Aide Memoir

REPUBLIC OF ZAMBIA

LUSAKA SANITATION PROJECT

IMPLEMENTATION SUPPORT MISSION

February 9- 17, 2017

Aide Memoire

I. INTRODUCTION AND ACKNOWLEDGEMENTS

1. A World Bank team[footnoteRef:1] visited Zambia during the period February 9-17, 2017 to review progress on the Lusaka Sanitation Project. The overall objective of the mission was to review implementation progress and to support Lusaka Water and Sewerage Company (LWSC) in accelerating key project activities. This aide memoire summarizes the main mission findings and recommendations, and reflects the comments made at a wrap-up meeting held on February 16, 2017 at the Ministry of Water, Sanitation and Environmental Protection (MWSEP) and chaired by Dr Edward Chomba, Permanent Secretary MWSEP. The mission wishes to thank the Government of Republic Zambia (GRZ), and officials from MWSEP, LWSC, Lusaka City Council (LCC), Zambia Environmental Management Agency (ZEMA), and National Water Supply and Sanitation Council (NWASCO) for the for the excellent collaboration and the courtesies extended. The full list of key persons met is attached in Annex 1. As agreed with LWSC, this aide-memoire will be classified as a public document under the World Banks Access to Information policy. [1: The mission comprised: Josses Mugabi (Task Team Leader); Odete Muximpua (Water and Sanitation Specialist and Co-Team Leader); Zvikomborero Hoko (Sanitary Engineer); Wedex Ilunga (Senior Procurement Specialist); Richard Everett (Social Development Specialist); Mwansa Lukwesa (Environmental Specialist); Tambulani Chunga (Sanitation Marketing Consultant); Peter Hawkins (Senior Water and Sanitation Specialist); and Charles Odonga (Institutional Development/Utility Management Specialist)]

II. KEY PROJECT DATA

2. Key Project Data (as of February 15, 2017)

Project Data

Project Performance Ratings

Board Approval: May 22, 2015

Effectiveness Date: June 17, 2016

Current Closing Date: December 31, 2020

Summary Ratings:Last Now Trend

Achievement of PDOS MS

Implementation Progress MS MS

Credit Amount: US$63.9 million[footnoteRef:2] [2: Credit amount when expressed in USD is lower than at the time of approval due to SDR-Dollar exchange rate fluctuations. The original credit amount was USD 65million, implying an exchange loss of USD 1.1 million. ]

Amount Disbursed: US$12.4 million

% Disbursed: 19 percent

Ratings: HS=Highly Satisfactory; S=Satisfactory; MS=Moderately Satisfactory; MU=Moderately Unsatisfactory; U=Unsatisfactory; HU=Highly Unsatisfactory; Improving; Deteriorating; Stable

III. SUMMARY OF MISSION FINDINGS

3. Project implementation is gaining momentum. Works contracts for priority sewerage works have been signed. This package of works includes three subprojects i.e. expansion of sewer network in Emmarsdale (CSE-08), expansion of sewer network along Kafue Road (CSE-23), and upgrading of Ngwerere Western Interceptor (CSU-05). The works were procured in two lots. Lot 1 included CSE-23 and Lot 2 included CSE-08 and CSU-05 subprojects. The total contract amount for the two lots is US$7.5 million which is about 30 percent lower than the original engineers cost estimate (US$10.9 million). The contractors are expected to mobilize no later than March 30, 2017. Construction period is estimated at 12 months. Procurement of consultancy services for construction supervision of priority sewerage works is also in advanced stages. Contract negotiations have been completed and LWSC expects to sign the consultancy contract by March 15, 2017.

4. However, approval of safeguards instruments for priority sewerage works is delayed and this may impact on the construction schedule. The Environmental and Social Impact Assessment (ESIA) Report and Resettlement Action Plan (RAP) for year 1 sub-projects have been prepared, and extensively reviewed by the Bank team. Both documents have received a provisional approval by the Zambian Environmental Authority (ZEMA), and a final public meeting the last step to receiving final ZEMA approval and authorization to proceed has been held on January 25, 2017. At the same time, the documents will need to be cleared by the Bank, publicly disclosed and any compensation payments made before construction can start. Both the ZEMA and Bank clearances of the safeguards documents are expected by March 15, 2017. However, LWSC is yet to secure Government funds for compensation of Project Affected Persons (PAPs) as per the RAP. Both the Ministry of Finance and MWSEP have committed to expedite the process of securing compensation funds (about $0.49m) and transferring the funds to LWSC no later than March 31, 2017. The mission also discussed and agreed on safeguards instruments for the rest of the planned works under the project and a schedule of their preparation. TORs for Year 2-5 Safeguard instruments have been prepared by LWSC and cleared by the Bank. Environmental and social impacts, including possible resettlement, of the proposed Year 2-5 sewerage works and Faecal sludge treatment facilities will assessed through standard ESIA and RAP processes. Environmental and social impacts related to the collection and transportation services will be addressed through Environmental and Social Management Plan(s), to be developed as part of the FSM business development study. The ESMP(s) will be supplemented by health and safety guidelines and operational procedures and employee Codes of Conduct. The potential environmental and social impacts of the onsite services (OSS) subproject will be addressed through ESMPs, EHS guidelines and Employee Codes of Conduct developed as part of the OSS Design and Construction Supervision study and consultancy. In addition, it is understood that ZEMA will require a separate Strategic Environmental and Social Assessment (SESA) to assess the collective impacts of the household units, for which LWSC will develop a TOR.

