Data Used for Project Planning3. Existing Water Supply System4. Project Description5. Cost Estimates for Part A6. Construction Schedule7. Annual Project Expenditures8. Estimated Schedule of Disbursements from Bank Loan9. Estimated Past and Future Water Production

10. Water Requirements and Production Capacity11. Internal Rates of Return12. Consultants' Estimate of Indirect Benefits13. Incremental Financial Rate of Return14. MWWA Organization Charts, 197215. Approximate Income Statements 1968-197216. Estimated Inccme Statements 1971-198217. Estimated Sources and Application of Funds 1972-198218. Estimated Balance Sheets 1971-198219. Assumptions for Financial Projections20. Schedule of Water Rates

- 3 -

Maps

IBRD-10208 - Bangkok Metropolitan AreaIBRD-10209 - Existing Water Supply SystemIBRD-10210R- Proposed Water Supply System

THAILAND

APPRAISAL OF BANGKOK WATER SUPPLY PROJECT

SUMMARY AND CONCLUSIONS

i. This report covers the appraisal of a water supply project forthe Bangkok metropolitan area for which a Bank loan of US$55.0 million isproposed. A parallel loan of US$19.6 million for the project is beingconsidered by the Asian Development Bank.

ii. The borrower would be the Metropolitan Water Works Authority(MWWA) of Bangkok, an autonomous body established in 1967, which is respon-sible for water supply in metropolitan Bangkok. MWWA has begun a majoreffort, supported by the Government of Thailand, to strengthen its organizationand management and improve its operations and financial performance. Continu-ance of this effort to achieve acceptable levels of service and efficiencywill be a prime and most demanding objective of the proposed project.

iii. The recent history of the water supply systems in the four rapidlygrowing municipalities which make up metropolitan Bangkok is marked by in-ability to meet runaway demand in spite of rapid system expansion and byfinancial dependence on government subsidies. At present, almost 40% ofthe population, mainly of the lowest income, has no service and less thanone-quarter of the area served has a continuous supply of water at adequatepressure. Meanwhile, the population and water demand of the metropolitanarea continue to grow and a program to increase water supply, to extenddistribution and to make drastic improvements in the efficient use of theservi4e is required. The objectives of the proposed project are to meetthese requirements.

iv. Over a five year period, the project would about double MWWA's watersupply and distribution capacity. The major water system components addedby the project, together with some future additions to the distributionnetwork, would be capable of serving about 2.5 million more people thanare presently served and the safety and reliability of the service to thetwo million persons presently served should improve from poor to good.Effective water use control measures would be imposed and the MWWA wouldapproach financial self-sufficiency. This would be a formidable undertakingwith many problems and would require. considerable cooperative effort andsupport by MWWA, involved government agencies, the financing institutionsand the general public.

v. The estimated total cost of the project is about Baht 4,417 million(equivalent to about US$212 million) before interest and commitmentcharges during construction. Foreign exchange costs would be equivalent toabout US$76.7 million (36%), substantially all of which would be financed bythe proposed Bank and ADB loans. MWWA is expected to meet about 25%of the project costs with funds generated by operations during the construction2eriod, which would be a dramatic change from MWWA's past reliance on govern-ment subsidies. The balance of the project expenditures (39%) would befinanced by government loans.

- ii -

vi. The project would be carried out by MWWA with the assistance ofengineering and management consultants. The arrangements for design, pro-curement, construction supervision, management and control of the projectare suitable. The project is technically sound and the estimated costsand time schedule are realistic. The project is scheduled for completionabout mid 1978.

vii. All supply and construction contracts would be awarded on thebasis of international competitive bidding in accordance with the Bank'sguidelines. Local firms are in a good position to win all of the pipeinstallation contracts and some of the pipe supply contracts. Bids of localmanufacturers will receive a preference of 15% or applicable customs duties,whichever is less. Foreign suppliers and contractors (probably in associationwith local firms) are expected to win the contracts for the large and complexequipment and construction works which comprise most of the project componentproposed for financing by the Bank.

viii. New water rates which went into effect in July 1972, togetherwith a modest increase immediately following the project construction periodshould put the MWA in a fairly sound financial position. The determiningfactors would be the effectiveness of programs, now underway, to improvemetering, billings and collections. Projected results include an annualfinancial return on fix-d assets of almost 8% in 1980 and over 8.0% thereafter.

ix. The expected incremental financial return on the water supplyfacilities included in the project is about 8%. The return on the projectas a whole, which also includes investments in improved metering and billing,would be about 12%.

X. The project is suitable for a Bank loan of US$55.0 millionequivalent for a term of 26 years including a grace period of 6 years.It would be guaranteed by the Kingdom of Thailand.

THAILA'ND

APPRAISAL OF BANGKOK WATER SUPPLY PROJECT

I. INTRODUCTION

1.01 The Government of Thailand has requested parallel loans from theBank and the Asian Development Bank (ADB) to finance the foreign exchangecosts of a US$212 million project to increase the water supply capacity,extend the water distribution system and improve water supply operationsin the Bangkok metropolitan area. A Bank loan of US$55 million and an ADBloan of US$19.6 million are proposed to be made to the Metropolitan WaterWorks Authority (MWWA), which is responsible for water supply in the area.

1.02 The project is part of a 30-year water supply program, underwaysince 1971, based on a Water Supply and Distribution Master Plan completedfor the Government in February 1970. The Master Plan was financed by theGovernment and prepared by Camp, Dresser & McKee (CDM), Consulting Engineers,USA, in association with various other specialized consultants. 1/

1.03 Bank participation in project preparation began in 1968 at theGovernment's request for technical advice. Early in 1970 the Bank reviewedthe Master Plan and commented on the decisions and actions required beforea discrete project would be ready for consideration by international finan-cing agencies. Since then, Bank assistance on project preparation hasbeen given on a number of occasions, including field missions. A criticalelement in project preparation was the time required to acquire land. Othersincluded development of MWWA's project administration capability and estab-lishment of appropriate charges for water service. These issues have nowbeen substantially resolved. Early in 1971, at the request of the Government,the ADB began considering possible lending for the part of the projectcomprising distribution and metering. The Bank and ADB parts of the projectare mutually dependent and project planning has involved close cooperationbetween the two institutions.

1.04 Field appraisals of the project were carried out concurrently bythe Bank and the ADB in July 1972. Because of a number of pending issues,post-appraisal missions from both agencies visited Bangkok in November 1972and March 1973. The Bank appraisal team comprised Messrs. P. Callejas,P. Jacob, P.C. Kapur and V. Nwaneri.

1/ The special consultants included: Booz, Allen & Hamilton, Managementand Financial Consultants; the Pitometer Associates, Engineers(leakage and water use studies); Geraghty & Miller, ConsultingGroundwater Hydrologists; Haley & Aldrich, Consulting Soils Engineers;and Jenny Engineering Corporation, Tunnel Consultants.

II. THE SECTOR

General

2.01 Thailand has an area of 514,000 sq km and a total population (1970)of about 36.2 million. The population growth rate between 1960 and 1970was about 3.1% per year. During the decade total urban population increasedabout 4.9% per year and by 1970 urban population in communities of morethan 3,000 people totaled about 20% (7.25 million) of the national popula-tion. Thailand's urban development is largely synonymous with the Bangkokmetropolitan area which in 1970 had a population of about 3 million (about40% of total urban and more than 8% of national population). The nextlargest urbanized areas have populations in the order of 100,000. Annex 1shows the population growth of Thailand and the Bangkok metropolitan area.

2.02 In the absence of large secondary cities in Thailand, the dominanceof the Bangkok metropolitan area reflects far more than population alone.It is the residence of the King and most Government functions are concen-trated there. It is the main port, the center of finance and commerce andmost of Thailand's manufacturing industry is located there. It is thecenter of higher education in Thailand, a popular tourist center and theregional headquarters i- Southeast Asia for a number of international agenciesand commercial organizLions. Metropolitan Bangkok comprises the four munici-palities of Bangkok, Thonburi, Nonthaburi and Samut Prakan with a total areaof about 300 sq km ({ap IBRD-10208). The estimated annual population growthrate between 1960 and 1970 averaged about 5.7% (Annex 1), due in part toextension of municipal boundaries in 1965 and 1967. The rate of increaseas of 1970 was about 4% per year. About 10% of the municipal populationare squatters. Bangkok's development has not been according to any plan.The rapid rate of growth along with a lack of any control over land use haveseverely strained public services, particularly transportation and watersupply.

2.03 Forecasts of future growth of metropolitan Bangkok through theyear 2000 are given in Annex 1, which shows a range of predictions by variousauthorities including the project consultants. Annex 2 summarizes the popu-lation and area data used for project planning. For project purposes, the1985 population is estimated at about 6.1 million (including some areasserved by MWA outside municipal boundaries) and in the year 2000 - signifi-cant only as a very broad planning framework - almost 10 millior.. There areGovernment proposals for promoting growth of other urban centers in Thailandas a means of controlling Bangkok's growth. Ilowever, the resul_s of suchaction would not be strongly felt in Bangkok for some time. In the meantime,the city would continue to grow and the problems of coping with this growth,including the provision of adequate urban infrastructure, would increase.

-3-

Sector Development

2.04 The water supply sector in Thailand can be divided into threeparts:

(a) rural communities with populations less than 5,000;

(b) urban communities with populations greater than 5,000except Bangkok; and

(c) the Bangkok metropolitan area.

2.05 About 29 million people (1970) live in about 45,000 rural communitieswith populations of 5,000 or less. About 15% of this population, in about10,000 communities, are served by some kind of public water system. Mostof these were developed during Thailand's Second Development Plan (1967-1971).About 4 million people live in urban communities, other than Bangkok, withpopulations over 5,000. Public water systems serve about one-third of thispopulation. During the Second Plan there were about 100 projects to providenew water systems or expand existing ones in these urban communities. Therural and urban population not served by the public systems use shallowwells, rivers, streams, canals and rain water collected from roofs, whichgenerally are unsafe water sources without treatment.

2.06 During the Third Plan (1972-76) the Government proposes to con-struct 50 new urban water systems, expand another 50, and provide watersupplies to 20,000 more villages. These objectives are ambitious butforeign exchange requirements are low and the funds allocated appear adequate.A Bank sector mission in 1971 reported, however, that technical assistancewas required for most efficient use of the funds and that attaining thevillage program objectives probably required resolution of inter-agencyoverlapping. A project to help improve the services and facilities, in-cluding water supply, of four secondary cities in the Northeast is beingprepared with the Bank's help.

2.07 The most acute current sector problems that could be resolvedby outside financial assistance are in Bangkok. Bangkok's existing watersupply system (1972) is described in Annex 3 and the major elements areshown in Map IBRD-10209. The system has a productive capacity of about1,150,000 m3/day; 70% treated water from the Chao Phya River and 30% ground-water. Another estimated 300,000 m3/day is drawn from groundwater sourcesby private tubewells, mainly serving industrial, commercial and institutionalestablishments. The public system provides service, generally unsatisfactory,to about 63% of the 3 million population in the metropolitan area, includingnine small outlying communities with separate systems. About 20% of theexisting capacity has been added by improvements to the system since 1970.Since 1950, when only about 20% of the metropolitan area was served, theaverage annual increase in production has been about 12%. Yet demand hasnot been met and service has been consistently poor (Annex 3 and paragraphs4.01 through 4.03). If metropolitan Bangkok's population approaches10 million by the year 2000, the Master Plan consultants estimated that an

- 4 -

investment of some US$600 million equivalent (1969 prices) over 30 yearswould be required; of this, about US$335 million would be necessary over thefirst 15 years.

2.08 Thailand has no significant separate sewerage systems to collectand safely dispose of waste water from residences, industries or commercialand institutional establishments in urban areas. Most waste water is dis-charged directly or indirectly to storm water drains, surface drains, canalsor natural water courses. Water pollution is becoming an increasinglyserious aesthetic nuisance and health hazard in urban areas, especiallyin Bangkok and along the nearby coast. Substantial investments, estimatedto total about US$140 million equivalent over a 15-year period, are requiredto provide sewerage and improve drainage in the most densely developedportions (about 50 km2) of metropolitan Bangkok. A Master Plan for sewerage,drainage and flood protection in the metropolitan areas was completed in1968 and approved in principal by the Government in 1969. Detailed designof a first stage project was completed in about 1970. Implementation wouldrequire major programs of institution building (including legislation) andconstruction, but little progress has been made. Planning for waste disposalin other urban areas also is required.

Sector Organization

2.09 The water supply system of the Bangkok metropolitan area is theresporLsibility of the Metropolitan Water Works Authority (MWWA), the proposedborrower described in Section V of this report.

2.10 Two major Government organizations are responsible for most com-munity water supply in the other parts of Thailand. The Provincial WaterWorks Division (PWWD) of the Public and Municipal Works Department in theMinistry of Interior deals with communities of over 5,000 people. The PWWDis responsible for the design, construction and operation of 144 municipalwater systems which it owns and also acts as consultant to 45 water systemsowned by municipalities. The Sanitary Engineering Division (SED) of theDepartment of Public Health in the Ministry of Health deals with communitiesof 500 through 5,000 where SED is responsible for the planning, design andconstruction of water systems which are then turned over to the communitiesfor operation. SED staff train plant operators and advise on operations andmaintenance. Eight other Government organizations are active on water supplyin communities under 500 population.

Sector Financing

2.11 Since its establishment in 1967, and through FY 1972, MWWA hasincurred annual cash losses which were met by Government budget contributions.The Government also made giants for capital improvements by MWWA until 1971when it changed to a loan basis with the first of two loans for improvements.These loans carry interest of 4% and are repayable in 20 years after fiveye-rs of grace. The past and expected future financing of MWWA's part ofthe sector are described in Section VI of this report.

- 5 -

2.12 PWWD water systems are metered for the most part, and water ratesare uniform at Baht 2.00/m3. Except in some of the smaller systems, col-lections cover cash operating costs before depreciation. Cash surplusesaccumulate in a central revolving fund and have been used to finance lessthan 10% of capital expenditures. Charges for water supply service by mostSED systems are flat rate charges for service from public taps or from ser-vice connections. Collections are difficult. SED also manages a smallrevolving fund to help some communities. Most capital costs of both thePWWD and the SED systems are financed by Government grants. USAID providedabout 40% (US$4 million) of the Government funds for SED projects duringthe period 1966 through 1970; this source of aid has since been terminated.

III. THE PROJECT

Description

3.01 The proposed project would be the first major construction stage(July 1973-June 1978) of a long-range program (paragraph 1.02) to increasethe water supply capacity, extend the water distribution system and improvethe water supply operations of the MWWA.

3.02 The project details are given in Annex 4 and the major elementsare shown in Map IBRD-10210R. Because of the proposed parallel financingby the Bank and the ADB, the project is divided into two parts, (A) and(B), to indicate the components that would be financed by each agency. Theprincipal project components are as follows:

Part A (Proposed for Bank Financing)

(a) Raw Water Transmission Facilities - A new raw waterpumping station at Sam Lae, improvements to 21 km ofthe open raw water transmission channel (Bang LuangReservoir and Klong Prapa) and a new siphon at KlongRangsit.

(b) Water Treatment Plant - A new water treatment plant atBang Khen built in two phases. Total maximum reliablecapacity would be about 1,200,000 m3/day. Phase Onewould be 800,000 m3/day and, Phase Two, 400,000 m3/day.The plant includes the transmission pumping station;

(c) Transmission Tunnels - 32.5 km of reinforced concretelined transmission tunnels, 2.0 to 3.4 m in diameter,constructed in two phases;

(d) Reservoirs and Pumping Stations - Four 40,000 m3 groundlevel reservoirs and pumping stations (distributioncenters) which receive water from the transmissiontunnels and pump into the distribution system. Thesewould be constructed in two phases of two units each;

- 6 -

(e) Sam Sen Reservoirs - New treated water storage capacity(40,000 m3 ) in three reservoirs at the existing Sam Senwater treatment complex;

(f) General Use Equipment - Shop, maintenance, service,miscellaneous treatment, office and transportationequipment;

(g) Consulting Engineering - Detailed design and constructionsupervision of Part A, general engineering advisoryservices for project management and control and trainingof engineering and operating personnel; and

(h) Management Consulting Services and Administrative and FinancialTraining.

Part B (Proposed for ADB Financing

(a) Trunk Mains - 188 km of trunk mains from the distributioncenters, 400 mm to 1,500 mm diameter;

(b) Distribution Mains - 975 km of distribution mains from150 mm to 30^ mm diameter;

(c) Metering Program - A meter maintenance shop, overhaulingof serviceable meters, and the purchase and selectiveinstallation of 158,000 new ones;

(d) Tubewells - 50 new 300 m3/hour tubewells, located inareas where groundwater is good, to maintain MWWA's totalgroundwater sources at about 330,000 m3/day capacity; and

(e) Consulting Engineering - Advisory services for detaileddesign and construction supervision of Part B.

Cost Estimates

3.03 The estimated costs of Part A of the project are detailed inAnnex 5. The summarized costs of Parts A and B are given below:

-7-

Baht US$Part A Local Foreign Total Local Foreign Total

-millions~~~---- - - - - -

Raw water facilities 54 25 79 2.6 1.2 3.8Water treatment plant 354 353 707 17.0 17.0 34.0Transmission tunnels 514 250 764 24.7 12.0 36.7Distribution reservoirsand pumping stations 182 189 371 8.8 9.1 17.9Sam Sen Reservoirs 37 9 46 1.8 0.4 2.2General use equipment 18 27 45 0.9 1.3 2.2Land 157 - 157 7.5 - 7.5Engineering Consultants:

Design 49 44 93 2.4 2.0 4.4Construction Supervision 146 108 254 7.0 5.2 12.2Special Services & Training 6 16 22 0.3 0.8 1.1

MWWA Engineering 61 - 61 2.9 - 2.9Management Consulting & Training 22 23 45 1.1 1.1 2.2Contingencies:

Physical 108 73 181 5.2 3.5 8.7Price 99 72 171 4.7 3.5 8.2

Subtotal 1,807 1,189 2,996 86.9 57.1 144.0

Part B

Trunk and distribution mains 738 247 985 35.4 12.0 47.4Metering program 41 44 85 2.0 2.1 4.1Tubewells 17 31 48 0.8 1.4 2.2Engineering 36 18 54 1.7 0.9 2.6Contingencies:

Physical 80 32 112 3.9 1.5 5.4Price 101 36 137 4.9 1.7 6.6

Subtotal 1,013 408 1,421 48.7 19.6 68.3

TOTAL 2,820 1,597 4,417 135.6 76.7 212.3

3.04 The cost estimates are realistic. They were prepared by the en-gineering and management consultants and M}WA. Estimates of the Part Aconstruction components and contingency allowances are based mostly on detaileddesigns and on March 1973 1/ prices for equipment, materials and constructioncosts in Bangkok. General use equipment estimates were developed by the manage-ment consultants and MWWA. Land costs are quite firm. The estimated costsof the physical components of Part B are based on CDM's Master Plan estimates

1/ Including the expected effects of currency realignments through March1973.

-8-

uodated to March 1973 by 1M,AWWA and ADB, using costs of current MSWA contractsand quotations for equivalent work. 1/

3.05 The allowances added for physical contingencies on Part A supplyand construction contracts range from 5% to 10% of the estimated bid pricesbefcre price contingencies. Considering the advanced state of design andthe information about sites, foundation conditions, construction and costsused by the consultants, this allowance appears adequate. The price contingencyallowance for Part A amounts to 8.1% of the major construction components(including general use equipment and physical contingencies but excluding land)and is based on escalation at the rate of 5% per year for foreign and localcosts between March 1973 and the expected dates of contract awards. Theseallowances result from the consultants' evaluation of recent experience oncost trends in Thailand on similar works, and are appropriate for the project.The estimated costs of proposed Part A engineering supervision contracts includeprice contingencies of 6% per year. The foreign exchange components oftotal costs are based on assumptions as to the expected results of bidding(paragraphs 3.16 and 3.17) and detailed analyses of the indirect foreignexchange components of supplies and materials purchased locally by contractors.

3.06 The estimated costs include allowances for duties and chargeson imports and income and business taxes on contractors and consultants.These total about Baht /90 million (10%) of the estimated cost of the totalproject (excluding land).

Loan Amounts

3.07 A Bank loan of US$55 million equivalent is proposed to cover 96%of the estimated foreign exchange costs of the Part A project, includingengineering consulting services related to Part A and the managementconsulting services. The proposed loan amount excludes US$1.6 million offoreign exchange expenditures on detailed engineering design of Part Aunder a contract awarded in June 1971 (paragraph 3.08). A loan of US$19.6million equivalent is expected from the ADB to finance 100% of the estimatedforeign exchange costs of Part B. Neither loan amount includes interestduring construction which would be covered by funds generated by MWWAoperations.

Detailed Design, Construction Supervision and Project Management

3.08 MWWA has responsibility for carrying out the project. CDM wasengaged under two contracts for detailed design and preparation of tenderdocuments for Part A. Work under the first contract, involving most ofthe project, has beer completed. The second contract for transmissiontunnels began in September 1972 with the agreement of the Bank in order notto delay the project. The tender documents for the last tunnel segment arescheduled to be finished by about October 1973. The consultants were engagedunder terms and conditions acceptable to the Bank, and the work has beengood. IWWA financed the first contract from its own resources. Retroactivefinancing of the foreign exchange costs of the second contract since

1/ Including the expected effects of currency realignments through March 1973.

September 1, 1972 from the Bank loan is proposed and the amount of US$0.5million is included in the loan.

3.09 Detailed design and preparation of tender documents for Part Bof the project are being done by NWWA's Department of Engineering. MWWAwill engage a second consulting engineering firm, subject to the approvalof the ADB, to act in an advisory capacity to review and guide the Engineer-ing Department's work on Part B. The foreign exchange costs would befinanced by the proposed ADB loan.

3.10 The responsibility for construction supervision for Part A is tobe delegated by NMWWA to engineering consultants. A contract is beingnegotiated with a joint venture comprising Black & Veatch International(BVI) and CDM, subject to Bank approval. The foreign exchange costs wouldbe financed by the proposed Bank loan. The start of work under theconstruction supervision contract is critical to the procurement andconstruction timetables for Part A of the project but requires a letterof intent authorized by the Government. Since the time required to completethis process is uncertain, it was agreed during negotiations that Governmentauthorization to appoint the required consultants would be a condition ofeffectiveness of the loan.

3.11 Construction supervision of Part B will be done by MWWA with theadvice and guidance of the Part B consultants (paragraph 3.09). The foreignexchange costs would be financed by the proposed ADB loan.

3.12 Overall project coordination, control and administration are theresponsibilities of MWWA. Since this is a very formidable undertaking, MWWAwould arrange for the assistance of independent engineering advisers andshort-term specialists as needed on special problems. Engagement of theadvisers and the specialists would be subject to the approval of the Bank.The foreign exchange costs of the advisory group would be financed by theproposed Bank loan.

3.13 During negotiations assurances were obtained that consultantsacceptable to the Bank will continue to be engaged as outlined above (para-graphs 3.08, 3.10 and 3.12) to assist MWA in carrying out the project.

Procurement and Construction

3.14 The schedule for design, procurement and construction of theproject is shown in Annex 6. Part A would be divided into about 30 majorcontracts. The water treatment plant, transmission tunnels and the groundlevel reservoirs and pumping stations would be built in two phases to permitchanges in the second phase should demand studies to mid-1975 demonstratethe need (paragraph 4.10). Invitations for bids on the first 13 Part Acontracts would be advertised during the period August-October 1973. Tenderingfor the second phase contracts would start during the last half of calendar1975. Part A would be completed in about June 1978.

- 10 -

3.15 The pipeline components of Part B of the project will be carriedout through a number of smaller contracts spread fairly evenly over theproject period. The metering program and tubewell construction are tobe carried out mostly during the period 1973 through 1975. Completionof Part B is scheduled for about the end of 1977. The construction priorityof the various trunk main and distribution main segments would be reviewedprom time to time taking account of water system operating data and the-rend of water demand at various points of the system. A computer model ofthe system, developed originally for the Master Plan, is to be broughtup-to-date by ?MWWA periodically as required for use in evaluating priorities.Assurances to this effect were obtained during negotiations.

3.16 All supply and construction contracts for Parts A and B would beawarded on the basis of international competitive bidding in accordancewith the Bank's and ADB's guidelines respectively. A preference of 15% orthe applicable customs duty, whichever is lower, would be applied to bidsfor Part A contracts from local manufacturers. No preference would begiven on ADB financed contracts. However, local firms are expectedto have little difficulty in winning some of the contracts for pipe supplyunder Part B, and for substantially all of the pipe laying contracts.

3.17 Foreign suppliers and contractors (probably in association withlocal firms in most case ) are expected to win the contracts for the largeand complex equipment anc" construction works comprising Part A. However,substantial amounts of materials and supplies (such as pipe) which go into

the construction contracts would almost certainly be obtained locally by thecontractors. Substantially all required labor, with the possible exceptionof some very specialized skills, are available locally and would be obtainedin Thailand by the contractors because of cost advantages.

Disbursements and Closing Date

3.18 Annex 7 shows the forecasts of project expenditures on an annualbasis for Parts A and B. These forecasts were derived from the constructionschedules (Annex 6) and the expected periodic progress payments on thevarious contracts, including consulting contracts.

3.19 It is proposed that the loan for Part A be disbursed for: theestimated foreign exchange component (37%) of civil works contracts; theC.I.F. costs of equipment directly imported; the ex-factory costs of locallymanufactured goods; 65% of imported but locally procured goods (i.e. off-the-shelf items); and the foreign exchange costs of consulting services. Theestimated quarterly disbursements from the loan are given in Annex 8.The estimated disbursements in the first two quarters include reimbursementsfor US$1.0 million of prior expenditures on consulting services (paragraphs3.08 and 5.14) proposed for Letroactive financing.

- 11 -

3.20 The Closing Date for the proposed Bank loan would be June 30, 1979which allowsabout 12 months beyond the scheduled project completion date forfinal contract payments and some slippage in the project.

3.21 In the event that the foreign exchange costs of Part A of theproject eligible for disbursements from the proposed Bank loan are less thanthe amount of the loan, the unused balance of the loan would be cancelled.

Land Acquisition and Rights-of-Way

3.22 Land required for the raw water facilities, water treatment plant(including future extensions) and the ground level reservoirs and pumpingstations has been acquired. The transmission tunnels (Part A), with thefollowing exception, and the trunk and distribution mains (Part B) aredesigned to be installed in public property and do not require land acquisitionor rights-of-way. The exception for transmission tunnels is one sectionunder railway property for which approval by the railway authorities hasbeen obtained. In cases where detailed tunnel design shows possible savingsby crossing under small segments of private property, the NWWA would attemptto obtain rights-of-way. Ilowever, if the cost of the right-of-way provesto be too high or the acquisition procedures too lengthy, the short-cutwould not be taken.

Ecological Aspects

3.23 The project is intended to eliminate the deficiencies of theexisting water supply systems in the metropolitan area and to extend servicesto substantial numbers of people who do not now have adequate amounts of safewater conveniently available from the present public system. Thus the needfor the majority of the population to satisfy some or all of their waterrequirements from unsafe water sources will be substantially reduced, and theincidence and risk of diseases attributable to the lack of a good watersupply, a serious health problem in Thailand, would be reduced.

3.24 The increase of water supply, as a result of the project, wouldcause significant changes in the nature and location of water pollutionproblems. Bangkok already has a waste water disposal problem (paragraph2.08) and, therefore, some definite plan of action for a sewerage programshould be formulated and actions initiated as soon as practicable. TheGovernment noxw has the basis for a sewerage, drainage and flood protectionprogram in the metropolitan area (paragraph 2.08) but little action has beentaken.

3.25 It would be unrealistic to expect that a significant sewerageprogram could get underw.ay within the next two or three years. However,within that period definite progress on deciding how and when to deal withthe sewerage problem is possible and should be made. Therefore, as a meansof promoting action, assurances were obtained from the Government duringnegotiations that positive action toward resolution of the sewerage anddrainage problems in the metropolitan area will be taken. Toward this end,by December 31, 1974, the Government,in consultation with the Bank, wouldprepare specific proposals including timetables and financing plans for:

12 -

(a) development of the institutional structure required forcarrying out Bangkok's sewerage projects and operations; and

(b) for emba-king on a significant construction program.

The covenant also requires the Government to seek the enactment of'!egislation to create the institutional framework mentioned above.

IV. JUSTIFICATION

Existing Situation

4.01 There are very serious deficiencies in the existing MWWA andprivate water supply systems in the Bangkok metropolitan area and with theservice which MWWA can now provide (paragraph 2.07 and Annex 3). Alterna-tives to the MWWA supply are limited almost exclusively to deep tubewells.However, groundwater sources are being overused with the result that manywells are failing or must be abandoned in an expanding area where the chlorideand iron content of the groundwater has increased to unusable levels (Annex 3,paragraph 10). Also, reduced groundwater levels are resulting in settlementof parts of the city witl a resulting increase in drainage and floodprotection problems.

4.02 MWWA's distribution network is now accessible for on-premiseswater service to only about 63% of the total population in the metropolitanarea. Supply and pumping capabilities are such that MWWA can maintainadequate pressures in only a small part of the distribution system (theconsultants estimate about 20%) and consequently distribution is not equitable.At best, customers are able to get adequate amounts of water by pumping fromthe mains (illegal but commonly practiced) or other expensive means. Atworst, the supply is available for only a few hours per week and the mainsare under a vacuum for considerable periods of time, permitting intrusionof polluted water and contributing to the malfunction of meters. Most cus-tomers have invested in storage facilities which they attempt to fill whenthe MWWA supply is available.

4.03 With the existing deficiencies, lower income people in particularare forced to resort to unsafe sources, usually the heavily polluted riverand klongs (canals) accessible to them. MRWA delivers water by tank truckto some areas where the shortages are most acute. Those that can afford itpurchase bottled water for drinking. There is some sale of water by vendors,usually an expensive a,id unsafe source. Boiling water for drinking purposesis a common and relatively expensive practice.

Water Supply Requirements for the Future

4.04 The past and expected future population growth of the metropolitanarea (now about 3 million) has been discussed in paragraphs 2.02 and 2.03and is shown in Annexes 1 and 2. The project consultants' estimates of

- 13 -

the total population to be contended with in the service area as the basisfor planning the water supply system are for about 3.9 million by 1975, about4.9 million by 1980 and about 6.1 million by 1985. Although there are arange of rational forecasts by various authorities for the future populationof the metropolitan area, the divergence through 1985 is not much and theconsultants' estimates for 1975 through 1985 are sound bases for planningthis project.

4.05 The design projections for population to be served by the IThMAsyster and for future water requirements are shown in Annexes 9 and 10.Annex 10 also shows a higher estimate of future water requirements basedon the 12% per year past trend, and a lower estimate of water requirementsbased on minimum rational assumptions that could be derived from the basedata accumulated by the consultants. This minimum estimate results inaverage requirements about 15% lower from 1978 than used as the basis forproject design, but is considered improbable because it assumes that domesticwater use per capita served would decline 50% (from about 300 1/cd to150 1/cd) between 1970 and 1980.

Expected Results of Project

4.06 The project as planned would meet the expected water demand of themetropolitan area until about 1982, as calculated by the consultants. Ifmeasures proposed as part of the project to reduce wasteful water use andcontrol leakage (paragraphs 5.10 and 5.13) are not successful, the availablewater supply on completion of the project would be immediately inadequateto meet the project objectives. If the trend of water requirements followsthe minimum rational estimate (paragraph 4.05) the project might meet itsintended objectives until about 1985.

4.07 As planned the proposed project would provide good quality waterservice for about 4.6 million people in an area of about 400 sq km. Bycomparison, at present, about 2 million people in an area of about 180 sq kmare poorly served. The distribution system should be under sufficientpressure at all times (Annex 4), except during severe power failures, tosupply water to the third level of any building served under conditions ofpeak demand.

4.08 The project would allow MWA to reduce its reliance on groundwaterstarting about 1977 and to discontinue such use altogether before 1990. Atthe same time, MWWA would have capacity to provide most of the requirementsof establishments now using groundwater from private tubewells which haveto be abandoned (paragraph 4.01). Project planning assumes that total useof groundwater (M7WA and private) will reach a peak of about 700,000 m3/daywithin the next two years, and then will begin to decline and eventually leveloff at about 400,000 m3/day by private users.

Least Cost Solution

4.09 The most costly elements of the project are the raw water treat-ment and transmission facilities. A number of basic alternatives as to

- 14 -

source of water and the location and sizing of units were examined. In thecase of the source of water there are no practicable alternatives. Thequestion studied and debated most extensively is whether the proposedadditional water suipply capacity provided by the project, and thereforeproject costs, would be more than enough to satisfy demand for a reasonableperiod after project completion. Assuming the lowest future trend of waterlemand (paragraph 4.05), treatment facilities of about two-thirds the,roposed size could be adequate until about 1982. Thus, carrying out the-roject as planned could result in an investment (before contingencies) ofabout US$7.0 million equivalent (4% of the total project costs before contin-gencies) for excess productive capacity some three or four years in advanceof actual requiremens. However, as noted in paragraph 4.05 this bLow trendis considered improbable and building the project on that basis could easilyresult in system deficiencies as soon as the major project investments arecompleted. The project would then fail to achieve the intended r'esults andthis risk is considered too great in relation to potential cost benefits tomake this alternative acceptable for Bangkok.

4.10 As noted earlier (paragraphs3.02 and 3.14), the treatment plant isbeing built in two phases with the second phase starting toward the endof 1975. A continuous program of investigation, data collection and analysisof water use and trends would be initiated promptly by MWWA to provide amuch better basis for pl. lning, and this would be monitored carefully duringthe first years of the project. If the results of the water use controlprogram are better than expected and demonstrate that demand is substantiallyless than predicted, part or all of the second phase of the water treatmentplant would be deferred to another future project. The portion of the Bankloan required for the second phase (now estimated to be about US$4.0 million)would be cancelled then if not required for other eligible project contracts.During negotiations assurances were obtained that the decision to proceedwitli phase two contracts will be made about July 1975, based on new demandstudies, and will be subject to the approval of the Bank.

4.11 Aside from the above question about capacity, the proposed projectis clearly the least cost solution to the problem of providing an adequatepublic water supply system for metropolitan Bangkok.

Return on Investment

4.12 The incremental financial return on the 1973-82 time slciee of theMWWA expenditures on expanded supply facilities, of which the present projectconsti.utes roughly 90%, is calculated to be about 8% (Annexes 11 and 13).Sensit-vity analysis indicates that the return could drop to about 7% if theproject costs exceed the estimates by 20%, and could increase to over 10%if such costs were 20% lower than estimated. The return is not sensitiveto increases in operating expenses, but a decrease of 20% in revenues lowersthe rate of return to about 6%. The return on the project as a wtole, which

also includes investments in improved metering and billing, would be about 12%.