5. Preparation of additional sewerage subprojects is significantly delayed, and their implementation is now likely to start in Year 3 of the project. Feasibility studies were completed in August 2016[footnoteRef:3] for sewer network sub-projects (worth about US$130 million) that were originally programmed to start implementation in the second year of the program, with financing from WB, EIB and AfDB. However, LWSC has not yet been able to progress to detailed design for the WB sub-projects, due to a number reasons. First, LWSC decided to procure a separate consultancy for detailed design rather than expand the scope of the feasibility study consultancy a decision that led to further delays in completing preparatory activities. Second, there was uncertainty on the scope of detailed design consultancy, including (i) whether or not to include subprojects proposed for financing by EIB, and (ii) whether or not to include additional subprojects without a full feasibility study. As a result, LWSC took much longer to finalize the ToRs for detailed design consultancy. The final scope of the consultancy includes detailed design, tender documentation and construction supervision of five sewerage sub-projects estimated at US$30 million, as well as full feasibility study and detailed design for an additional five subprojects (see Annex 2 for details). The Bank provided no objection to the ToR on December 16, 2016, and LWSC proceeded to publish a Request for Expressions of Interest (REoI) on December 27, 2016. The shortlist and RFP were cleared by the Bank on February 3, 2017. LWSC issued the RFP to shortlisted consultants on February 7, 2017, with a proposal submission deadline of March 17, 2017. LWSC will fast-track the rest of the procurement steps to ensure that the consultancy contract is signed no later than June 30, 2017. The consultant will then be expected to produce detailed designs and tender documents for the first five subprojects within 6-9 months. This means that the next set of sewerage works under the project (after the priority works above) will only be ready for tender in the first quarter of 2018. [3: Three months behind schedule ]

6. Progress on the onsite sanitation (OSS) component has been slow, but is expected to pick up pace over the coming months. Feasibility studies for OSS interventions were completed in August 2016, but LWSC has not yet progressed to detailed design. A significant amount of time has been spent on firming up a strategy and principles to guide implementation of OSS interventions under the project and beyond an important step that was completely overlooked at feasibility stage. Consultations have been carried out on LWSCs evolving strategy for OSS, including on sustainable business models for delivering both the infrastructure and fecal sludge management (FSM) services at scale. The Banks September 2016 mission helped in firming-up various aspects of the strategy, and how project resources could be better utilized to support operationalization of the strategy (for details see September 2016 mission aide memoire). A set of actions was agreed to accelerate progress, including fast-tracking the procurement of additional technical assistance (TA) services that are critical to getting this component ready for implementation. The mission reviewed and enhanced the draft Terms of Reference (ToRs) for design and supervision of OSS facilities (improved toilets and septic tanks), and FSM business development. It was agreed that LWSC will finalize the ToRs taking into account Bank comments and advertise all the REOIs no later than March 20, 2017. Thereafter, LWSC will fast-track the rest of the procurement steps and ensure that all three consultancy contracts are signed no later than July 30, 2017. The consultants will then be expected to produce detailed designs and tender documents within 6-9 months. This implies that OSS works and goods packages will only be ready for tender in the first quarter of 2018.

7. LWSC has made good progress in defining the nature and scope of institutional strengthening activities to be supported under the project. An institutional assessment of LWSC was completed in January 2016, which resulted in LWSC developing an outline Institutional Development Action Plan (IDAP). During the mission, progress was made in firming up the plan and identifying a set of actions to help kick-start LWSCs change process. Further, the mission supported LWSC in undertaking a rapid, qualitative assessment of LWSCs organizational structure, behaviour, capability, tools, and ability to influence the external policy environment. For each of the areas, the assessment examined the situation encountered in LWSC and compared it against what would be expected in a well-run utility in order to identify gaps and issues to be addressed. This assessment helped to inform further development of the IDAP, and will provide a basis for tracking progress (see details in Annex 3). The IDAP is designed to contribute to overall performance of the utility by, among others, promoting a positive organizational culture and productive work environment; addressing long standing structural issues; enhancing staff capabilities; improving operational processes and systems, as well as strengthening LWSCs ability to influence the external policy and regulatory environment. LWSC management will finalize internal consultations on the IDAP in the coming weeks, and ensure buy-in from across the organization. A Special Task Force (Change Management Team) will be appointed by the Managing Director to spearhead the process and to ensure that the action plan is finalized and approved by the Board no later than April 15, 2017. The mission also encouraged LWSC management to conceptualize and implement regular short-term, high-impact performance improvement programs within the context of the IDAP.

8. There are however a number of unresolved policy and regulatory issues that are critical to achieving project objectives related to sustainability of sanitation services. These include: developing new economic regulation tools and instruments for urban sanitation services; approving a sustainable tariff structure for urban sanitation services; strengthening enforcement of sanitation-related bylaws, building codes and regulations; establishing a predictable public financing stream for the public good aspects of urban sanitation; security of tenure arrangements for peri-urban areas; and improving accountability arrangements between different sanitation players in the urban space. The mission strongly recommends that LWSC management pays close attention to these issues and take deliberate actions to influence policy and regulatory changes. With respect to sewerage tariffs, NWASCO confirmed that (i) as a regulator, they are not bound by the targeted tariff increases included in the projects result framework; and (ii) their approach to sewerage tariff setting will change from one that is based on a percentage of water tariffs to one based on actual costs of providing sewerage services. To facilitate this change, NWASCO is in the process of developing guidelines for separation of costs for water and sewerage services. The guidelines are expected to be ready for use by utilities before the next pricing review in September 2017. At the same time, NWASCO has initiated stakeholder consultations on improving policy and regulatory framework for OSS services. These consultations are expected to result in specific policy proposals or changes in existing legal frameworks (e.g. WSS Act) aimed at further strengthening the enabling environment for integrated sanitation service solutions (i.e. mixed use of off-site and on-site solution).

9. The mission noted several key policy issues that are reflected in LWSCs evolving strategy for OSS and the principles the utility has formulated to guide planning and design of OSS interventions. For instance, LWSC is pushing for sustainable public financing mechanisms for sanitation services (including the public good aspects) beyond the project, through an increased sanitation surcharge and a review of restrictions imposed by the regulator regarding what can be financed by the surcharge. However, discussions with NWASCO revealed that the regulator had (on request from LWSC management) temporarily suspended the sanitation surcharge due to LWSCs inability to meet its obligations in terms of completing peri-urban sanitation projects approved by NWASCO as eligible for financing through the surcharge[footnoteRef:4], and LWSCs continued use of the accumulated resources for other purposes (e.g. to meet short-term cash flow requirements). The mission flagged this issue with the new LWSC management who agreed to review (in consultation with NWASCO) the decision and issues that led to the suspension, with a view to reinstating the surcharge. The mission emphasized the importance of the sanitation surcharge as one of the public financing mechanisms for sanitation investments in Lusaka, and that the scale up and sustainability of OSS services beyond the project is partly dependent on maintaining the surcharge mechanism as a source of financing. [4: At the time of the suspension, LWSC had collected about US$1 million through the sanitation surcharge, and NWASCO had approved 3 projects for implementation. However, to date none of the projects have been completed.]

10. With respect to enforcement of sanitation-related bylaws and regulations, LCC is empowered by the Public Health Act to regulate and enforce rules for the construction and use of sanitation facilities, but it lacks capacity (funds and human resources) to implement this enforcement. Given this constraint, LWSC plans to use financial incentives (i.e. partial financing of containment structures) to encourage households/landlords to improve sanitation facilities. Those customers who do not respond to the incentive will be specifically targeted through an enhanced enforcement program implemented in collaboration with LCC public health teams. The exact nature and scope of the proposed enforcement program is currently unknown. It is expected that program will be designed and implemented as part GIZs technical assistance package to LWSC and LCC which was initiated recently. Specifically, GIZ will support LCC in improving systems for environmental health monitoring and enforcement related to sanitation (including wastewater, on-site sanitation, faecal sludge and solid waste management). Further, the mission was pleased to learn that LCC is accelerating efforts to grant security of tenure to households in various peri-urban areas in Lusaka. This move is good for sanitation services as it is expected that a secure tenure status would provide additional incentives for households to invest in improving sanitation.

11. Communication and advocacy has improved. The mission noted significant improvements in communication and advocacy activities under the project, in line with the recommendations of the June 2016 Bank mission. Efforts have been made in creating awareness on the Lusaka Sanitation Program in general. A workshop for the media has been conducted and public awareness campaigns have been done through radio programs. Further, a joint LWSC-LCC branding initiative is gradually taking shape with the new city Mayor as the champion. Initial advocacy activities will target a cross section of key stakeholders, including members of parliament, councilors and community leaders. These advocacy efforts will be further enhanced by the sanitation marketing consultancywhich is currently in advanced stages of procurement and whose scope includes both advocacy and marketing communication. LWSC has issued a Request for Proposals (RfP) to the shortlisted firms with a proposal submission deadline of March 21, 2017. Evaluation will be fast-tracked and a technical evaluation report sent for Bank review and no-objection by April 15, 2017. LWSC will fast-track the rest of the procurement steps and ensure that a contract is signed no later than May 30, 2017.