4.13 The above return estimates suggest that present water charges arenot too far out of line with the costs of providing improved service. Theydo not provide the substantive justification for the project. The project

- 15 -

is the least cost means of providing a satisfactory water supply system forthe cultural, commercial and economic center of Thailand. The alternative,which would he the indefinite continuation of the present deficiencies,with their adlverse public health and economic implications, is not acceptableto Thailand.

4 V. THE BORROWER

The Borrower

5.01 The borrower would be the Metropolitan Water Works Authority (MWWA),an autonomous body established under the Metropolitan Water Works AuthorityAct of 1967, which took over the responsibility for water supply in an areaof 3,130 sq km including the four municipalities of Bangkok, Thonburi, Non-thaburi and Samut Prakan (Annex 3 and Map IBRD-10208). The Act empowers MWWAto borrow money subject to prior approval of the Council of Ministers whenin excess of Baht 5 million (US$0.2 million).

History of Operations

5.02 The history of MWWA and its predecessor organizations is markedby rapid expansion in a generally unsuccessful effort to catch up withdemand and by the problems that go along with ungainly growth. Problems inthe technical area were compounded by gross deficiencies in administrationand accounting.

5.03 From its inception, MWWA has been a weak organization. The tran-sition from the earlier form of municipal operations to that of a publicutility was a difficult one. In the first few years the consolidation ofactivities of the four independent systems proved to be largely super-ficial in as much as no uniform procedures were adopted and work was carriedon, without overall direction, in much the same fashion as before. MWWA'sproblems were attributable largely to the lack of trained manpower, lowstaff morale, lack of strong management control, physical system deficienciesand, until recently, a most uneconomic water tariff. The management con-sultants (paragraph 5.14), engaged since January 1971, have helped consider-ably to improve the situation. With continued management assistance whichMWWA has already decided to retain, and continuation of MWWA's own recentefforts, it should be possible to build in the course of the next few yearsa fairly efficient and financially independent institution.

Organization and Management

5.04 The MWWA Act, 1967 defines broadly areas of responsibility withinIWIA generally based on the principle of vesting (i) overall control andresponsibility for policy decisions in a Board composed of representativesof various Government departments and the General Manager of MWWA, (ii) over-all Government supervision of MWWA's activities through the Ministry of theInterior, and (iii) responsibility for day-to-day management, in accordance

- 16 -

with Board policy and Government directives, in the General Manager. Froma strictly legal standpoint the Act provides a suitable framework for anindependent water supply utility. In the past, however, because of dependencyon government grants, most major decisions were made by special committees,consisting of a variety of Government representatives. As MWWA establishesits financial independence it should be able progressively to assert itsinstitutional autonomy. A modest beginning has already been made.

5.05 The present General Manager (since 1976) is corrpetent and experiencedand enjoys considerable support from the Government authorities. Under hisleadership, VWA is beginning to progress. lIowever, he will soon be reachingretirement age and it is uncertain whether he will be given an extension ofserv_ce. Under the Act, the General Manager's appointment is to -be approvedby the Council of Ministers. Assurances were obtained during negotiationsthat the Bank would be consulted in advance about future appointments to theGeneral Manager's position.

5.06 MWWJA's organization chart, including a change for financialmanagement adopted in February 1973, is in Annex 14. The General Manageris being assisted by three deputies - one for Engineering and Operations,one 'or Administration and Services and the third for Finance, a new post.Because of low salary grades, 1! MWWA has not so far succeeded in recruitinga full time, permanent Deputy General Manager (Finance), As a temporarymeasure, in consultation with the Bank and ADB, a senior civil servant hasbeen appointed to this position on a part-time basis in addition to his dutiesin the National Economic and Social Development Board (NESDB). To date, thishas oroved to be a very beneficial step for MW%TA, but knowing the importanceof the post, M4WWA is continuing its efforts to fill the position on a permanent,full-time basis. Assurances that this will be accomplished by March 31, 1974were obtained during negotiations. In view of the critical nature of allthe Deputy General Manager positions, assurances were also obtained thatthe 3ank would be consulted in advance about future changes in appointmentto any of these posts.

5.07 MW!A has had problems filling other key positions, and was ableonly recently to recruit the Chief of the Finance Divis,on, the PublicRelations Officer and the Budget Analyst. However, three muiore positions(Personnel Officer, Management Analyst and Legal Adviser) consideredimportant for strengthening MWWA are still vacant. MWWA appears confidentthal appointments to these positions will be made shortly. MAMWA has beenquiize successful in filling engineering posts.

5. 0.6 MI¶A's present staff strength is about 4,100 (ITovem7ber 1972),against a total of ,,521 sanctioned by its Board. There is no goodjustification for this large complement and thorough reviews are required.Assurances were obtained uuring the negotiations that staff requirements and

1/ MWWA is in the midst of an overall salary review and intends shortlyto make revisions which would put MWWA on a more competitive recruitingbasis.

- 17 -

strength would be reviewed annually by MWWA in consultation with the Bankand ADB, within six months of the close of each fiscal year,and that employ-ment would be kept to a minimum consistent with the needs of the projectand sound operating practices.

5.09 Many of MWWIlA's professional and technical staff, although qualifiedin other ways, lack experience with a well run water supply utility. Trainingon the job is an essential component of each engineering and management con-sulting contract. Additional opportunities for practical training are beingsought. During negotiations assurances were obtained that a detailed trainingprogram will be worked out and implemented within 6 months of the date of theloan and revised periodically as necessary, all in consultation with theBank. Among the possibilities being explored are arrangements for shor't termvisits by supervisory staff to the well established utility in Singapore.The training costs are presently included in the costs of consulting services,MWWA's engineering and operating costs and the foreign exchange contingencyallowance for Part A of the project.

Operation of the System

5.10 As in general management, MWWA has recently improved its efficiencyin various critical aspects of operations with the aid of consultants as fol-lows:

(a) mapping and records of existing system;

(b) leak detection and repairs;

(c) operation of pumping and treatment facilities;

(d) location and recording of service connections; and

(e) meter installations.

MWWA recognizes that improvement of performance in these and other areasmust continue and be accelerated if good standards and project objectivesare to be achieved. Also needed is a good program of continuous monitoring,reporting and control of groundwater resources in the metropolitan areaand a suitable agency should be assigned these responsibilities (Annex 3,paragraph 10); assurances to this effect were obtained from the Governmentduring negotiations.

Financial Management

5.11 Major deficiencies exist in the area of accounting and financialmanagement and these have contributed to some of the problems of MWWA inbilling and collection of revenue. The management consultants have alreadydrafted the framework of a good general accounting code for MWWA. Now thatthe new financial organization has been adopted by MWWA and staff gaps arebeing filled, the processes of installation of the accounting system andtraining, and the preparation and use of reports required for financialmanagement are to be implemented under the new management consulting

- 18 -

contract (paragraph 5.14). Assurances were obtained during negotiationsthat a commercial system of accounting will be in substantial operation byOctober 1, 1973.

Metering, Billing and Collection

5.12 MWWA's most critical deficiencies have been in the area of metering,billing and collections. Over 900 personnel are employed for meter reading,billing and collection of revenue. Billing is bi-monthly; the delivery ofbills and collection of revenue is mainly through full time bill collectors.Most metering, meter reading, billing and collection procedures have beengrossly inefficient and ineffective. MWWA has an established policy to meterall service connections, but in fact 60% of the meters do not function,Estimates of water use for billing customers with defective meters have beenconsistently low. Billing is slow and collection procedures are weak. Theresults are that unaccounted-for water has been in the order of 60% to 65% oftotal production. Bills are rendered six months late on the average and upto two years in some cases. Some connections are never billed and many areunrecorded. In effect, i4RWA has not been charging for most of its services.

5.13 Correction of this situation is the most critical and possibly themost difficult aspect of this project. To achieve this objective the projectincludes "Metering Impr vement" and "Revenue Improvement" programs designedby the consultants. These programs aim toward: complete records of allconnections including classification of users; proper installation and main-tenance of effective meters; satisfactory meter testing and repairs; reliablemeter reading on regular schedules; realistic estimates of water use at con-nections without functioning meters; installation of efficient clerical,reporting and recording procedures for production of bills, ordering replace-ment of inoperative meters and producing up-to-date reports on water use andthe status of the meter reading/billing/collection cycle; and enforcement ofcollections. The implementation procedure is to introduce these changes ona district by district basis. Also, efforts will be concentrated first onlarge water users. Metering will be selective leaving the least profitablecustomers until later. A modest but promising start on these programs hasbeen made already. The consultants predict substantial completion of theseprograms in 1975. At the time of negotiations, the work programs andspecific goals of accomplishment were discussed and commitments obtainedthat there would be annual reviews. The results would be submitted to theBank and the ADB within four months of the close of each fiscal year andrevision of the work plans and goals made in consultation with the Bank andADB.

Management_ ConsultanLs

5.14 Booz, Allen and hamilton International Inc. (BAHINT) have beenassisting MWWA in its efforts to improve its management and financial adminis-tration under a contract signed in September 1971 and completed in September1971. The work of the consultants provided a valuable basis for MWWA'sown efforts to cope with many problem areas and MWWA has retainedBAHINT for a further 27 months commencing October 1972. An important

- 19 -

component of management consultancy services is the training of W-A's staffso that they can take over and run the institution efficiently with a minimumof outside help, after the present contract terminates in December 1974. Theforeign exchange element is proposed to be financed from the Bank loan.Retroactive financing of about US$500,000 is proposed to cover foreignexchange expenditures on the contract since October 1, 1972. During nego-tiations, assurances were obtained that MWWA will continue to engagemanagement consultants, acceptable to the Bank, as required to assist MWWA.

Audit

5.15 According to the MWWA Act, WMWA shall have its accounts and finan-cial statements audited annually by the National Audit Coulncil. So far nosuch audits have been carried out and MEWA has yet to prepare its first setof financial statements for proper submission to the Audit Council. This isdue to the fact that MWWA has been operating financially more or less as aGovernment department.

5.16 During negotations agreement was reached that following theimplementation of commercial accounting procedures by MWWA during the fiscalyear ending September 30, 1973, MWWA's financial statements for that yearand for subsequent years would be audited by independent auditors acceptableto the Bank and that such statements, together with the auditor's report,would be submitted to the Bank not later than six months after the end ofeach fiscal year. For this purpose it was further agreed that audit by theNational Audit Council would be acceptable to the Bank. However, if aftercompletion of the audit for FY 1975, the Bank considers that the NationalAudit Council's audit needs strengthening to meet the Bank's requirements,the Government and MWWA will take all necessary action to achieve therequired standards including engagement of commercial auditors to assistthe National Audit Council.

Insurance

5.17 M.-WA does not have any defined policy for insuring its propertyagainst loss or damage. A plan for obtaining adequate insurance coverageis being considered by MWWA and soon will be presented to the Bank and ADBfor comment. During negotiations assurances were obtained that MWWA wouldmake appropriate provisions for insurance.

VI. FINANCIAL ASPECTS

Introduction

6.01 The accounting and financial branches of MWVA have been very weak(paragraph 5.11). MWWA has not yet produced any audited Balance Sheets(paragraph 5.15). Government has recognized MWWA's problems and deficienciesand is now giving it strong backing particularly for management and financialimprovements. Actions already taken in strengthening the management and

- 20 -

proposed to be taken as a part of the project are expected to lay soundfoundations for developing a well run and viable utility.

Financial Position - Past and Present

6.02 On its formation in 1967 MWWA took over the assets and liabilitiesof four separate water works (paragraph 5.01). The gross book value of fixedassets thus assumed was Baht 1,329 million (US$63.9 million) and their netdepreciated value Baht 1,093 million (US$52.5 million). Over the next fiveyears ending September 1972 MWWA. added some Baht 312 million (US$15 million)to its fixed assets, financed entirely by Government.

6.03 From its inception, MWWA has incurred cash losses in each of thefive years of its existence. Through FY 1972 (ending September 30, 1972)these losses totaled Baht 107 million, all met by the Government. Includingdepreciation, the operating deficits for the five years were of the order ofBaht 350 million. A proforma summarized income statement for the years1968-1972 is at Annex 15.

6.04 These unsatisfactory financial results are attributable partly tothe large quantities of non-revenue (unaccounted-for) water and partly toan uneconomic water tariff. About 60% of water produced earned no revenueand of this, based on ield studies extending over 18 months, the consultantsestimate that distribution leakage does not exceed 10% of production whichis relatively good for a large system. Free supply of water for municipalparks, firefighting, etc. is only about 2%. The remaining 48% of productionhas been lost through faulty metering and billing procedures (paragraph5.12). There has been no leadership in the Finance Department andcertain key positions have remained unfilled. Action is now being takento remedy these shortcomings (paragraphs 5.06 and 5.07). With the assistanceof management consultants (BAHINT), MWWA has launched metering and revenueimprovement programs (paragraph 5.13). The target recommended by BAHINTand adopted by MWWA is to achieve a gradual 8% yearly reduction in unaccounted-for water bringing it down to about 22% by 1977. The target is not beyondIMIA's capacity to reach but M$WWA's degree of success is extremely difficultto predict. For this reason a more modest reduction of 3% in 1973, 7'% in1974 and 5% annually in 1975 through 1979 has been assumed for financialprojections (paragraph 6.14). If this is achieved the unaccounted-for waterwill come down to 25%7 in 1979. Ultimately MWWA ought to be able to attain15% to 20%, typical of well run water utilities.

6.05 A major step to improve NWWA's financial position was taken byGovernment in approving a new uniform rate schedule effective July 1, 1972(paragraph 6.16). :n December 1972 the consultants estimated that the newtariff will raise the average revenue per m3 of water from Baht 0.58 in 1972to Baht 1.53 in 1973 and to Baht 1.71 by 1977. Billings for the 7 monthsafter the rate increase show an average of Baht 1.30 per m3 which has beenadopted for 1973. With the improvement in metering, meter reading andbilling procedures and increased water consumption by large consumers it isestimated that the average rate will increase to Baht 1.44/u3 in 1974 andto Baht 1.65/m 3 by 1979. A rate increase of about 25% will be necessaryeffective October 1, 1979 (paragraph 6.17).

- 21 -

6.06 IfWtA's two current loans from the Government (paragraph 2.10)totaling not more than Baht 259.2 million (US$12.5 million) for "improvementof the operation of MWWA" carry interest of 4% and are repayable in 40semi-annual installments after a five-year grace period. The interestaccrued in the first five years is deferred and thereafter is payable in 40semS-annual installments. MWWA spent Baht 81 million from these loans in1972, and expects to use the balance in 1973 and 1974.

6.07 The gross value of fixed assets of HzWWA at the end of FY 1972 isabout Baht 1,641 million (US$79 million). BAHINT has stated that with theexception of land holdings N4WWA's records of ownership of fixed assets arein reasonably good order and that MWWA takes a physical inventory of its fixedassets every six months. With regard to land there is some confusion as toexactly which parcels of land belong to MWWA; some identified parcels areclaimed by other government entities as well as by MfWWA. Although "revaluationof assets" is in BAHINT's current terms of reference (paragraph 5.14), nosignificant work on revaluation is justified since their depreciated valueis small compared to the proposed project investments. MWWA should, however,establish an asset value, including work in progress, supported by appropriateassets registers and depreciation schedules and adopt these in its openingbalance sheet for FY 1973. During negotiations assurances were obtained thatthis would be done by December 31, 1973.

Financing Plan

6.08 The estimated "Sources and Application of Funds" statement of MWWAfor the years 1972-1982 is in Annex 17. The financing plan for the projectconstruction period (1973-1979) is summarized below:

- 22 -

Baht US$ Percentage-------------…million----------

APPLICATION OF FJNDS

Capital Expenditures:

Part A of the project to be financedby IBRD 2,921- 140.4 57.6

Part B of the project to be financedby ADB 1,421 68.3 28.0

Interest during construction on IBRD& ADB Loans 390 18.8 7.7

Other construction by KWWA 331/2 15.9 6.5

Total Capital Expenditures 5,063 243.4 99.8

Increase in cash balance 10 0.5 0.2

Total 5,073 243.9 100.0

SOURCES OF FUNDS

Internal cash generation 1,714 82.4 33.8Less: debt service requirements 269 12.9 5.3

Net cash generation 1,445 69.5 28.5

Borrowings:

IBRD Loan 1,144 55.0 22.6ADB Loan 408 19.6 8.0Prior Government Loans Unutilized 178 8.6 3.5Government Loan for the Project 1,750 84.1 34.5

Total Borrowings 3,480 167.3 68.6

Government & Customer Contributions 148 7.1 2.9

Total 5,073 243.9 100.0

/1 Excludes B 75 million expended before 1973.

/2 Includes an allowance of $ 116 million for expansions of MWWA'sseparate systems (paragraph 2.07).

6.09 The proposed loan of US$55 million would cover about 23% of MWWA'sde-clopment program for 1973-79. The ADB loan would cover 8%, capital con-tributions 3% and self-generated funds 28%. The balance of about 38% wouldbe provided by the Government.

- 23 -

6.10 The proposed terms of the Bank and ADB loans are each 26 yearswith 6 year periods of grace. The assumed interest rates are 7-1/4% and7-1/2% respectively.

6.11 Internal cash generation of Baht 1,714 million (US$82.4 million)forecast during 1973-1979 would require a major effort on MWWA's part toimplement the programs described in paragraph 5.13. This will require con-stant monitoring. The loan documents require MWWA and Government to review,in consultation with the Bank, at least three months before the beginningof each fiscal year, NMWA's cash requirements for that year and the stepsrequired to ensure that its internal cash generation together with theproceeds of the loans will be sufficient to cover these requirements.Assurances were obtained from Government that should funds available toMWWA be inadequate for completing the project, the Government would providesuch funds, or cause such funds to be provided, promptly as needed, on termsand conditions acceptable to the Bank.

6.12 The estimated amount of financing required from the Government(Baht 1750 million)is assumed to be in the form of loans with the sameterms and conditions as the two earlier loans of 1971 and 1972, i.e., carryinterest at 4% and be repayable over 40 semi-annual installments after agrace period of five years. Interest during the grace period would bedeferred and repaid in 40 semi-annual installments. Even though this rateis lower than the cost of money in Thailand, it is considered reasonable inview of the potential benefits of improved water supply operations in Bangkok,the extremely weak financial position of MWWA, the very large investmentinvolved in the proposed development program and the large taxes on theproject (paragraph 3.06).

Financial Projections

6.13 The Estimated Income Statements, Sources and Application of FundsStatements and Balance Sheets for 1972-1982 are in Annexes 16 through 18.The assumptions for these financial forecasts are in Annex 19.

6.14 The projections indicate that during the project construction period1973-1979 MWWA's annual rate of return on average net book value of fixedassets in operation would be in the range of 4.2 to 9.0%. These forecastsare based on the assumptions that MWWA would achieve a substantial reductionin unaccounted-for water (paragraph 6.04) and that the new tariff effectiveJuly 1972 would more than double the 1972 average revenue of Baht 0.58 per in 3 .The projected rate of return up to 1979 should be considered satisfactory,particularly in view of the cash deficits incurred by MWWA in the precedingfive years. After completion of the project an increase of about 25% inthe rates, effective October 1979, would be needed to cover the debt servicecharges and cash requirements for expansion of services. The projectionsshow that with this increase, MWWA would be able to earn a rate of return ofabout 7.9% in 1980, 8.4% in 1981 and 9% in 1982. A rate of return covenantis discussed in paragraph 6.17.

- 24 -

Tariffs and Rate Covenant

6.15 Under the MWWA Act of 1967, IfWWA can set water rates, subject to theprior approval of the Council of Ministers.

6.16 Annex 20 shows the water rates before and after the July 1, 1972revision (paragraph 6.05). Under the new tariff the free monthly supply of6 m3 which was allowed in Bangkok and Thonburi only has been extended toNonthaburi and Samut Prakan. Another feature of the new rate structure isthat most consumers in Nonthaburi, as well as those using up to about 60 m3

monthly in Sanut Prakan and up to about 70 m3 in Thonburi, will now paylower water bills. But in Bangkok, which constitutes about two-thirds ofthe metropolitan area and where most of the large industrial and commercialusers are located, the new rates will raise the water bills for monthly con-sumption exceeding 12 m3 and earn substantial additional revenues for =,WA.The new rates are still lower than those of all the Provincial Water Worksof PWWD (paragraph 2.12). The impact of the new tariffs, as well as of theother improvement programs, on MW%tJA's financial position is extremely dif-ficult to forecast with any degree of certainty. It is essential. therefore,that a periodic rate review at intervals of not more tharn two years shouldbe made by Yfl7J!A to determine, irn consultation with the Bank, what changes,if any, are needad in its rate structure and level of charges to meet itsfinancial requirement during the project construction period (paragraph 6.11).The first review would be completed not later than in July 1974. Governmenthas agreed to carry out any required changes in the rate structurewithin six months after each review. No reduction in the present rateswould be permitted during the construction period. Assurances were obtainedon these points during the negotiations and suitable covenants incorporatedin the loan documents.

6.17 After completion of the project (beginning with October 1979)tW'A has agreed to establish and maintain water rates at a level which willgenerate sufficient revenues to cover operating costs, including depreciation,plus a minimum return of 8% on the average net value of fixed assets inoperation. This rate of return is recommended after taking into considerationthe cash requirements of MWETA for meeting its debt service charges, estimatedat about Baht 330 million annually, as well as capital investments for minorexpansion of its services in the order of Baht 200 million every year, withoutrecourse to further borrowing until about 1982. The financial projectionsshow that a rate increase averaging about 25% would be needed effectiveOctober 1979 to achieve this objective. A commitment to the rate of returncovenant was obtained from MW[,WA and Government during negotiations.

Debt Limitation

6.18 During negotiations, agreement was obtained that throughout tileproject construction period MWWA will not incur, without Bank approval, anylong-term debt in addition to that required under the agreed projectffi.ancing plan. For the remaining life of the loan, MWWA agreed thatadditional long-term debt would not be incurred without Bank approval unlessnet revenues for the previous year provide debt service coverage of at least

- 25 -

1.5 times maximum interest and amortization payments in any future year.The expected net cash generation will provide debt service coverage of 1.7times or more through 1982, except in 1979 when it is estimated to be about1.4 times.

VII. AGREEMENTS REACHED AND RECOMMENDATION

7.01 During loan negotiations agreement was reached on the followingprincipal points:

(a) action toward resolution of the sewerage problems in theBangkok metropolitan area (paragraph 3.25);

(b) the initiation of a continuous program of investigation,data collection and analysis of trends in water use anddemand for the purpose of planning economic future expansionof the water supply system (paragraph 4.10);

(c) that the timing and content of the second phase of Part Aof the project would be determined on the basis of theabove demand analysis (paragraph 4.10);

(d) annual reviews and revisions of the metering improvementand revenue improvement programs (paragraph 5.13);

(e) annual reviews of MWWA's cash requirements and the stepsrequired to ensure that available funds would be adequateto cover MWWA's requirements (paragraph 6.11);

(f) water rate reviews and changes, if necessary, at intervalsof not more than two years during the project constructionperiod (paragraph 6.16); and

(g) an annual rate of return on net fixed assets in operationof not less than 8% beginning October 1, 1979 (paragraph6.17).

7.02 A condition of effectiveness of the proposed loan would be theGovernment's authorization for MWWA to appoint the consultants required forconstruction supervision of Part A of the project (paragraph 3.10).

7.03 The proposed project is suitable for a Bank loan of US$55 millionequivalent for a term of 26 years including a grace period of six years.

June 8, 1973

ANNEX 1Page 1 of 2

90 f

THAILAND: BANGKOK WATER SUPPLY PROJECTPOPULATION DATA AND PROJECTIONS /

(MILLIONS OF PERSONS)

RANGE OF ESTIMATES BY OTHERS /

70 - 14

/ ~I

60 - LEGEND: f 12CENSUS DATA AS ADJUSTED BYPOPULATION DIVISION, U.N. 119661 i/

a X ESTIMATE BY MINISTRY OF INTERIOR // / |

g: 50 / 1/ 4 05 A ESTIMATE BY CONSULTANTS i 10

O 8 DATA FROM WORLD BANK /d' /O 0 ATLAS OF 1972 / 4,z ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~zOF /// / A/< 40 * RESIDENT REGISTRATION RECORDS /U. / R,/

-JO // ,@THAILAND/2 2; / -

20 _ . z/

_ ge,zy j l ~~~~~~RANGE OF ESTIMATES FOR 4^ oS^/ ~~~~~~~~~~METROPOLITAN AREA

210BANGKOK METR OPOLITAN AREA 2

E )(USE SCALE AT RIGHT

1920 1930 1940 1950 1960 1970 1980 1990 2000

YEARS

World Bank(-E7405(RI

ANNEX 1Page 2 of 2

THAILAND

BANGKOK WATER SUPPLY PROJECT

Population Data and ProJections

TOTAL THAILAND (Millions of Persons)-- Estimated-----

Year Census 2 ' Max. Consultants Min.

1919 10.11929 12.11937 14.41947 18.51960 26.9

1968 33.61969 35. 1970 36.2 i

1975 42.0 41.0 40.01985 57.0 54.0 50.02000 90.0 78.0 70.0

BANGKOK METROPOLITAN AREA (Millions of Persons)

Consultants Town & Country BangkokR Registration Design Max. Planning Planning

Year Censu v Records Estimate Potential Dot. Division

1947 - 0.801952 1.101955 1.341960 - 1.741965 2.461968 2.781969 2.88 2.88 2.801971 3.201975 3.69 - 3.94 - 3.83 3.701980 4.661985 5.66 6.49 -- 5.49 5.101990 6.242000 9.92 - 14.6 - 7.29 6.50

2' Census data as adjusted per recommendations of United NationsPopulation Division (1966).

2/ Estimate by Ministry of Interior on basis of residence registrationrecords.

# Estimate by consultants based on 3.0% per year annual growth since 1960.

/ World Bank Atlas of 1972.

April 18, 1973

THAILA.ND

BANCKOK WATER SUPPLY PROJECT

Summary of Population and Area Data Used for Project Planning

YEAR 1919 1929 1937 1947 1960 1969 1975 1985 2000

THAILAND

Total Population (millions)/' 10.11 12.13 14.41 18.46 26.86 35.00 41.00 54.00 78.00

DOTAL MWWA AREA (4 changwats) /2

Total Population (thousands) /3 752 971 1,135 1,560 2,674 3,944 4,920 7,305 11,820

MUNICIPALITIES IN MWWA AReAL4

Total Area (sq im) A- - - 97.6 178.2 300.4 300.4 410.o 663.0

Totae Population (thousands) _ _ _ 801 1,744 2,875 3,691 5,661 9,920(% of Thailand) - - - 4.3% 6.5% 8.2% 9.0% 10.5% 12.6%

AREAS OUTSIDE MUNICIPALITIES SERVED BYMVWA CENTRAL SYSTEM

Total Population (thousands) _- - - 74 200 418 -0-

1949MWWA CENTRAL SERVICE SYSTEM

Total Area Served (sq km) - - - - 182 362 570 815

Population served:

Inside Municipalities (thousands) - - _ 181 963 1,805 2,553 4,290 8,512('9 of municipal population) - - - 20% 55% 63% 69% 76% 86%

Outside Municipalities (thousands) - - _ - - 41 134 300 -0-(% of population in area served) - - - - 55% 67% 72% -

Total Population Served (thousands) - - - 181 963 1,846 2,687 4,591 8,512(% of total in service area) - - - 20% 55% 63% 69% 75% 86%

SEPARATE WATER SYSTEMS /6

Total Population (thousands) _- - 44 76 161 305

Population Served (thousands) _ _ _ _ _ 11 38 100 225(%of total) - - - - - 26% 50% 62% 74%

/1 Thailand population data for 1919, 1929, 1937, 1947 and 1960 are census figures adjusted according to the recommendations of the Population Division,United Nations, as given in a paper "An Evaluation of the Demographic Statistics of Thailand", 1966. The 1969 estimate is based on the 1960 adjustedcensus data and the assunption of 3.0X annual g,rowth to 1969.

/2 The total area for which the MWWA has authority to provide public water supplies comprise Phra Nakorn (including Bangkok), Thonburi, Nonthaburi andSanut Prakan.

t Census data for years 1919 through 1960 were aijusted as for the national population. The 1969 population estimate is an adjustment of the residenceregistrati-s records qs of December 31, 1968.

/4 'the municipalities within the MWWA to which m.st of MWIA's water service is provided are Bangkok, Thonburi, Nonthab,ri and Samut Prakan.

'1 Areas 1) the municipalit'es are those listed a- official in 194'7, 1960 and 1969. Future i,-creases are predicted whet estimated p-pulation densitiesexceel 14,000 to 17,000 persons per sq kT.

/6 Separate water systems are those f-r or.mun' t:es nst ser-vei U'-,. cestal water system b,t are within the MWWA arei.

April 11, 5't-

ANNEX 3Page 1

THAILAND

BANGKOK WATER SUPPLY PROJECT

Existing Water Supply System

General

1. Under the Metropolitan Water Works Authority Act of 1967, MWWAis responsible for the public water supply systems in four changwats(provinces), as shown on Map IBRD-10208, with a total area of 3,130 km2and an estimated 1970 population of about 4 million. However, MWWA'sexisting water supply and distribution systems serve only the central urbanarea of Metropolitan Bangkok (Bangkok, Thonburi, Nonthaburi and SamutPrakan) which is referred to as the Central Service System (area of 300.4km2 and 1970 population about 3 million) plus nine smaller communities(referred to as Separate Systems). The areas and populations pertinent tothe MWWA water supply systems are given in Annex 2. The major features ofthe existing MWWA systems are shown in Map IBRD-10209.

2. The part of the Central Service System which serves Bangkok andThonburi is the only part which uses a surface water source. Groundwater isa supplementary source for these two municipalities and the only sourcefor Nonthaburi, Samut Prakan and the nine separate systems.

Surface Water Supply and Transmission

3. The surface water supply is taken from the Chao Phya River atan intake at Sam Lae, situated about 35 km north of Bangkok's municipalboundary (Map IBRD-10209). At Sam Lae, the river water is pumped intoBang Luang Reservoir, a former oxbow of the river about 10 km long, andthen transported to the Bangkok water treatment plant complex at Sam Senthrough a 25 km unlined canal, Klong Prapa.

4. The water in Klong Prapa passes under three major transportationand irrigation klongs by means of three-barrel inverted siphons (the Rangsit,Bang Khen and Bang Sue siphons). The Bang Sue siphon restricts flow tothe Bangkok water treatment plants and a new parallel siphon is underconstruction.

5. Along Klong Prapa at Bang Sue, a pumping station provides lowlift pumping facilities to increase the raw water flow to the Bangkoktreatment plant. The station also contains high lift units to pump throughtwo parallel pressure mains, 11.2 km long, across the Chao Phya River to theThonburi water treatment plant.

ANNEX 3Page 2

6. With improvements substantially completed in 1972, the raw watersystem has a reliable capacity rated at about 780,000 m3/day. This issufficient for the existing surface water treatment plants.

7. The Chao Phya River originates in northern Thailand and flows750 km to the Gulf of Thailand, having a drainage area of 177,000 km2.It is used extensively for navigation, irrigation and power generation.Until recently the minimum flow of the river in Baagkok was as low as25 m3/sec. For such low flows saline intrusion would reach the watersupply intake at Sam Lae. However, the minimum flow is being increased aslarge upstream dams and storage capacity are completed. The Royal Irriga-tion Department has estimated that future minimum flows at Bangkok wouldbe at least 120 m3/sec which would be more than adequate to meet Bangkok'sraw water requirements of 70 m3/sec in the year 2000.

8. Raw water quality at the intake is acceptable even thoughupstream activities result in pollution of the river. Future upstreamdevelopment will increase the potential pollution. However, higher minimumflows will increase available dilution and also the Government of Thailandis planning to exert controls on water pollution. The combined effectis expected to be raw water quality at the intake about the same or betterthan in 1970.

9. The open raw water transmission system is subject to potentiallydangerous pollution from navigational use of Bang Luang Reservoir andfrom resident population along the route of the system. An MWWA programis underway to wall and fence Klong Prapa to help protect the raw watersupply from surface drainage and wastes. Recommendations have been madeby the consultants to strictly control access including prohibition ofswimming, fishing and navigation along the entire route of the raw watercanals.

Groundwater

10. About one-third (variously estimated at 330,000 to 400,000 m3/day)of MWWA's present water supply is groundwater. MWWA now has about 180 opera-tional tubewells. Private tubewells are estimated to be pumping an additional250,000 to 300,000 m3/day. This large scale withdrawal of groundwater bypublic and private tubewells, which has accelerated dramatically since 1955,exceeds the natural recharge capability of the aquifers with attendantproblems of rapidly falling groundwater levels and increasing chlorides andiron content of the water. This has led to abandonment of many wells(including one-third of all public wells constructed since 1955), particularlyin concentrated areas of pumping in the southern portions of Bangkok andThonburi. However, properly designed, constructed and spaced tubewells canstill be expected to supply water in northern and eastern areas of Bangkokand north of Thonburi. For the medium- and long-term future, effective useof the groundwater resource requires systematic monitoring of groundwaterl_vels, withdrawals and quality (procedures which have been lacking in thepast) and the prompt imposition of controls over the points and amaunts ofextraction.

/

ANNEX 3Page 3

Treatment Plants

11. The Bangkok water treatment plant at Sam Sen is a complex of10 plants with individual design capacities ranging from about 30,000to 173,000 m3/day. The first plant is more than 50 years old; the mostrecent was constructed in 1963. Total design capacity is about 547,000m3/day but in 1969 maximum reliable output of the complex totalled only480,000 m3/day. Improvements in the physical facilities and operatingprocedures were recommended by CDM and carried out in 1971 and 1972. Thus,by the end of 1972, total reliable output has been increased to at least650,000 m3/day and is expected by the consultants to reach 680,000 m3/day;maximum output could be about 708,000 m3/day.

12. The Thonburi water treatment plant, constructed in 1963, has adesign capacity of 172,800 m3/day. Until completion in November 1971 ofa second raw water pressure main from Bang Sue (paragraph 5), the plantcapacity was limited to 86,400 m3/day. Also completed in 1971 was a50,000 m3/day temporary raw water connection to the Bangkok Noi Canal. MWWAnow rates the Thonburi plant at 180,000 m3/day.

13. Treatment processes at all of the treatment plants comprisesedimentation, rapid sand filtration and chlorination. Four of the olderBangkok plants have horizontal flow sedimentation units. All of the otherplants, including Thonburi, have solids contact type clarifiers of variousages and designs. The rapid sand filters are also of various designs.However, all consist of a single media of relatively coarse sand and aredesigned to operate at filtration rates of about 4.8 m/hr (about 2 gpm/sq ft).All but one of the plants use air and water filter backwash systems.

14. Treated water storage capacity at the Bangkok plants is verylimited; effective capacity is only about 30,000 m3 or about one hour ofreliable plant output. The Thonburi plant has treated water storagecapacity of 18,000 m3.