12. The project still face substantial coordination risks, but these are now proactively being managed by LWSC. Information sharing between partners has improved. The Program Steering Committeewhich is charged with the responsibility to oversee and coordinate program implementation is now fully constituted and held its first meeting in January 2017. A program management support consulting firm (EIB-financed[footnoteRef:5]) was recruited and is providing much-needed technical and program management support to LWSC. A draft Program Implementation Manual (PIM) has been prepared and circulated to development partners for comments. Finally, LWSC is taking a more proactive role in developing a coordinated approach to program implementationincluding facilitating the sharing of information, developing a joint implementation schedule at the program level, identifying critical interface risks and mitigation measures (see Annex 4 for a summary of the joint program implementation schedule). The mission recommends that LWSC organizes (in consultation with program funding partners[footnoteRef:6]) one joint mission within the next six months to discuss, among other things, the program coordination arrangements and how they could be further enhanced. [5: The main financing agreement for EIB lending to the program is expected to be signed in June 2017. In the meantime, EIB provided a technical assistance grant which has been used to finance the program management support consultancy] [6: Current funding partners for the Lusaka Sanitation Program include: World Bank, EIB, KfW, AfDB, GIZ and MCC]

13. Disbursements and commitments have increased significantly. This is mainly due to the recent signing of works contracts for priority sewerage works. The original disbursement schedule assumed that about US$15 million (23 percent) would be disbursed by the end of FY17. As of Febraury 2017, disbursements stood at US$12.4million (19 percent), which close to the original projection. However, the rate of disbursements is expected to slow down significantly over the next 12 months as the rest of the major infrastructure investments will not be ready for tender until the first quarter of 2018. Nevertheless, the Bank and LWSC will continue to closely monitor the project procurement plan to identify opportunities for accelerating disbursements, where possible.

14. Overall implementation progress rating is maintained at moderately satisfactory. Although there has been some progress since the last formal mission in June 2016 (especially the signing of the first works contracts under the sewerage component), the mission concluded that the progress registered since then does not justify an increase in the rating, given the persistent delays on both the OSS and institutional strengthening components. The PDO rating on the other hand is downgraded to moderately satisfactory due to: (i) delays in preparation of sewerage subprojects, which has created some uncertainty on whether all planned subprojects can be fully implemented within the remaining project period; and (ii) unresolved tariff regulation issues which have put into question the likelihood of achieving PDO indicators related to cost recovery. The mission also reviewed the Results Framework and updated the baseline indicators for project monitoring and evaluation (see annex 5).

IV. AGREED ACTIONS

1. Summary of agreed actions. The majority of actions over the next 3-6 months will be procurement-related. The main focus are the priority consultancy services that required to help defined the subsequent works packages under the project. Attention must also be paid to completion and implementation of safeguard instruments for the priority sewerage works. Summary of agreed actions is presented in Table 2 below.

Table 2 Summary of Agreed Actions

#

What

When

Who

Status

Procurement-related

1

Sign consultancy contract for construction supervision of priority (year 1) sewer network rehabilitation and expansion

March 15, 2017

LWSC

completed

2

Complete procurement process and sign consultancy contract for detailed engineering design and supervision of Year 2-5 sewerage sub-projects

June 30, 2017

LWSC

In progress evaluation of technical proposals

3

Complete procurement process and sign consultancy contract for sanitation marketing

May 30, 2017

LWSC

In progress evaluation of technical proposals

4

Complete procurement process and sign consultancy contract for design of household OSS systems

July 30, 2017

LWSC

In progress

5

Complete procurement process and sign consultancy contract for FSM business development

August 30, 2017

LWSC

In progress EOI evaluation

6

Complete procurement process and sign consultancy services for design of a call center solution for OSS service delivery

August 30, 2017

LWSC

In progress

7

Complete procurement process and sign consultancy contract for LWSC organizational restructuring study (Funded by WB trust fund)

March 31, 2017

WB

In progress

Other Actions

8

OSS strategy approved by LWSC Board

June 30, 2017

LWSC

In progress

9

Bank clearance of RAP and ESIA for priority sewerage works

March 15, 2017

WB

Completed

10

Government funds for compensation payments transferred to LWSC

March 30, 2017

MoF and MWSEP

In progress

11

LWSC completes compensation payments

May 30, 2017

LWSC

In progress

12

Board approval of IDAP

April 15, 2017

LWSC

In progress

13

Share approved IDAP with the Bank and other development partners

April 30, 2017

LWSC

In progress

14

Organize corporate governance and utility management training for LWSC Board members and senior management

April 30, 2017

LWSC and WB

On schedule

15

Review decision to suspend sanitation surcharge and the issues that led to the suspension. Share findings and recommended way forward with the Bank

June 30, 2017

LWSC and NWASCO

In progress

15. Proposed timing of next mission. The next Bank mission is tentatively scheduled for September 2017. In the interim, the Bank will continue its close monitoring and technical discussions with LWSC to help ensure that the agreed action plan targets detailed in this Aide Memoire are met. The team is currently conducting regular technical discussions /missions to advance progress in various activities of the project. This approach will be continued over the course of the project.