15. The present treatment plants are capable of producing water ofacceptable quality in accordance with Thai drinking water standards (similarto the World Health Organization International Standards), but in practicethe performance of the plants has, in the past, fallen short of theircapabilities.

Estimated Present and Future Production Capacityof Existing Facilities

16. During 1968 and 1969, CDM and MWWA conducted extensive tests ofthe real capacity of existing surface water facilities. MWWA's tubewellsystem was evaluated also, but less reliably because new wells are addedand older ones abandoned almost continuously. The estimated total productioncapacity in 1969 was about 998,000 m3/day including about 400,000 m3/dayof tubewell capacity (a peak). Actual performance in 1970-1972 wasinfluenced by decreases in reliable tubewell capacity (to 330,000 or350,000 m3/day) and increases in treatment plant capacity. MWWA's totalexpected reliable production capacity in 1973 is 1,183,000 m3/day.

ANNEX 3Page 4

17. Total reliable productive capacity of existing facilities isexpected to remain at about 1,183,000 through 1976. Some of this capacitywill come from new tubewells constructed during the period to maintaingroundwater production capacity at about 330,000 m3/day. Starting in1977, when the first production elements of the proposed project wouldcome into use, MWWA use of groundwater would be gradually reduced anddiscontinued by 1990. The load placed on existing treatment plants probablywould also be reduced somewhat in 1977 because of the age of those facilities.The estimated future contribution of existing facilities to total reliableproduction capacity is as follows (Annex 10):

Surface WaterYear Treatment Plants Tubewells Total

…_______-------…m 3 /day (000)-------- --

1973-1976 853 330 1,1831977 823 300 1,1231978 823 250 1,0731980 823 150 9731985 823 75 8981990 823 0 823

Distribution and Stor-ge

18. The first water pipes were installed in Bangkok about 1914.Starting in 1952 the rate of installation of mains increased sharply toaverage about 40 km per year. The peak rate was 215 km in 1965. Thetotal length of water mains of 100 mm or larger diameter was about 1,110 kmin January 1969. 1/ Contracts for an additional 83 km of mains wereawarded in 1971. The materials used for pipelines are predominantlygalvanized iron in the smaller sizes, asbestos cement in the intermediatesizes and bituminous lined cast iron in the larger sizes. Steel pipelinesare used for most klong and bridge crossings. Prestressed concrete pressurepipe is being used on some of the new large diameter pipelines.

19. A leakage survey in 1969 indicated that leakage in the distributionsystem (upstream of the meters) totalled about 7% of the total water producedat the generally low pressures (average 0.5 kg/cm2) then prevailing. Thisis certain to increase as production capacity and system pressures increase.A continuous leak detection and repair program initiated by the consultantsin 1969 was transferred to MWWA in 1970. It is working fairly effectivelyand aims toward coverage of the total pipeline system at least annually withmore frequent attention in critical areas.

1/ 60 mm pipelines are in use in many areas of Bangkok, but mains of thissize are too limited in capacity to be considered as effective distribu-tion components.

ANNEX 3Page 5

20. Distribution storage is provided by 11 elevated tanks with a totalcapacity of aboutF 16,500 m3. Only about 500 m3 (in Nonthaburi and SamutPrakan) is effective because system pressures in Bangkok and Thonburi aretoo low to fill the eight larger tanks which have never been used. For allpractical purposes, therefore, MWWA has no distribution storage capacityfrom which to meet peaks in demand.

Service Connections and Metering

21. Service connections totalled 269,400 as of January 31, 1972. Theaverage yearly increase during the prevsious 10 years was about 14,000.MWWA policy is to meter all connections. Extensive studies by the consultantsin 1968 and 1969 disclosed, however, that about 60% of the installedmeters were not functioning and many others were operating poorly. Underservice conditions at the time, average meter life was only about twoyears depending on the type and location of the meter, and meter repairfacilities were completely inadequate. About 30 different makes of metersfrom at least six different countries are being used.

22. Based on recommendations by BAHINT and CDM, a Metering ImprovementProgram (MIP) was initiated by MWWA in 1971 with the objective of correctingthe above described situation and to accurately determine water use by MWWAcustomers. This program got off to a fair start in November 1971 and will becarried on and completed as part of the proposed project.

Extent and Quality of Service

23. Out of a total 1970 population of about 3 million in MWWA'scentral service area, an estimated 2 million were served by water supplyconnections. The productive capacity of the water system in metropolitanBangkok increased at the average annual rate of about 12%/year between 1960and 1973, but the extent of the distribution system and the numbers ofpeople served has also increased rapidly and water demand has seldom been met.

24. The degree of the water problems experienced almost continuouslyin the area for many years has varied from year to year. The situation hasimproved somewhat since 1969 due to works completed in 1970-1972. However,low pressures are general throughout the system and a complete lack ofwater for hours, or even days, is experienced in portions of the systemswhich are remote from the treatment plants and tubewells. The consultantshave estimated that less than 20% of the service area has adequate flowsand pressures.

25. One result of low pressures and intermittent flows is that storagemaintained by customers averages about 1 m3 per connection and may total20% of the MWWA's average daily production capacity at a cost substantiallygreater than an equivalent amount of storage in the distribution systemitself. Another result is that the MWWA system can seldom be used as asource of water for fire fighting. In general, the public has to lookto other sources, either unsafe or comparatively expensive or both, to meetpart or all of their water requirements. This is particularly true of lowincome population.

June 8, 1973

ANNEX 4Page 1

THAILAND

BANGKOK WATER SUPPLY PROJECT

Project Description

General Design Aspects

1. The project is designed to give a total reliable capacity ofabout 2,273,000 m3/day of treated water pumped into the distribution systemfrom existing and new facilities by mid 1978. This total capacity woulddecline gradually starting in 1979 as groundwater use by MWWA facilities isphased out and the reliable capacity of existing surface water treatmentand pumping facilities is reduced by aging. The total capacity of thesystem is expected to be adequate until about 1982 or perhaps as late as1985, depending on the trend of demand, when Stage II surface water treatmentand transmission capacity should go into operation.

2. The standard base for the water supply design is the averagedaily demand, or average annual demand divided by 365. Maximum dailydemand is the largest volume of water expected to be required in a 24-hourperiod of the year, and the raw water, treatment and transmission facili-ties are designed to meet this requirement. Maximum or peak hour demandis the largest volume of water required in a 60-minute period during theyear. A distribution main is designed for the peak hour demand in thearea served by the main, drawing in part from distribution storage.

3. There are no records to use for determining the actual relationshipof maximum daily and peak hour demands to average daily demand in Bangkok,because the water system has not met those demands. The consultants wasforced to rely on their evaluation of the primary factors which causedemand maximums and peaks. From that study the consultants concluded thatfor design purposes:

(i) maximum daily demand is 1.25 times average daily demands; and

(ii) peak hour demand is 1.7 times average daily demand.

4. The above ratios are judged to be sound bases for design ofthe project with due consideration of economy on the one hand and reliabilityin meeting physical project objectives on the other. The use of maximumdaily demand for design of raw water, treatment and transmission components(rather than allowing service failures during such times) is particularlyjustified for Bangkok because there appear to be extended periods of up tothree months when this demand may be equaled or approached almost everyday. The lowest conceivable ratio of maximum daily to average daily demandfor systems of this size is about 1.15. However, as shown in Annex 10,should 1.15 prove to be the correct ratio, the project designed on the basis

ANNEX 4Page 2

of the 1.25 ratio would have excess capacity to meet demand requirements foronly one additional year. During construction and imnediately aftercomp7etion of the project, better operating data would be collected andanalyzed to mal-2 a more reliable determination of the maximum daily and peakhourly demand ratios which would be used on design of further systemexpansions.

5. Another design dec4sion which influences prcvect costs is thewater pressure provided in the distribution system. For reasons or economy,the project is designed to provide a minimum pressure of 1i.0 kg/cm2 atcustomers' ground floor taps tAroughout the distribution system, under condi-tions of peak demand except when there are concurrent heavy demand forfire fighting. A ground level pressure of 1.0 kg/cm 2 is enough to supplywater to the third level of buildings with adequate plumbing although thepressure would be low. Heavy demands for fire fig1iting would occur forlimited periods and the detrimental effect on customer service wouldnormally be understood and tolerated. Design of t1ie system for peak demandplus fire flows would add considerably to costs and is not consideredjustifiable a.- this ti-me.

6. The transmission and cistri ulon systemas are planned on the basisof 15 districts, eaacs. wr h approxinwtely the same water demand by the year2000. Three of the ' stricts dvould be served directly fro.c distributionpumping at Thonburi, Jam Sen and the ne' Bang hrien treatment plants. Twelvedistricts would be served from distribution centers (reservoir-pump stationcomplexes) located throughout t-he area. Dour of these would be constructedas part oF the project.

7. Most components of the project contain elements wdlth more capacitythan strictly needed for the lmmediate objectives of the project. This isparticularly true of hydraulic conduits and butldings (such as control andadministration buildings at the treatment plant and pumping statior struc-tures), where the engineers have concluded that it would not be physicallyfeasible or economic to make additions o- construct parallel facilities foreach future construction stage.

8. The principal details of the physical components of Part A of theprojiect are given in tabular form in the balance of this annex.

June 8, 1973

THAILAND

BANGKOK WATER SUPPLY PROJECT

Project Description - Part A

Project Element Description Remarks

PART A (Bank Financing)

I. Raw Water Facilities

a) Sam Lae Intake and Pumping Station - mechanically cleaned bar racks - Existing pump station with 3, 3m3/sec pumping units

- 4 horizontal, split case, axial flow, 6 m3/sec would remain in service.

pumps with adjustable impellers and about 350 - Until completion of project, up to 4 m3/sec of raw

horsepower electric motors water to meet present requirements to be drawn by- maximum pumping head, 3m gravity from high level irrigation canal (nlong- station constructed for 5 pumping units Prame Pracha Korn) of Royal Irrigation Department.

- Raw water puming capacity on cpletion of project- small engine driven generator set for emergency would be 24 Im/sec (2,100,000 m

3/day) with one

power for auxiliaries and lighting existing and one new pumping unit in rqserve. Cap-acity includes alloweace for 122,000 m /day lossesin transmission and at water treatment plants.

- Ultimate pumping installation would be 13 units at6 m/sec plus 3 existing 3 m

3/sec units to weet pro-

jected raw water requirements of about 70 ma/sec inyear 2000 with 2 new units and 2 gxisting units inreserve At that stage enlargement of intake channelrequired.

b) Raw Water Transmission Conduits

1) Sam Lae to Bang Luang Reservoir - dredging of earthen part of channel to enlarge - Additional dredging required in future constructionexisTing cross sectional area of 60 m

2to about stageF until ultimate cross sectional area reaches

72 m 180 m<.

2) Bang Luang Reservoir - dredging of new navigational channel and use of - No additional dredging required for future.dredged material as earth barrier between surfacewater supply and navigational channel

3) Klong Prapa from Bang Luang Reservoir - excavation of existing earth canal to obtain - Capapity on completion of project would be aboutto Bang Khen Water Treatment Plant Site trapezoidal cross section with bottom width of 24 m

5/sec (2,100,000 m

3/day).

10 m, depth of 4 m and 1:2 side slopes - Further excavation by dredging required for futureconstruction stages to attain cross sectional areaultimatel-Y of 131 a

2.

- The canal would not be lined at any stage. Periodicdredging would be required to maintain capacity.

4) Klong Prapa from Bang Khen to San Sen - continuation of present MWWA program to construct a'Water Treatment Plant walls and fences along canal whiqh would have

capacity of 11 m3/sec (950,000 m /day) to Bang

Sue, where the Thonburi surface supply is with-drawn, and 9 m

3/sec (780,000 m

3/day) to Sam Sen

Pr ect Element Description Remarks

5) Rangs t Siphon - new, 4 barrel, 36 m3/sec (3,100,000 a

3/day) - Because of very difficult construction conditions,

siphon under Klong Rangsit new siphons would be built in 2 stages, irstead of

3, to meet requirements in the yeas 2000 (70 m /sec

or 6,050,000 m /day.

- Oldest existing siphon (capacity 3 m3/sec) would be

abandoned upon completion of project because of poorstructural condition. Other existing siphon (capacity7 m3/sec) eventually would be held in reserve.

II. Bang Khen Water Treat.ent Plant - Plant capacity for maximum sustained reliable - Some major hydraulic conduits, pumping stationoutput would be 1,20O,000 m3/day constructed in structures and other buildings would have excess

2 stages (800,000 mx/day and 400,000 m3/day), capacity to accomodate some future plant expansions.

- Ultimate plant capacity would be 4.8 million m3/day

constructed in 4 modules, eac of which could bedeveloped mainly in 200,000 a/day increments.

a) Raw Water Intake and Screens - short raw water canal connection from Klong - Initial installed capacity about 2.4 million m3/day.

Prapa and mechanically cleaned, vertical,

coarse bar racks

b) Raw Water Pumping Station - 4, horizontal, mixed flow, electric motor driven - Rated capacity of station would be 1,250,000 m3/day

pumping urits with variable propellers or speed with 1 large unit in reserve.

controls - Smaller unit would be replaced in future to increase

- pumping head frDm 8 to 12 m rated capacity to 1,500,000 m3/day.

- 3 of pumping units at 500,000 m3/day capacity - Station structure adequate for 6 large pumps.

with 1,00Q horsepower motors and 1 of mnits at - Ultimate pumping installation, 12 large units with250,000 mi/day capacity total rated capacity of 5.0 million mi/day with 2

units in reserve.

c) Water Treatment Units

1) Clarifiers - 6 circular, solids contact units at 200,000 m3/day - Ultimate plant would have 24 clarifiers at 200,000

capacity each m3/day.

- 4 units constructed first phase and 2 anits, - Initial influent channel from raw water pumping

phase two station adequate for 12 units.

- Clarifiers constructed above ground.

- Solid contact process would be of slurry recirculationtype similar to that used successfully at most existing

MWWA treatment plants. 2

-Loading rate 70 rmA per minute (2,400 gailons per ftper day).

Project Element Description Remarks

2) Filters - 16, 75,000 m3/day, 2 compartment,dual media, rapid - Ultimate plant would have 64 filters in blocks

sand filters with air/water backwashing of 8 each (a further subdivision to 4 units each- 10 units constructed first phase and 6 units in is possible).

second phase - Design lolding rate would be 200 mm per minute(5 gpm/ft ) but hydraulic capacity adequate for upto 8 gpm/flt 2

.

- Filter media would be anthracite coal and sand.

- Simple float controlled effluent valves would main-tain constant water levels in the filters. Filtereffluents would be metered.

- Backwash water would be pumped.

3) Filtered Water Reservoirs - 2 units at 60,000 m3

each - Design provides for filtered water storage of 10%of maximum reliable plant capacity.

- Ultimate plant would have 8 reservoirs with totalcapacity of 480,000 m3

.

4) Chemicals - plant would include facilities for storing,preparing and feeding alum, lime, polyelectrolytecoagulant aids, chlorine and potassium permanganate

5) Sludge and Washwater Lagoons - 2 shallow earth lagoons at 150,000 m3

each to store - Design provides for 5% of plant intake to beclarifier sludge and filter washwater wasted in filter wash and clarifier suidge.

Lagoons would be periodically dewatered andcleaned after prolonged settling of waste.

- Ultimate plant would have four lagoons at 150,000 m3each.

- Lagoon capacity for project may be reduced in finaldesign to about 75,000 m

3.

6) Transmission Pumping Station - 4 horizontal, split case, electric motor driven - Rated capacity of station would be 1,080,000 m3/day

pumps with 1 large unit in reserve.- maximum pumping head, 35 meters - Small unit would be replaced in future with large- 3 of units at 430,000 m 3

/day with 2,300 horse- unit to give rated capacity of 1,290,000 m3/day.

power motors and 1 unit at 220,000 m /day - Station structure adequate for 6 large units.capacity - Ultimately there would be 12 large units with total

- alternate bids to be received on constant speed rated capacity of 4.3 million m3

/day with 2 unitsand variable speed drives in reserve.

- Individual pump discharges metered.

- Station would draw from filtered water reservoirand discharge to treated water transmission conduits.

7) Local Distribution Pumping Station - 3, variable speed pumping units at 160,000 m3

/day - A pumping station at the water treatment plant tocapacity plus 1 unit at 80,000 m

3/day supply distribution needs in the area of the plant ><

- 1 of larger pumps would be diesel engine driven and the needs of the plant itself for various usesand the others, electric motor iriven except filter wash water.

ProJect Element Description Remarks

7) Local Distribution Pumping Station - macimum pumping head about 50 meters - Station would draw from filtered water storage and(continued) - small elevated storage tank ~~~~~~discharg into local trunk mains and the plant dis-ntinued - small elevated storage tak tribution networt.

- Rated capacity of station would be 240,000 m3

/day tomeet peak hourly demsn with I large electric motordriven and the diesel engine driven units in reserve.

- One large electric motor driven unit could beeliminated in final design.

- Ultimate station would comprise 3 or 4 electricunits and 1 diesel with total reliable capacity of480,000 m3

/day with 1 or 2 units in reserve.

8) Adinistrati n and Service Buildings - administration and control building - This would be center for treatment plant operationsand Staff Housing and for control of entir surface water, treatment

plant and treated water transmission systems.

- service buildings - Laboratory and vehicles maintenance building- Workshop and parts storage building- Chemical building

- staff housing

9) Instrumentation and Controls - metering at the raw water, transmission and - Plant design would utilize minimum amount ofdistribution pumps and the filter effluents instrumentation required to make most effective use

-Sam La and dstribuion puping sationsof treatment plant components and chemicals. Essen-Sas Lae and distribution pub ping stations b tial instruments and controls would be restricted tothroughout system toll enter through direct simple mechanical or electrical types.

line telephone connections to those stations - Existing Sam Sen and Thonburi treatment plants may notbe directly connected to new treated water transmis-- new water treatment plant would be operated as sion system and will be operated fairly independently

balance between distribution centers and raw to serve needs in their distribution areas.water transmission

III. Transmission Conduits - 5 contracts for construction of 31.7 km of tunnel - Depth 17 to 22 meters below ground in stiff to hardof equivalent diameters from 2.0 m to 3.4 m, with clays. At this depth, interference avoided withauxiliary structures such as shafts, isolating almost all existing or possible future undergroundvalves and provisions for bulkheads, as follows: structures including utilities, possible mass transit

Diameter length facilities and pile foundations.2.0 m b.km - Borings being made entire length as basis for final2.2 m 4.50 km depth and aligraent design decisions.2.5 a 2.90 km

2.8 a. 7.30 km- Alternate sections designed for competitive bidding:3.0 m 1.77 km circular for boring machines and equivalent egg3.4 m 8.50 km shaped for hand mining.

- Ultimate system constructed over 25 year period with !i9 spurs, of 2.0 to 4.6 m equivalent diameter tunnelswith total length about 85 km.

- Hydraulic grade would be about 30 m above ground attransmission pump station.

Project Element Description Remarks

Ut. Transuission Oonduits (continued) - Capacity to meet msxcimus daily demand in eachservice district.

- Sconomic size and location to give least totaleapital and operating costs using 8% discount rate.

n Ground leavl Reservoirs and Distribution Pumping - 4 distribution centers connected to transission - Systex by year 2000 would include 12 distribu-Stations (Distribution Centers) tunnels and discharging to the distribution system tion centers, each about equivalent to the 4- A surge tower, twin ground level reservoirs and a that would be constructed under the project.pumping station would be constructed at each center - Project would be conatructed in two phases ofas follows: two units each.

Site Reservoirs PLmping Units(sax. ater (50 head andsurface elev. capacity in 000 s

3)

at 4o a)

Tha Phra 2 units at 1 diesel at 17020,000 m3 3 variable speed at 170

1 variable speed at 120

Phahon Yothin 1 diesel at 1702 variable speed at 1702 variable speed at 100

Lqmpini Park 1 diesel at 1504 variable speed at 150

Klong Toey 2 units at 1 diesel at 14015,000 a3 2 variable speed at 140

2 variable speed at 100

April 11, 1973

ANNEX5

THAILAND

BANGKOK WATER SUPPLY PROJECT

Cost Estimates for Part A

Local Foreign Local ForeignCurrency Exchange Total Currency Exchange Total---- Million Baht--- -- ---- Million USS------ -

Raw Water 54 25 79 2.6 1.2 3.8

Water Treatment Plant Phase I 282 280 562 13.5 13.5 27.0Water Treatment Plant Phase II 72 73 15 3-5 3.5 7.0

354 353 707 17.0 17.0 34.0

Tunnels Phase I 403 196 599 19.4 9.4 28.8Tunnels Phase II 111 54 165 5j3 2.6 7.9

514 250 764 24.7 12.0 36.7

Pump Stations & Reservoirs Phase I 83 89 172 4.0 4.3 8.3Pump Stations & Reservoirs Phase II n 100 199 4.8 4.8 9.6

182 189 371 8.8 9.1 17.9

Sam Sen Reservoirs 37 9 46 1.8 0.4 2.2

General Use Equipment 18 27 45 0.9 1.3 2.2

Land 157 - 157 7.5 -7.5

Sub-Total 1,316 853 2,169 63.3 41.0 104.3

Contingencies:Physical 108 73 181 5.2 3.5 8.7Price 99 72 171 4.7 3.5 8.2

Sub-Total 1,523 998 2,521 73.2 48.0 121.2

Engineering Consulting:Design Tunnels 8 10 18 0.4 0.4 0.8Design Others 41 34 75 2.0 1.6 3.6Supervision & Advisory Services 152 124 276 7.3 6.0 13.3

MWWA Engineering 61 - 61 2.9 - 2.9

Management Consultants 22 23 45 1.1 1.1 2.2

TOTAL 1,807 1,189 2,996 86.9 57.1 L4_4=0

June 6, 1973

THAILAND

BANGKOK WATER SUPPLY PRHJECT

Construction Schedule

CALENDAR YEAR 1973 19 7 4 1975 1976 1977 1978

JA S O N D J F M A M J J A S O N D J F MA M J J A S O ND JFMAMJJ A S N D JF M A M J J A S O N DJ F M A M J J A S O N D

PROJELCT MONTH 123 41 25 6171 1 . 7*PFISCAL YEAR 1973 |71974 1975 j 1976 1977 1978

Supply System - Samlae Pumps A I T E

- Samlae Substation A T E _

- Ssalae General A PQ T LEGEND- Klong PrapL -GE

- Rangsit Siphon 1 A -Advertise

Bang Kh~en WTP -Pumps A NP- Pre qualify,B Clarifiers A | T T - Tender

- Subs .ation , A B T _- - I - E - Evaluation- Genesl (1 ) A P T _ E C - Construction

I ~~~~~~~~~~~~~~~~~~~~~~S - Shop DrawingTunnels Section 1 APQ T S C F- Fabricate

2 A !PQ T ______ _____ _I -InstallX ~~~3 A 1 IPQ 1 T_ E_ __

i 4 ~~~~~~~~A1IPQ I T F E ___ _____4

Pump Stations (2) _ PUPS A I T .

- Substations A T - General \____ PQ I_T___E_ _C _ __

Samsen Reservoirs PQ T E E_

Bang Khen WT? - Pumps T F I- Clarifiers (3)- General (4) A PQ T

w Tunnel Section 5 A _PQ _T _ E _ C _

Pump Stations (5) - pumps A I- Substations IA _ _T _ -- General A PQ 1T ' E _

NOTES:

(1) 4 Clarifiers, 10 filters, half reservoir(2) Phahon Yothin and Tha Phra(3) Phase One supplier - option(4) 2 clarifiers, 6 filters, half reservoir,

distribution pump station(5) Lumpini Park and Klong Toey

April 6, 1973

THAILAND

BANGKOK WATER SUPPLY PROJECT

Annual Project Expenditures

Local Currency Costs Foreign Exchange CostsPrior to cyTotal Prior to Total Total

Year Ending September 30, 1973 1973 1974 1975 1976 1977 1978 1979 Local 1973 1973 1974 1975 1976 1977 1978 1979 Foreign Costs-____________________________million Baht------------------------------ ------------------------------- million Baht_----_____________________

PART A

Raw Water Fscilities - - - 24 26 4 - - 54 - - - 9 14 2 - _ 25 79Bang Then Water Treatment

Plant - - 13 84 132 88 33 4 354 - - 10 83 145 76 35 4 353 707Transmission Tknnels - - - 159 206 110 33 6 514 _ - - 78 100 53 16 3 250 764Distribution Reservoirs and

Pumping Stations - - . 29 58 54 36 5 182 - - - 29 63 51 41 5 189 371Sam Sen Reservoirs - - - 13 17 7 - - 37 - - - 3 4 2 - _ 9 46General Use Equipment - 4 8 2 2 2 - - 18 - 6 12 3 3 3 - - 27 45Land - 132 25 - - - - _ 157 - - - - - - 0 157

Contingencies:

Pbysical - - 1 29 41 26 6 5 108 - - 1 18 28 17 5 4 73 181Price - - 1 20 31 29 13 5 99 - - 1 12 22 21 12 4 72 171

Engineering:

Detailed Design- Tunnels - 8 - -. - - - - 8 - 10 - - - - - - 10 18- Other Works 41 - - - - - _ _ 41 34 - - - - - - - 34 75

Construction Supervision andAdvisory Services L - 8 40 50 49 42 24 _ 213 - 9 23 26 35 20 11 - 124 337

Management Consulting - 7 8 7 - - - _ 22 - 9 13 1 - - - _ 23 45

TOTAL PART A 41 159 96 417 562 362 145 25 1,807 34 34 60 262 414 245 120 20 1,189 2,996

PART B

Trunk Mains - - 55 75 81 131 33 - 375 - - 24 29 26 65 - - 144 519Distribution Mains - - 44 58 74 150 37 - 363 - - 13 18 19 53 - - 103 466Metering Program - - 27 10 4 - - - 41 - - 32 12 - - - - 44 85Tubewels - - 10 4 2 1 - - 17 - - 17 7 3 4 - - 31 48Contingencies:

Pbysical - - 14 15 16 28 7 - 80 - - 8 7 5 12 - - 32 112Price - - 4 U 20 50 16 - 101 - - 4 5 6 21 - - 36 137

Engineering - 3 8 8 7 8 2 - 36 - 2 4 3 4 4 1 - 18 54

TOTAL PART B - 3 162 181 204 368 95 - 1.013 - 2 102 81 63 159 1 - 408 1,421

TOTAL PROJECT 41 162 258 598 766 730 240 25 2,820 34 36 162 343 477 404 121 20 1,597 4,417

/ Includes 0 61 million in local currency for MWWA engineering costs during period 1973-1978.

June 6, 1973

ANNEX 8

THAILAND

BANGKOK WATER SUPPLY PROJECT

Estimated Schedule of Disbursements from Bank Loan

Cumulative Disbursement % ofat end of Quarter Total

IBRD Fiscal Year and Quarter (US$ 000)

19742nd quarter ending December 31, 1973 820 1.53rd quarter ending March 31, 1974 2,053 3.74th quarter ending June 30, 1974 3,286 6.0

1975ist quarter ending September 30, 1974 4,519 8.22nd quarter ending December 31, 1974 7,668 13.93rd quarter ending March 31, 1975 10,817 19.74th quarter ending Juw - 30, 1975 13,966 25.4

1976i1st quarter ending September 30, 1975 17,115 31.12nd quarter ending December 31, 1975 22,091 40.23rd quarter ending March 31, 1976 27,067 49.24th quarter ending June 30, 1976 32,043 58.3

19771st quarter ending September 30, 1976 37,019 67.32nd quarter ending December 31, 1976 39,964 72.73rd quarter ending March 31, 1977 42,909 78.04th quarter ending June 30, 1977 45,854 83.4

1978Ist quarter ending September 30, 1977 48,798 88.72nd quarter ending December 31, 1977 50,240 91.33rd quarter ending March 31, 1978 51,682 94.04th quarter ending June 30, 1978 53,124 96.6

19791st quarter ending September 30, 1978 54,567 99.22nd quarter ending December 31, 1978 54,712 99.53rd quarter ending March 21, 1979 54,856 99.74th quarter ending June 30, 1979 55,000 100.0

Assumption: That loan becomes effective by October 1, 1973.

June 8, 1973

THAIIJLND

BANGKOK WATER SUPPLY PROJECT

Estimated Past and Future Water Production for Project Design

Population of Area Average Daily Water Production in Central Service Area Public System

Served by Central MWWA Central System A/ Private Total

Water System Service / Surface Ground (Ground Public & of which

Year Totaly Served Connections Water Water Total Water) Private ground water

----- thousands---- -thousands- ------------- t--------thousands mi/day---------------------------

1949 910 181 23.5 67 - 67 - 67 -

1950 980 206 26.0 74 - 74 - 74 -

1951 1,035 234 28.8 74 - 74 - 74 -

1952 1,100 271 33.1 93 - 93 - 93 -

1953 1,176 336 39.1 105 - 105 - 105 -

1954 1,259 385 45.7 146 8 154 - 154 8 5

1955 1,344 426 55.1 148 15 163 - 163 15 9

1956 1,419 472 63.0 159 34 193 - 193 34 18

1957 1,492 524 70.7 157 33 190 - 190 33 17

1958 1,572 633 83.6 159 64 223 - 223 64 29

1959 1,657 851 114.8 170 153 323 - 323 153 47

1960 1,743 963 125.6 171 109 280 - 280 109 39

1961 1,868 1,018 134.2 169 177 346 2 348 179 51

1962 2,002 1,136 144.3 194 174 368 8 376 182 48

1963 2,144 1,243 154.4 240 183 423 21 444 204 46

1964 2,297 1,321 167.2 387 187 574 42 616 229 37

1965 2,464 1,385 180.2 566 71 637 62 699 133 19

1966 2,573 1,493 195.4 573 153 726 85 811 238 29

1967 2,683 1,603 206.0 586 234 820 120 940 354 38

1968 2,780 1,720 222.2 580 308 888 170 1,058 478 45

1969 2,949 1,846 241.9 534 398 932 200 1,132 598 53

1970 - 1,965 258.0 630 353 983 240 1,223 593 48

1971 - 2,094 266.9 641 354 995 260 1,255 614 49

1972 - 2,228 288.0 742 318 1,060 280 1,340 598 45

1973 - 2,372 3o6.0 823 402 1,225 300 1,525 702 46

1974 - 2,526 324.0 851 366 1,217 315 1,532 681 44

1975 3,891 2,687 342.0 930 260 1,190 330 1520 590 39

1980 - 3,514 441.o 1,423 150 1,573 350 1,923 500 26

1985 6,o79 4,591 573.0 2,010 75 2,085 400 2,485 475 19

1990 _ 5,645 691.0 2,625 - 2,625 s50 3,075 450 15

1995 - 6,940 841.0 3,395 3,395 425 3,820 425 1 I

2000 9,920 8,512 1,039.0 4,336 - 4,336 400 4,736 400 8

Note: All data taken from Table 5.8, Volume IT, of Master Plan Technical Report dated February 1970 except as noted.

1/ Total population estimates increased 1969 onward to include population in areas served by central system outside municipal

boundaries. These data taken from Master Plan Tables 4.13-4.16,

j Service connections at end of fiscal year (December 31 through 1960 and September 30 thereafter). Data for 1969 through

1971 are reported actuals as given on pages 26 and 27 of Project Summary Report (Draft), June 1972, by Booz Allen & Dextiton

International, 5Inc.

3/ Productio(i if wr'a eater and ground water for public system in 1970, 1971 and 1972 revised to reflect actuals as reported

by MWWA.

4.0

THAILAND - BANGKOK WATER SUPPLY PROJECT

WATER REQUIREMENTS & PRODUCTION CAPACITY

3.5

AVERAGE DAILY DEMAND

INCREASE FROM 1975 AT R C -3.0 12 %/YEAR (RATE 1960-19721973* ._

U,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4z -0

2.5__

RELIABLE CAPACITY SYSTEM WITH PROJECT

YEAR~~~~~~~~~~~~~~~~~~~~~~~~~~.-

0

z<

0.00

1.50XSIGSYTM17

MINIMUM ESTIMATE AVERAGE ~DAILY DEMAND

ACTUAL PRODUCTION AVERAGE DAY

0.5

O0

01965 1970 1975 1980 1985 1990

YEARWorld Bank- 7404

THAILAND

BANGKOK WATER SUPPLY PROJECT

Water Requirements and Production Capacity

Average Daily Production & Requirements Maximum Daily RequirementsMaster Production 12%/Yr. 1.15 times 1.25 times 1.15 timesPlan Used for Increase Minimum Master Master Min.Estimate Reliable Production Capacity

Estimated Demand Financial from Demand Plan Plan of Existing ProjectYear Actual Estimate Forecasts 19 7 5LA EstimateL.2 Avg. Day Avg. Day Avg. Day Facilities Facilities Total

--- -------------------------------------------------- m3/day (000)---_____________________________________-_____-___________

1965 637 _- - -_ _ 883 - 8831966 726 _- - -_1967 820 - - - - -1968 888 - - - - _ - 908 - 9081969 932 - - _ _ _ _ 998 - 9981970 983 1,032 - _ 1,036 1,190 1,290 1,190 983 - 983

1971 995 1,102 995 - 1,097 1,270 1,377 1,260 990 - 9901972 1,058 1,16o 1,058 _ 1,133 1,335 i450 1,305 1,153 - 1,1531973 1 16225 10160/3 - 1,175 1,410 1,530 1,350 1,183 - 1,1831974 - 1,217 1,160o- - 1,148 1,400 1,520 1,320 1,183 - 1,1831975 - 1,190 1,160 '3- 1,190 1,102 1,370 1,490 1,270 1,183 - 1,183

i976 - 1,241 1,160o/ 1,330 1,118 1,430 1,550 1,285 1,183 - 1,1831977 - 1,310 1,326 1,490 1,137 1,510 1,640 1,310 1,123/4 800/4 1,9231978 - 1,388 1,403 1,670 1,182 1,600 1,735 1,360 1,073/4 1,200 2,273L41979 - 1,475 - 1,488 1,870 1,262 1,700 1,845 1,450 1,023 1,200 2,2231980 - 1,573 1,573 2,095 1,350 1,810 1,970 1,550 973 1,200 2,173

1981 - 1,658- 1,663 - - 1,910 2,075 - 958 1,200 2,1581982 - 1,752 1,759 - 1,504 2,010 2,190 1,730 943 1,200 2,1431983 - 1,851 - _ _ 2,130 2,315 - 928 1,200 2,1281984 - 1,961 - - - 2,260 2,450 - 913 1,200 2,1131985 - 2,085 - 3,695 1,767 2,400 2,610 2,030 898 1,200 2,098

1990 - 2,625 - 6,515 2,233 3,020 3,280 2,570 823 1,200 2,023

/A Average annual increase 1960-1972, starting with Master Plan estimate for 1975.

2 Assumes population served 65% 1970 through 1975, increasing to 70% in 1980, 75% in1985 and 80% in 1990. Domestic use per capita served reduced from 290 led in 1970to 150 lcd in 1978 and thereafter.