Annex 1 List of Key People Met

NAME

INSTITUTION

Mrs. Ireen Habasimbi

Min of Finance

Mr. Mulusepa

Min of Finance

Mrs. Mwila Zulu

Min of Finance

Mr. Joseph Chanda

Min of Development Planning

Mr. Eward Chomba

Min of Water Development, Sanitation and Environmental Protection (MWDSEP)

Mr Oswell Katooka

MWDSEP

Mr. Musole R. Kambita

MWDSEP

Mr. Charles Kalapa

MWDSEP

Dr. Sylvester Mashamba

LWSC

Mr. Jilly Chiyombwe

LWSC

Ms. Matilda Mwansa

LWSC

Mr. Malambo Dennis

LWSC

Mr. Christopher Walimuntu

LSWC

Mr. Wycliff Kunda

LWSC

Mr. Hamalambo Kanini

LWSC

Ms. Yvone M. Siyeni

LWSC

Mr. Evaristo Simusokwe

LWSC

Ms. Mwiche Sekeleti Musabaila

LWSC

Mr. Nyonge Phiri

LWSC

Mr. Kennedy Mayumbelo

LWSC - LSP

Ms. Barbara Banguna

LWSC - LSP

Mr. Obert Musongo

LWSC - LSP

Mr. Hector Zulu

LWSC - LSP

Mr. James Mwale

LWSC - LSP

Mr. Francis Chipalo

LWSC LSP

Mr. Godmans Numwa

LWSC - LSP

Mr. Charles Kapembwa

LWSC - LSP

Mr. Avitol Kweendenda

LWSC - LSP

Ms. Mwansa Mukuka

LWSC - LSP

Mr. Stephen Dollery

Project Implementation Consultant - LSP

Mr. Abhinav Goel

Project Implementation Consultant - LSP

Mr. Patric Katuramu

Project Implementation Consultant - LSP

Mr. John Banda

Project Implementation Consultant - LSP

Ms. Nosiku S. Muyunda

Project Implementation Consultant - LSP

Mr. Trevor Surridge

GIZ

Annex 2 Sewerage Sub-projects (Year 2-5)

1. The Year 2-5 subprojects are divided into two parts (Part 1 and Part 2). Part 1 subprojects have a full feasibility and preliminary design study done while Part 2 have no feasibility study. Part 2 subprojects were identified through a preliminary assessment done in-house by Lusaka Water and Sewerage Company.

Part 1 sub-projects

2. Table 1 shows Part 1 sub-project areas and their estimated network lengths, indicative number of pump stations and indicative pipe diameters required. Figure 1 shows the location of these subprojects. A feasibility study and preliminary design has been done for these areas under World Bank funding. The next step is detailed design of the selected sub-projects followed by construction which will require construction supervision.

Table 1: Part 1 Subproject details

Sub Project

Estimated Network length (km)

Estimated No. of Pump stations

Indicative range of pipe diameters (mm)

Estimated cost (US$ million)

CSE 5 Chipata

40

1No., estimated total daily flow of 0.5ML/d & Proposed power of 0.7KW

160-400

4,805,279

CSE 10 Garden

17

160-400

1,530,326

CSE 20 Kanyama,

CSE-14 Industries phase

60

2No. with estimated total daily flow of 6 and 10ML/d respectively

100-600

7,519,340

CSE 25 Chawama Kuomboka

60

1No. with estimated total daily flow of 3.3ML/d

100-400

6,650,246

Part 2 sub projects

3. Part 2 sub-projects incorporate five sub-projects (i) Mass Media (ii) Chalala (iii) Vonna/Ndeke (iv) Roma/ Munali, and (v) Kwamwena. Summary details of the subprojects under Part 2 are given in Table 2.

4.

Table 2: Part 2 Subproject details

Sub Project

Area coverage (Ha)

Estimated Network length (km)

Estimated No. of Pump stations

Indicative range of pipe diameters (mm)

Estimated number of new connections

Estimated cost (US$ million)

Mass Media

250

47

1

160-400

2050

9,725,804

Chalala

1815

344

2

160-600

14200

71,184,608

Vonna/Ndeke

700

133

Nill

160-300

5740

27,521,956

Roma/ Munali,

1370

260

2

160-900

10,000

53,802,320

Kwamwena

600

114

Nill

160-400

7100

23,590,248

A brief description of each sub-project is given below.

Mass Media

5. Mass media is well-planned area located about 5km East of Lusakas Central Business District (CBD). The area is mainly a high cost residential though commercial properties have come up in recent years. The project area is estimated at 250 Ha and covers part of a low cost area (Kalingalinga compound), as shown in Figure 2. A detailed design of the condominial sewerage system for Kalingalinga was done in 2012 with phase one being implemented. However, the project area under this scope has no existing sewerage system though Mass Media pump station is within a kilometre. At present, residents rely on onsite sanitation solutions. The use of septic tanks and soakaways has threatened the groundwater quality of the area. Further, LWSC has boreholes within the same area hence the need to sewer the area. On the eastern side of the project area, a main sewer trunk line crosses the project area through to Kaunda Square ponds. Mass media is under the Manchinchi sewer shed whereas Kalingalinga flows to the Kaunda Square sewer shed.

Figure 2. Mass media area

Chalala

6. Chalala is one of the newly developed areas on the south-eastern part of Lusaka. The area is predominantly high cost residential and is well planned. It is about 3km from the Lusaka CBD and covers about 1815 ha as shown in Figure 3. It covers the water works area, Hilview, Rockfield and Rockview areas. The area is under the Manchinchi sewer shed. Chalala has no existing sewerage infrastructure. At present, residents rely on onsite sanitation solutions. The use of septic tanks and soakaways has threatened the ground water quality of the area. Further, the area is so rocky that it is a challenge for households to build quality onsite sanitation facilities. LWSC has some boreholes within the same area which risks contamination if the situation is not corrected. The nearest existing sewer line to Chalala is an interceptor along Chilimbulu Road. This interceptor will require assessments to confirm if additional flows can be accommodated. The project area has a generally flat terrain. Due to the relative flat terrain of the area, pumping stations or DEWATs will have to be considered so as to lift or localise the treatment of wastewater from the area.