3 Production 1973-1975 limited by c4pacity existing facilities.

/4 Beginning March 1978.

April 4, 1973

ANNEX 1 1Page 1

THAILAND

BANGKOK WATER SUPPLY PROJECT

Internal Rates of Return

The Project

1. The project would increase water production and transmissioncapacity, extend the distribution system to serve more people over a widerarea and generally improve the reliability and quality of water supplyoperations in metropolitan Bangkok. It is also expected to increase theefficiency of use of the water service provided. As it has been decidedthat these services are of high social priority and must be provided, theprimary justification for this project is that it is the least cost solution(para 4.09).

2. This annex therefore does not calculate economic or financialrates of return 1/ to justify the project. Rather, these rates of returnare examined to indicate the adequacy of the tariff structure from thepoint of view of the financial viability of the MWWA and to estimate therate of return on the investment to society.

Financial Rate of Return

3. Details of the physical characteristics and financing plans forthe project are available in Sections III and IV of the report and inAnnex 4. In connection with the calculation of the financial rates ofreturn, the following assumptions are made:

(a) The rates of return are calculated for the entireproject including the investment in additionaldistribution works required in 1979-81 to fullyutilize the project. Although the project issubdivided into separate parts because of theproposed parallel lending arrangements, it isconsidered here as a single operation.

1/ The term "rate of return" used in this Annex refers to the internalrate of return, defined as the discount rate which will equate thecosts and benefits attributable to the project, thus yielding a zeronet present value.

ANNEX 11Page 2

(b) Costs and benefits relating to existing facilitiesand to subsequent time slices of MWWA's long-termprogram have been ignored in calculating the incre-mental return on the project.

(c) Capital costs include allowances for physical but notfor price contingencies.

(d) All values are expressed in constant 1973 prices(including the effects of recent currency realign-ments). While there is no allowance for priceinflation per se, the average revenue per cubicmeter of water does rise, as can be seen inAnnex 13, because of an expected increase in thepercentage of users falling within the tariffcategories with higher charges per cubic meter(Annex 20).

(e) The incremental financial internal rate of returnis somewhat overstated because, in a partial attemptto obtain an estimated economic rate of return, taxesand duties amounting to an estimated Baht 420 million(10% of nr capital costs) have been deducted from thecapital costs.

(f) The incremental operating costs attributable to theproject are assumed to remain constant after 1982,the year in which the project is expected to befully utilized.

(g) The useful life of the principal project elements isassumed to be 40 years.

4. Based on these assumptions, two sets of financial rates ofreturn have been derived for the project. The higher set assumes that,without the project, the steps necessary to reduce the nonrevenue (unac-counted-for water) would not be taken; the lower set assumes that they wouldbe taken.

5. Based on the first assumption, the project is expected to yieldan incremental financial internal rate of return of about 12.6%; the secondassumption reduces this rate to 8.4%. Sensitivity analysis has been appliedto these financial rates of return with the following results:

ANNEX 1 1Page 3

Rate of Return (%)Including Full

Benefits ofImproved Metering

Ass umptions Minimum and Billing

Expected Value 8.4 12.6Project Costs:Increase by 10% 7.6 11.4Increase by 20% 6.9 10.4Decrease by 10% 9.3 13.9Decrease by 20% 10.4 15.6

Operating Costs:Increase by 10% 8.2 12.4Increase by 20% 7.9 12.1

Operating Revenues:Decrease by 10%compared to estimates 7.3 11.1

Decrease by 20%compared to estimates 6.1 9.5

Operating Costs increase by 10%and operating revenues de-crease by 10% 7.0 10.8

Economic Rate of Return

6. It was not possible to develop a meaningful measure of economicbenefits for the purpose of estimating the economic rate of return on theproject. However, an examination of the adjustments which would be requiredto move from a financial to an economic analysis, as outlined below, indi-cates that the economic rate of return would exceed the financial rate ofreturn, probably by a substantial margin.

7. The move to an economic analysis can be broken down into twoparts: a re-evaluation of the costs and a re-evaluation of the benefits.

8. Costs: The major distortion in the capital costs -- duties andtaxes to be paid on capital equipment -- has already been removed (seepara 3(e) above). No adjustment in the present market foreign exchange rateappears warranted to make it reflect more accurately its social opportunitycost. Similarly, actual wage costs seem to measure fairly well the socialcost of labor in the project. Some land which the project will occupy ismunicipally owned and will be given to MWWA at no cost. From a social pointof view this land has a value; however, an imputed value on that part ofthe land which will be used in this time slice of the program has alreadybeen included in calculating the financial rate of return, so no furtheradjustment would be required.

9. For recurrent costs, the financial cost of labor probably reflectsits social value. However, the cost of operating inputs, to the extent theyare procured domestically at a higher cost than the c.i.f. price or include

ANNEX I 1Page 4

import taxes and duties, are probably overstated from a social point of viewin the financial analysis.

10. Thus, as far as the cost side is concerned, it is probablyreasonable to expect the economic rate of return to be slightly higher thanthe financial because such market price distortions of costs that areworth noting are upwards.

11. Benefits: The social benefit of the additional water produced bythe project is probably understated in the financial analysis in two ways.First, the value of the water per se to the customers is almost certainlyunderstated. With a product such as water for which there is a highlyinelastic demand, the consumer's willingness to pay is generally far greaterthan the price, both overall and at the margin. Thus, when actual revenuesare used to measure the value of the additional water provided, substantialamounts of socially valuable consumer surplus are ignored. This consumersurplus becomes particularly significant with a project such as this whichmakes water available to those who have not had access to it before due tophysical rationing (insufficient distribution mains, etc.). Second, thereare a number of social benefits listed below which are more or less externalto the priv.Lte use of water. Some of these are partially internalized inthe price of water and some are overlapping and their inclusion wouldconstitute double cc nting, but not all.

(a) the advantages to customers in terms of efficiencyof having a convenient dependable source of goodquality water;

(b) reduction of wasteful use by some customers byappropriate metering and pricing so that otherswould benefit;

(c) cost savings to individual consumers by reductionof use of bottled or boiled water;

(d) cost savings on installation, operation and maintenanceof pumps and storage tanks now commonly used by cus-tomers to get water from the MWWA system;

(e) health benefits to the population served and to thecommunity as a whole - reduction in time losses, humaninefficiency and medical costs due to illness attribu-table to lack of ample amounts of safe water fordrinking, cooking and sanitation;

(f) reduced losses from fire due to adequate water suppliesfor fire fighting;

ANNEX 11Page 5

(g) availability of adequate reliable supplies of goodquality water to commercial and industrial establish-ments now hampered by deterioration of groundwatersources; and

(h) a general reduction in overpumping of groundwater inthe MWWA service area, making this resource availablefor use where I4WWA service is not available.

12. It would be very difficult to measure the real value of thesebenefits with the data available in Bangkok. The consultants have attemptedto quantify some of them, and the results for health (including savings inpurchase of bottled water) and for fire protection are shown in Annex 12.The estimate of Baht 80 million for annual benefits from improved fireprotection appear realistic.

13. A proper economic evaluation would also consider the negativeexternalities. For example, the project will undoubtedly aggravate thesewage and waste disposal problems in the area which has no sewerage systemat present.

14. Despite potential negative externalities, there appears to beno doubt that the underestimations of the consumer willingness to pay andof the positive externalities are far greater, and that, from the benefitside of the analysis, the net value of the project would be substantiallylarger when measured in social instead of market prices.

15. Thus, since the net value would be increased in an economicanalysis on both the benefit and the cost sides of the ledger, the incre-mental internal economic rate of return would certainly be significantlyhigher than the estimated financial rate of return.

June 8, 1973

ANNEX 12Page 1

THAILAND

BANGKOK WATER SUPPLY PROJECT

Consultants' Estimates of Indirect Benefits 1/

Savings Related to Public Health. Three categories of public healthbenefits have been selected for cost evaluation:

- Time lost from work as a result of water-borne illnesses

Assumption: 15% of the present (1969) served populationof 1,850,000 will lose two days from work eachyear at a wage of Baht 50 per day per worker.

Annual Cost: Baht 28,000,000

- Purchase of medicines to combat water-borne illnesses

,ssumption: 30% of the present served population of 1,850,000will require medicine at a cost of Baht 40 peryear per person.

Annual Cost: Baht 22,000,000

- Provision of an alternate source of potable water.

The major bottled water company in Bangkok producesabout 750,000 liters per day. Most of it is consumedlocally. The cost varies from about Baht 1.00 perliter for a sin «e bottle to about Baht 0.25 per literfor multiples of 20 liter bottles.

Assumption: 500,000 liters per day of bottled water is utilizedby the served population because of lack of confidencein the public supply. A price or Baht 0.25 per literrepresents the minimum charge.

Annual Cost: Baht 45,000,000

The estimated cost is Baht 95,000,000 per year for these three items. It isassumed that an amount in this order could be saved through improvementsto public health if a completely adequate water supply were available.

1/ Master Plan for Water Supply and Distribution, February 1970, Volume I,pages 21 - 23.

ANNEX 12Page 2

Savings Related to Fire Protection. In recent years, annual fire losseshave been about Baht 200,000,000. Discussions with fire officials indicatethat these losses could be reduced by 30 to 50 percent if adequate quantitiesof water for fighting fires were available from the public supply system.

Assumption: Present annual fire losses of Baht 200,000,000can be reduced by 40 percent with the provisionof an adequate water system.

Annual Saving: Baht 80,000,000.

April 11, 1973

THAILAIN

BANGKOK WATER SUPPLY PROJECT

Incremental Financial Rate of Return

Benefits CostsYear Average Incremental Incremcrtal

Ending Incremental Rate Water Revenue Incremental Total Capital Incremental Total NetSeptember 30 Water Sales/L m

32 Gross Bad Debts Net Other RerenueL3 Benefits Costs L Recurring Costs 4 Costs Benefits

m- million Baht- ---------- --------------------------------Baht million-----------------------------------------------

1973 0 1.30 0 0 0 0 0 206 18 224 (224)

1974 22 1.44 32 1 31 3 34 370 21 391 (357)

1975 24 1.50 36 1 35 5 40 805 27 832 (792)

1976 26 1.56 41 2 39 6 45 1,061 33 1,094 (1,049)

1977 77 1.59 122 5 117 8 125 906 48 954 (829)

1978 115 1.62 186 7 179 11 190 281 60 341 (151)

1979 161 1.65 265 11 254 14 268 161 71 232 36

1980 197 2.05 404 16 388 20 408 135 80 215 193

1981 226 2.05 463 19 444 22 466 135 87 222 244

1982 andthereafter to2013 257 2.05 526 21 505 24 529 0 95 95 434

RATE oF RETURN 8.4%

A Increased volume from 1972, excluding increased sales due to reduction in unaccounted-for water from existing water supplysources. During period 1973-1976 the incremental sales would be due entirely to new tubewells.

/2 Average revenue per m3

for water sold at present prices through 1979 and with about 25% price increase starting 1980 (see Annex 16).

/3 Mostly meter rental charges and connection fees.

A Include cost of installing new connections and meters.

/A Including continuation of investments 1979-81 for distribution mains required to realize project benefits.

June 5, 1973

THAI LANDBANGKOK WATER SUPPLY PROJECT

METROPOLITAN WATER WORKS AUTHORITY

ORGANIZATION CHART 1972

BOARD OF DIRECTORS

|INTERNAL AUDIO LEA ADVISO

11111111111 GENERAL MANAGER

|MANAGEMET_ PUBLIC RELATIONS

E ANALYST OFFCE

DEPUTY GENERAL MANAGER FOR DEPUTY GENERAL MANAGER FOR DEPUTY GENERAL MANAGER

ADMINISTRATION & SERVICES ENGINEERING & OPERATIONS FOR FINANCE

WATER OPERATIONSBUGTADRESYADMINISTRATIVE DEPT. SERVICE DEPARTMENT DEPARTMENT ENGINEERING DEPT. REVENUE DEPARTMENT ACCOUNTING DEPT.

DIVISIONS OF: DIVISIONS OF: DIVISIONS OF: DIVISIONS OF: REGIONAL REVENUE DIVISION OF:

GENERAL SERVICES REGION No. 1 WATER PRODUCTION SURVEY AND DESIGN DIVISIONS: BUDGET

METER READING TREASURY

REGION No. 2 MANTENANCE CONTRUCTION SECTIONS MANAGEMENT

AND REPAIR SUPERVISION BILL COLLECTION

REGION No. 3 ~~~~~~~~~~~~~~~~SECTIONS ACCOUNTING

PERSONNEL AND REGION No. 3 WATER DISTRIBUTION RESEARCH AND INSPECTION SECTIONS

TRAINING REGION No. 4 DEVELOPMENT CASHIER'S SECTIONSCONTROL AND

PURCHASING ~~~~~~~~~~~~~~~~PROJET PLNfGESTIMATING SECTIONSMETER TESTING AND CONTROL

LAW AND REPAIR ADMINISTRATION

WATER QUALITY SECTIONSLABORATORY H

World Bank - 7406(R)

ANNEX 15

THAILAND

BANGKOK WATER SUPPLY PROJECT

Metropolitan Water Works Authority (MWWA)

Summarized Proforma Income Statements for the Years 1968-1972

1968 1969 1970 1971 1972---------- Million Baht -----------…

Revenue

Water Sales 61 65 69 72 89Other Revenue 23 24 31 29 39

Total 84 89 100 101 128

Operating Expenses

Salaries and Wages 30 33 42 48 55Power and Fuel 23 34 38 32 33Chemicals 22 14 16 17 17Materials 20 19 19 18 32Other Expenses 10 7 12 11 7

Total 105 107 127 126 144

Operating Loss (beforedepreciation) 21 18 27 25 16

Depreciation 45 47 51 54 46

Total Operating Loss 66 65 78 79 62

April 11, 1973

THAILAND

BANGKOK WATER SUPPLY PROJECT

Metropolitan Water Works Authority, Bangkok

Estimated Income Statements

Year ending September 30, 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

Estimated .Annual Water Production million m3

363 385 423 423 423 423 484 512 543 574 607 642Estimated Water Sales million m

3133 154 182 212 233 254 315 358 407 431 455 482

% water unaccounted for 63 60 57 50 45 40 35 30 25 25 25 25Average Baht/m

30.54 0.58 1.30 1.44 1.50 1.56 1.59 1.62 1.65 2.05 2.05 2.05

------------------------------------------------Million Baht----------------------------REVENUE

Water Billings 72 89 237 305 350 396 501 580 672 884 933 988Less Bad Debts - - ( 9) (12) (14) (16) (20) (23) (27) (35) (37) (40)

72 89 228 293 336 380 481 557 645 849 896 948

Meter Rent 2 2 2 3 3 3 3 3 3 4 4 4Connection Fees 27 36 36 37 39 39 41 44 46 50 52 54Miscellaneous - 1 2 3 3 4 4 4 5 6 6 6

Total Revenue 101 128 268 336 381 426 529 608 699 909 958 1,012

OPERATING COSTS

Salaries & Wages 48 55 69 83 92 95 99 102 100 104 108 112Power & Fuel 32 33 37 38 39 41 48 52 57 62 68 74Chemicals 17 17 19 20 20 21 25 27 29 32 35 38Materials 18 32 35 37 39 46 55 62 68 71 74 76Other Expenses 11 7 9 10 11 11 12 12 13 13 14 15Less Project Engineering & Supervision Capitalized - (11) (13) (13) (13) (11) (2) (2) (2) (2)

Total 126 144 169 177 188 201 226 244 265 280 297 313

Surplus (deficit) before Depreciation and Interests (25) (16) 99 159 193 225 303 364 434 629 661 699

Depreciation 54 46 44 48 53 88 125 150 17C 175 178 183

Total Operating Costs (including depreciation) 180 190 213 225 241 289 351 394 435 455 475 496

Operating Income (deficit) (79) (62) 55 111 140 137 178 214 264 .54 483 516

Interest - - - 4 10 10 10 10 122 L98 180 173

Net Surglus (deficit) (79) (62) 55 107 130 127 168 204 142 266 303 343

Operating Ratio before Depreciation < 125 113 63 53 49 47 43 40 30 31 31 31Operating Ratio after Depreciation < 178 148 79 67 63 68 66 65 62 50 -^ 49

Average Rate Base - - 1,255 1,365 1,548 2,868 4,249 5,098 5,058 7,7 5,'1 5,741

Rate of Return on Average Net Value of Fixed Assetsin Operation % - - 4.4 8.1- 9.0 L.8 4 4.2 - 0

0-n

THAILA1D

BANGKOK WATER SUPPLY PROJECT

Metropolitan Water Works Authority, Bangkok

Estimated Sources & Application of Funds

TotalProjectPeriod

Year ending September 30, 1973 1974 1975 1976 1977 1978 1979 1973-79 1980 l981 1932

SOURCES OF FUNDS -------------------------------------------------Million Baht____________________t____--

Income before Depreciation end Interest (16) 99 159 193 225 303 364 434 1.777 629 661 699Changes in Current Items Excluding Cash (1) (35) 6 (10) ( ) 15 (13) (18) ( 63) (38) (10) (12)

Net Cash Generation from Operations (34) 64 165 183 217 318 351 416 1,714 591 651 687

Government Contributions 53 83 20 - - - - - 103 - - -

Custower Contributions - - 6 7 7 8 8 9 45 9 10 10

Proceeds from Loans:IBRD - - 94 262 414 245 120 9 1,144 - _ -

ADB - 2 102 81 63 159 1 - 408 - -

Government - previous loans 81 128 50 - - - - - 178 -Government - loans for project - 50 50 460 630 520 40 - 1,750

Total 81 180 296 803 1,107 924 161 9 3,480

Deferred Interest 2 6 13 23 45 64 69 220

TOTAL SOURCES OF FUNDS 102 333 500 1,016 1,376 1,314 589 434 5,562 600 661 697

APPLICATION OF FUNDS

Net Assets:

Project costs -

Part A - financed by IBD15 42 193 156 679 976 607 265 45 2 ,921Part B - financed by ADB - 5 264 262 267 527 96 - 1,421

Other Assets 76 114 21 21 21 17 17 120 331 200 200 200

Total 118 312 441 962 1,264 1,151 378 165 4,673 200 200 200

Debt Service:

Interest capitalized:IBRD Loan - - 12 23 45 67 79 62 288 - - -ADB Loan - - 7 13 18 25 31 8 102Government Loans 2 6 9 13 35 58 69 - 190 - -

Interest Charged to Revenue:

IBRD Loan - - - - - - - 21 21 82 'o 78ADB Loaw -- - - - - 23 23 31 30 29Government Loans - - 4 10 10 10 10 78 122 75 70 66

Amortization:

IBRD Loan - - - - - - - - - 27 29 31ADB Loan - - - - - 9 10 1UGovernment Loans - - - - - 5 13 101 119 101 101 101

Deferred Interest on Government Loan - - - _ 1 2 11 14 11 11 U1

Total Debt Service 2 6 32 59 108 166 204 304 879 336 331 327

TOTAL APFLICATION OF FLNDS 120 318 473 1,021 1,372 1,317 582 469 5,552 536 531 527

Cash Surplus (deficit) (18) 15 27 (5) 4 ( 3) 7 (35) 10 64 130 170Cash Balance end of Year 12 27 54 49 53 50 57 22 22 86 216 3862

Debt Service Coverage (times) - 10.7 5.2 3.1 2.0 1.9 1.7 1.4 - 1.8 2.0 2.1

/1 Expenditure of 33 was incurred on this project before 1972.2 The acconulated cash vill be required to meet, in part, the next stage of expansion of facilities around this tine.