Figure 3 Chalala area

Vonna/Ndeke

7. Vonna/Ndeke is one of the newly developed areas on the eastern part of Lusaka. It is about 25 km from the Lusaka CBD and is mainly medium cost residential (Figure 4). It covers about 700 ha of land underlain by unconsolidated or semi consolidated gravel, sand, silt and clay sedimentary rock. Vonna/Ndeke has no existing sewerage infrastructure. Being a new development area, residents have started building alternative onsite sanitation systems. With plot sizes as small as 25mx25m, it is unthinkable to have both the borehole and onsite sanitation facilities on the same plot. Hence the need to sewer the area cannot be overemphasized. The area is located about 9km downstream of the proposed New Ngwerere Wastewater Treatment Plant. The area has no nearby sewer network to connect to, except a bio filtration plant installed within the vicinity to service Sitatunga City Properties. This plant was recently handed over to LWSC. An assessment should be carried out to establish whether the additional flows can be accommodated by this facility or whether there is need for a completely new DEWAT system to service the areas. Ndeke Village has 4678 plots while Vonna valley has 1062 plots.

Figure 4: Ndeke/Vonna valley

Roma/ Munali

8. Roma/Munali is a well-planned high cost residential housing area within the Manchinchi and Ngwerere Sewer shed. It is one of the old townships of Lusaka covering about 1370 ha of land with over 10,000 medium cost housing (Figure 5). The area has no existing sewerage network. At present, residents rely on onsite sanitation solutions. In some areas like Olympia, communal septic tanks are common. These are subject to annual flooding posing health risks to the public. The use of septic tanks and soakaways has threatened the groundwater quality of the area. Roma/Munali drain northwards allowing Roma to connect to CSU 05 (Ngwerere) which is earmarked for upgrade in the priority investments under the World Bank while Munali area can also be connected to either Kaunda Square ponds or down to the New Ngwerere Wastewater Treatment plant to be constructed under the European Investment Bank funding.

Figure 5. Roma/Munali

Kwamwena

9. Kwamwena is one of the new development areas on the northern part of Lusaka. It is a medium cost housing area and about 15km from the Lusaka CBD. The area is predominantly high cost residential and is well planned. It covers about 600 ha of land. The area has about 7100 plots most of which have had the buildings completed. The area has no existing sewerage network (Figure 6). At present, residents rely on onsite sanitation solutions. The area is also subject to flooding making construction of onsite sanitation facilities a challenge. Hence, providing sewerage infrastructure will alleviate the major challenges experienced.

Figure 6: Kwamwena

10. While interested consultants are expected to bid for all the above subprojects, Part 2 subprojects should have a detailed breakdown of cost for each key step/task for the defined scope of work for each sub-project. This will allow for easier negotiations should some of the scope of work fall off as a result of the outcome of the feasibility study.

Annex 3 - Institutional Capacity Development - Summary of Maturity Assessment and Institutional Action Plan

Assessment of LWSC Maturity Level

1. The Bank carried out technical missions to assess the maturity level of LWSC during the periods 12th- 17th December 2016 and 31st- 13th February 2017. The assessment used the Water Utility Maturity Model (WUM) as its conceptual framework. The model defines five levels of maturity (namely, level 1 - initial; level 2 - basic; level 3 - proactive; level 4 - flexible; and level 5 - progressive) against five broad attributes or dimensions of; behavior, structure, capability, tools and the ability to influence the external operating environment positively and strategically. These attributes are broken down into sub- components (table 1) and were assessed using a score card of management practices and organizational characteristics that one would expect to see for each of the five increasing levels of maturity. The summary of the assessment is given in figures 1 and 2 below.

Table 1: Attributes and their sub-dimensions

Attribute

Sub Components

1

Behavior

Strategic Orientation, Strategic Leadership, Organizational Culture, Customer Orientation, and Commercial Orientation

2

Structure

Organizational structure, Empowerment structure and Internal Accountability

3

Capability

Human Resources, Technical Operations, Infrastructure Management, Financial Management and Performance.

4

Tools

Monitoring and Evaluation, Information and Knowledge Management, Internal and External Communication and Continuous Improvement.

5

Influence

Policy, Legal and Regulatory Environment; Managerial Autonomy; External Accountability; Partnerships and Networks; and Corporate Image.

2. The results of the assessment shows that the current overall LWSC maturity level is graded at 2.6 i.e. the Companys maturity level lies between level 2 (basic) and level 3 (proactive). This finding is significant as it reveals that LWSC currently exhibits characteristics of both a level 2 and level 3 Utility under different attributes. The company has established basic foundations for progress as a Utility but is at different stages of acquiring vital behavioral orientations, structure, capabilities and tools that a level 3 (proactive) or higher level Utility should have.

Key Challenges facing LWSC.

3. The assessment of the LWSC maturity level has identified gaps or challenges that the company needs to address if it is to build its capability and grow into a higher level of maturity. Some of the key challenges include:

Poor Organizational Culture. The current LWSC organizational culture does not promote staff productivity and the achievement of organizational goals. Staff have poor values, attitudes and behaviors at work. There are disengaged managers and generally management has over some time practiced the laissez faire management style. This is by far the single most critical challenge the company is facing.

Inadequate Organizational Structure. The current organizational structure has gaps and issues that need to be addressed if the company is to be effectively aligned to the changes in its operating environment. As an example, company is overstaffed with staff costs amounting to about 60% of overall operating costs.

Poor Performance. The LWSC quantitative performance is poor as evidenced by the following Key Performance Indicators i.e. Water produced is only about 270 MLD against an estimated demand of 370 MLD; NRW has been above 42% over the last five years; debt age is at 8 months (2015); creditor payment period of 9 months; and WWTP effluent quality at only 56.1% (2015) compliance instead of 95% as required.

Inadequate organizational tools. The structure, systems and current activities for monitoring and evaluation of performance are inadequate as the current M&E framework has been established to only oversee the performance contracts between the Branches and the Head Office. Additionally, the performance contracting system itself has weaknesses in both design and implementation rendering it ineffective in galvanizing performance improvements. On the other hand, the MIS system together with other operational systems and processes need enhancement.

Liquidity Problems. The company currently faces serious liquidity problems. This has affected the implementation of planned activities. The impact of this is best exemplified by the very meager provision of funds for plant, equipment and network maintenance and repair. In 2015, the company only disbursed 16% of the approved budget for plant, equipment and network maintenance. On the other hand, the company takes over nine months to pay its suppliers. This definitely presents business relationship issues with suppliers.

Institutional Development Action Plan (IDAP)

4. LWSC has, with support from the mission, reviewed and developed a detailed draft five-year Institutional Development Action Plan. The plan aims at addressing issues and gaps identified through the institutional assessment of LWSC maturity level and to develop the Utilitys capacity to grow to higher levels of maturity. The IDAP has five objectives, namely; (i) Improve behavior, (ii) Improve Structure, (iii) Improve Capability, (iv) Improve tools and (v) Improve Influence. A detailed set of targets (with corresponding set of activities for their achievement) have been developed for the achievement these objectives. A Special Task Force (Change Management Team) is to be appointed by the Managing Director to not only finalize the plan and have it approved by the Board, but to oversee its implementation. The plan is to be approved not later than April 15, 2017. The IDAP will contribute to overall performance of the utility by, among others, promoting a positive organizational culture and productive work environment; addressing long standing structural issues; enhancing staff capabilities; improving operational processes and systems, as well as strengthening LWSCs ability to influence the external policy environment. Funding for the IDAP will mainly be through LWSC internally generated resources and the development partners; with the bank playing a lead role. The approved Bank support to LWSC under the Institutional Development component amounts to a total of USD 9 million.

22

Annex 4 Lusaka Sanitation Master Program

Annex 5 Project Results Framework

Project Development Objective (PDO): To increase access to sanitation services in selected areas in Lusaka and strengthen LWSCs capacity to manage sanitation services

PDO Level Results Indicators*

Core

Unit of Measure

Baseline

Cumulative Target Values

Frequency

Data Source/

Methodology

Responsibility for Data Collection

Description (indicator definition etc.)

YR 1

YR2

YR 3

YR 4

YR 5

Indicator 1: People provided with access to improved sanitation facilities under the project (cumulative)

(through sewerage)

[through on-site facilities]

X

People

(thousand)

0

(0)

[0]

0

(0)

[0]

20

(2)

[18]

60

(6)

[54]

150

(24)

[126]

213

(33)

[180]

Annual

Progress reports from LWSC

LWSC

Based on 50% sewer connection rate; assuming 8 people per sewer connection and 18 people per on

-site facility [footnoteRef:7] [7: Based on 50% of ultimately planned sewer connections; assuming 8 people per connection as per NWASCO guidelines; and assuming 18 people per on-site facility as per figures from Kanyama pilot project.]

Indicator 2: People with access to adequate fecal sludge management systems (cumulative)

People (thousand)

0

0

36

108

252

360

Annual

Progress reports from LWSC

LWSC

Adequate will need to be defined. Assuming 20,000 on-site facilities are serviced, serving 18 people each. [footnoteRef:8] [8: 8 people per sewer connection based on NWASCO guidelines. 18 people per on-site facility based on data of Kanyama FSM pilot project. Assumed overall average frequency of emptying is once in five years. ]

Indicator 3: Tons of BOD5 removed by the treatment plant supported under the project

x

Tons/year

77

230

230

470

709

949

Reports from LWSC

Recorded at Ngwerere Sewerage Ponds [footnoteRef:9]. (Baseline data calculated from LWSC measurements in Dec 2016) [9: Based on Ngwerere SP baseline load as per data of LWSC for 2013/2014 being 7000 m/d with BOD5 inflow 110 mg/l and outflow 20 mg/l. For 2020, assumed flow is 20,000 m/d (80% of design capacity being 24,900 m/d) with an inflow BOD5 of 170 mg/l and outflow BOD of 40 mg/l. ]