Jane 1, 1973

THUALAND

BANGKOK WATER SUPPLY PROJECT

Metropolitan Water Works Authority, Bangkok

Estimated Balance Sheets

Year ending September 30, 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

------------------------------------------------------- Million Baht---------------__-----------_______- ____-__-______

ASSETS

Fixed Assets

Gross Fixed Assets in Operation 1,484 1,641 1,849 1,953 2,315 4,734 5,291 6,707 6,931 7,031 7,231 7,431Less Accumulated DepreciLtton 422 468 512 560 613 701 826 76 1,146 1.321 1,499 1,682

Net Fixed Assets in Operation 1,062 1,173 1,337 1,393 1,702 4,033 4,465 5,731 5,785 5,710 5,732 5,749

Works in Progress 174 137 247 612 1,261 204 948 89 100 200 200 200

Total 1,236 1,310 1,584 2,005 2,963 4,237 5,413 5,820 5,885 5,910 5,932 5,949

Current Assets

Investments 60 69 81 93 106 120 134 149 163 178 193 209Inventories 67 67 64 61 58 55 55 55 58 62 65 68Accounts Receivable 23 4o 76 73 84 95 80 93 108 142 149 158Cash 30 12 27 54 49 53 50 57 22 86 216 386

Total 180 188 248 281 297 323 319 354 351 468 623 821

TOTAL ASSETS 1,416 1,498 1,832 2,286 3,260 4,560 5,732 6,174 6,236 6,378 6,555 6,770

EQUITY AND LL4BILITIES

Equity A 1,342 1,333 1,471 1,604 1,741 1,875 2,051 2,263 2,414 2,689 3,002 3,355

Long Term Debt

IBRD Loan - - - 94 356 770 1,015 1,135 1,144 1,117 1,088 1,057ADB Loan - - 2 104 185 248 407 408 408 399 389 378Government Loan - 81 259 359 819 1,449 1,964 1,991 1,890 1,789 1,688 1,587Deferred Interest - 2 8 21 44 89 152 219 208 197 186 175

Total - 83 269 578 1,404 2,556 3,538 3,753 3,650 3,502 3,351 3,197

Less Current Maturities - - - - 6 15 112 148 151 154 157

Net Long Term Debt - 83 269 578 1,404 2,550 3,523 3,641 3,502 3,351 3,197 3,o40

Current Liabilities

Accounts Payable 24 24 22 22 20 20 20 20 20 20 20 20Customers' Deposits 38 40 43 46 50 54 58 62 66 71 76 81

Employees Provident FPunds 12 18 27 36 45 55 65 76 86 96 106 117Current Maturities - - _ _ 6 15 112 148 151 154 157

Total 74 82 92 104 115 135 158 270 320 338 356 375

TOTAL EQUITY AND LIABILITIES 1,416 1,498 1,832 2 3,260 4,560 5,732 6,174 6,236 6,378 6,555 6,770

Debt:Equity Ratio - 6:94 15:85 26:74 45:55 58:42 63:37 62:38 59:41 55:45 52:48 k8:52

/ Includes contributions and retained uarnings.

J.ne 1, 1973

ANNEX 19Page 1

THAILAND

BANGKOK WATER SUPPLY PROJECT

Netropolitan Water Works Authority (MWWA)

Assumptions for Financial Projections

INCOME STATEMENTS

Revenue

1. Water production in 1973 through 1976, is based on the productivecapacity of the system. 1977 onwards it is based on the consultants estimateof water demand.

2. Water unaccounted-for in distribution (difference between waterproduced and water sold) which was 60% of production in 1972 is estimatedto come down to 57% in 1973 and 50% in 1974. Thereafter, a uniform annualdecrease of 5% is assumed in 1975 through 1979 bringing down the unaccounted-for water to 25%.

3. Water Billings are arrived at by multiplying the volume of watersales with the average rate per m3. The average rate reported by MWWA for7 months billing after tariff revision is % 1.30/m3. With improvement inmeter reading and billing procedures and increased water consumption by largeusers, it is estimated that the average rate will go up to $ 1.44/m3 in 1974and increase to $ 1.50/m3 in 1975 and to $ 1.65/m3 by 1979. A rate increaseof about 25% is assumed effective October 1, 1979 raising the average rateper m3 to $ 2.05.

4. Bad debts are estimated at 4% of billings.

5. Revenue from meter rents is based on the current average rate permeter multiplied by the estimated number of meters in each year.

6. Connection fees are projected on the estimate,d number of additionalconnections proposed to be given each year and the estimated cost perconnection. The number of connections assumed are as follows:

ANNEX 19Page 2

No. ofNo. of Connections Average

Year Ending Connections at New Dis- End of No. ofSeptember 30 the Beginning Connections Connections Year connections

--------------------------in thousands------------------------

1972 267 14 4 277 2721973 277 16 4 289 2831974 289 18 5 302 2961975 302 20 5 317 3101976 317 21 6 332 3251977 332 22 6 348 3401978 348 24 7 365 3571979 365 25 7 383 3741980 383 27 8 402 3931981 402 28 8 422 4121982 422 29 9 442 432

The average cost of a new connection which was about $ 2,500 in 1972 is estimatedto decrease to $ 1,850 by 1976 as a result of better scheduling and supervisionof labor and improved control over use of materials. The following estimatesof Labor and Material costs have been adopted for the projections:

Baht per connectionLabor Material Total

1972 (actual) 660 1,840 2,5001973 600 1,650 2,2501974 550 1,500 2,0501975 540 1,400 1,9401976 through 1982 500 1,350 1,850

Operating Costs

7. A 26% increase in 1973 under Salaries and Wages reflects provisionsof 11% for salary adjustments ($ 6 million) and 15% for additional staff(9 8 million). The estimates for 1974 through 1982 assume a 4% annualincrease for normal increments. Employment of additional staff for theproject and operations has also been assumed in 1974 and 1975 (16% and 6%respectively) while a net decrease of about 7% has been assumed to occurduring 1978-1979 period as the project is completed. Beginning with 1974,the estimated cost of NWWA's staff employed on engineering and supervisionof capital works has been capitalized and shown as a deduction fromoperating costs.

8. Power, Fuel and Chemicals are projected to increase at aboutthe same rate as water production plus a 3% annual increase due to priceescalation.

ANNEX 19Page 3

9. Materials include items used for maintenance of the system andfor giving new connections. The cost of the former is estimated at 0.5% ofthe average gross value of fixed assets in operation. The latter isbased on the number of new connections and the average cost of material perconnection (paragraph 6).

10. Other Expenses comprise rents, telephones, postage and miscella-neous items. They have been projected at about 12 to 13% of salaries andwages.

11. Depreciation has been assumed at 2.5% of the average gross valueof assets in operation.

12. It is assumed that MWWA will not be required,to make any remittancesto Government Treasury out of its net surpluses.

SOURCES AND APPLICATION OF FUNDS STATEMENTS

13. Government contributions in 1972 through 1974 are mainly for pur-chase of land and for distribution improvement works.

14. Customer contributions reflect the estimated cost of water metersmet by the consumers.

15. IBRD and ADB loan disbursements are directly related to foreignexchange expenditures except for payments to consultants in 1973 whichare assumed withdrawn in 1974.

16. Government loans of B 97 million and $ 162 million for capitalworks granted in 1971 are assumed to be utilized as follows:

Million j

1972 811973 1281974 50

259

A Government loan of $ 1,750 million for the project has been assumed tobe drawn as follows:

Million $

1973 501974 501975 4601976 6301977 5201978 40

1 .750

ANNEX 19Page 4

17. Debt service charges have been calculated as follows:

(a) IBRD L,oan - $ 1,144 million (US$55 million)

Principal and interest repayable in 40 equal semi-annualinstallments after a grace period of about six years.First repayment will be on October 1, 1979. Rate ofinterest 7.25%. Commitment charge 0.75%. The interestand commitment charges will be capitalized up to theClosing Date of the Loan (June 30, 1979).

(b) ADB Loan - g 408 million (US$19.6 million)

Repayable in 40 equal semi-annual installments after agrace period of about 6 years. First repayment isassumed on December 1, 1979. Rate of interest 7.5%and commitment charge 0.75%. Interest and commitmentcharges would be capitalized up to the Closing Date ofthe Loan (December 31, 1978).

(c) Government Loan - Amount as in paragraph 16. Principaltogether with interest at 4% on outstanding balancesrepayable in 40 semi-annual installments after five years'grace period. The interest accrued during the grace periodwould be d Zerred and repaid in 40 semi-annual installments.This follows the terms of the agreements dated September 3, 1971and May 22, 1972 for the two earlier loans.

BALANCE SHEETS

18. Fixed Assets are at book cost less depreciation.

19. Investments represent mainly the customers' deposits and EmployeesProvident Fund and are projected to increase accordingly.

20. Inventories amounting to $ 67 million in 1972 are projected toreduce gradually to $ 55 million by 1978 as a result of improved management.Thereafter they have been assumed at 60% of consumption of materials andchemicals.

21. Accounts receivable are assumed equal to 4 months water billings(less bad debts) in 1973. As a result of more effective collection proceduresto be implemented under the Revenue Improvement Program, they are assumedto come down to 3 months billings in 1974 through 1976 and 2 months billingsthereafter.

22. Accounts payable are projected to decrease from the present $ 24 mil-lion to $ 22 million in 1973 and $ 20 million in 1975. Thereafter they areassumed constant.

June 8, 1973

ANNEX 20

THAILAND

BANGKOK WATER SUPPLY PROJECT

Metropolitan Water Works Authority (MIWA)

Schedule of Water Rates

I. Rates applicable prior to July 1, 1972:

Bangkok: First 6 m3 free of charge, consumptionexceeding 6 m3 charged at 0.50 Baht/m 3

Thonburi: First 6 m3 free of charge, consumptionexceeding 6 m3 charged at 1.50 Baht/m 3

Nonthaburi: 2.00 Baht/m 3

Samut Prakan: 1.25 Baht/m 3

II. Rates effective July 1, 1972:

For all areas:

0 - 6 m3 Freeexceeding 6 - 12 m 0.50 Baht per m3

it 12 - 25 m3 1.00 it n itIt 25 - 50 in3 1.50 ti tt 11

"1 50 - 200 m3 2.00 " it "tit 200 m3 2.50 t' It t

III. In addition to the basic water rate, a monthly meter rent is charged

as follows:

SamutSize of Meter Bangkok Thonburi Nonthaburi Prakan

1/2 it 0.50 1.00 1.00 1.003/h It 0.50 1.50 1.00 1.00

1 " 0.75 2.00 2.00 1.001-1/2 It 1.00 2.50 2.00 1.002 it 1.25 3.00 2.00 1.002-1/2 " 1.50 3.50 2.00 1.003 1.75 4.oo 5.00 1.004 2.00 5.00 5.00 -5 2.50 6.oo -6 3.00 8.oo - -

12 6.00 10.00 - -

IV. Connection fees are based on estimated cost of labor and material

used for giving the new connection.

April 10, 1973

IBRD 10208

loo'l 15' 100 30' THAILAND F3R Y19

BANGKOK WATER SUPPLY PROJECTBANGKOK METROPOLITAN AREA

Municipal oreo7r'rr,7, ,=- Metropolitan Water Works Authority boundary

Changwat (province) boundaries............. Amphur (district) boundaries

Major roads-t--------t Railways

7. International boundaries

.i | ~ ~~ ~~ ~~~~~~~~~~~~~~~~~~~0 4 a 12 16K ILOMETEtRS

0 2 4 6 e 10

MILES14 14' -

The b-uOar- shtto this men do nof

-tply endorsmet or acpt-n by theM, ~~~~~~~~~~~~~~~~~~~~~Wond Bank -nd it, affillateo

InX NOI j l

BA ,UA PAK KRET /

>:: ' , .: ,: \ j />atBA~~~NG KHEN ,'

B A ABUR NONG CHOKXNONG KHAEMBAN KRUAT Uf >

9& T/H C? N B d R I (? \ . .....................N.A K H7

13'45' 34

100'15' /. \:,,r

\, 9,N^7 ~~~~~~. _9Xs }\z.. '>............V° p

BBMA<fWfMf5 t S AM u T . P R A KAbA NO ok

or i Ef TH AlILAND \ 1 THON

}~~~~~~ ~PAI CHRE BA K3 LA KRABANG

GThln< oh GuJf of Thoai/and

,, 15 OpALAY 10030 10045

100.30 , SAM LAE RAW WATER 100'45'

PUMP STATION ;THAILAND

BANGKOK WATER SUPPLY PROJECT

-14° l EXISTING WATER SUPPLY SYSTEM -

Area served by Metropolitan Water Works

< SAL NGI ( 4/ t < \ -; ~ ~ E ! Authority Central System (1969)

h Areas served by separate systemsRaw water canal

Existig i j Raw water force main\\- ~~~! Rangsit I * ~~~~~ Raw water pump stations

/er / / Water treatment plants

R\ ---- | -| -- I o Wells in production

_ _ Elevated storage tanksMain roads

BANG BUA Upi1 Railways

THONG | Rivers and canalsInternational boundaries

0 2 4 6 8 10 12 14 16

KILOMETERS

0 2 4 6 8 10

MILES

SBANGY .C O '

_13'45' REATMENT PLNT

13'45,-

THONBURI WATER TREATMENT P A

NONG KHAEM/-WJ

f HAIL H I NA / ,o\C H I N

L AO 5 |\

lT h,,I darics shap, this nis.s i, ii.,t

t -i4rkrda/onI South lBOislsdirss,szsr or atstaso tQ tfB

China Se da,d its sIfilfitNas l00 30 1 100i45 4

!, 1'±MALAYSIA I I0

100°15' 100 30, THAILANDNew Puimping SAMLARWWAE BANGKOK WATER SUPPLY PROJECTS Qt ~PUMP STATION,(EXISTING)

Proposed imrovets. I PROPOSED WATER SUPPLY SYSTEMto BangLung Reservoir : Area served by MWWA Central System(1975) 140-14° | \ Resrvor* Existing water treatment plants

\ | 9 0 1 0 Pump stations (first stage)Pump statictns(future stage)

0 ~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~C] Water treatment plantProposed improvement raw water channel

\ \ j < ru I 1l Rangsit ISip on v % --- Raw water force mainRansi \ | \ / 1 \ _ Transmission tunnel (first stage)

Transmission tunnel (tuture stage)< \ ; / BANG I W Rangsit siphon

{6 BUA THONG Q%| / /Proposed i rovemen/: A Existing elevated storoge tonks\ X_ r v f _ /}~~~~toKlong Pra$ Main roads

a o/ \ /, /t/ ~~~~~~~~~~~~~~~~~~Rivers and canalsbin/n d t or , s --- Id~nternational boundaries

Iierld Ba,iA end In ii_pro__K4n war_ter treatment pJant

kNG t~~~~~~~~A I sets

/ _ ~ ~~~~ ~ ~~~~~~ ~ ~~~~~~~ WAE PUM STATION M&PSIPHO

= ,7,,_ c~~~~~~~~~~~~~~~~~~~~~~~~n g T h u n g L ngDi345

> vf gAREARETMFNT PLA-13-45'THONBURI WAtER TREATMENT P ANT (XISTIB ANG) KO K

T H 0 NA B U R _ , Li

100°15' ON KHAEM / / Rat Bura O/ 0 2 4 6 a 10 12 t

l tonr/y,rlMorst.mnileirzl.lYlatimt.tia[nt~~~m Ron 10 °0 I L 4 1004 SURMA _ 1 _-_