Indicator 4: Tons of BOD5 removed by fecal sludge management systems

Tons/year

0

0

21

63

147

210

Reports from LWSC

Calculated on basis of sludge volume taken over, multiplied by 35 g BOD5/liter. [footnoteRef:10] [10: Based on assumption of 35,000 mg/liter BOD5 for received fecal sludge; 1200-liter sludge per standard size single latrine; with 10,000 standard size latrines emptied by end of project. Double size latrines or bigger to be counted in standard size equivalents. ]

Indicator 5: Domestic sewerage tariff increased (cumulative) to recovery O&M and debt servicing costs for domestic and other customers

% of water tariff

30%

45%

30%

45%

35%

50%

39%

54%

43%

58%

50%

65%

This indicator is contingent on tariff proposals being approved by NWASCO.[footnoteRef:11] [11: In the corresponding increase in ZMK/m plus inflation compensation to be applied in case NWASCO changes the sewerage tariff from % of water tariff to a true real sewerage tariff in ZMK/m.]

Indicator 6: Performance contract signed between LWSC management and branches

Yes/no

yes

yes

yes

yes

Yes

yes

Annual

Progress reports from LWSC

LWSC

Indicator 7: Integrated MIS established and used

Established/Used

No

No

Established

Used

Used

Used

Report from LWSC

Indicator 8: Percentage of sewerage blockage complaints addressed satisfactorily

%

98

98

99

100

100

100

EDAMS

NWASCO definition to be used. Will be monitored across the whole service area. (Using LWSC report to NWASCO)

Indicator 9: Direct project beneficiaries of which 50% female (on-site + off-site)

x

%

0

0

38 (36+2)

114 (108+6)

276 (252+24)

393 (360+33)

Annual

Progress reports from LWSC

LWSC

Assuming sewerage (at 50% connections) plus FSM

INTERMEDIATE RESULTS

Results Indicators

Core

Unit of Measure

Baseline

Cumulative Target Values

Frequency

Data Source/

Methodology

Responsibility for Data Collection

Description (indicator definition etc.)

YR 1

YR2

YR 3

YR 4

YR 5

Intermediate Result (Component One): Sewerage improvements (sewers, collectors, pump stations, treatment facilities constructed)

New household sewer connections constructed under the Project (cumulative)

x

No

0

0

300

850

2600

4100

Semi-annual

Progress reports

LWSC

Assumes 50% of households connect

Length of sewer rehabilitated and newly constructed(cumulative)

km

0

0

5

20

50

82

Semi-annual

Including main collectors and network

Wastewater treated per year (cumulative)

m/day (thousand)

4

7

7

10

15

20

Annual

Progress reports

LWSC

Influent to Ngwerere ponds. (Baseline data from LWSC measurements in Dec 2016)

Intermediate Result (Component Two): Access to on-site sanitation services and fecal sludge management systems

Improved on-site facilities constructed under the Project (cumulative)

x

No. (thousand)

0

0

1

3

7

10

Semi-annual

Progress reports

LWSC

2 Fecal sludge management facilities constructed & used

Constructed/

Used

2 Constructed.

Used

Used

Used

Semi-annual

Progress reports

LWSC

Operation Manual for FSM developed and in use

yes

Progress reports

LWSC

People trained to improve hygiene behavior or sanitation practices under the project (cumulative)

X

People (thousand)

0

0

36

108

252

360

Annual

Progress reports from LWSC

LWSC

Assuming that marketing campaign targets those with access to FSM services

Observed presence of hand washing facilities

%

0%

0%

20%

40%

60%

80%

Progress reports from LWSC

Report from program monitoring system (using data gathered by EHTs). In % of households in the project target area.

Intermediate Result (Component Three): Institutional strengthening

Minimum collection rate

%

79

85

85

85

85

85

Annual

Progress reports

LWSC

Using LWSC report to NWASCO

Number of sewer blockages addressed (cumulative)

#/km

5.7

5.0

4.5

4.5

4.8

5.2

Annual

Progress reports

LWSC

Feasibility studies completed (cumulative)

Number

1

2

Annual

Progress reports

LWSC

Drinking water samples tested (bacteriological and residual Chlorine)

Number

16755

16800

17000

17200

17500

17800

Annual

Progress reports

LWSC

Using LWSC report to NWASCO

where LWSC is nowBehaviourStructureCapabilityToolsInfluence2.12.72.20000000000000022.93where LWSC wants to beBehaviourStructureCapabilityToolsInfluence55555

Figure 2: LWSC

Disaggregated Current and Desired Maturity Level

Where LWSC is nowSOSLOCCuOCOOSESIAHRTOIMFMPerfM&EIKMIECCoIPLREMAEAPNCI3212.522.532.53222.51.52.533333432Where LWSC wants to be5555555555555555555555

Lusaka Sanitation Program - Abridged Implementation Schedule for Major Works Packages

Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Procurememt of consultancy services

Conceptual Design, ESIA and RAP

Tendering stage (Design- Build)

Design and Construction stage

Procurememt of consultancy services - completed

Design, ESIA and RAP -completed

Tendering stage (works)- completed

Construction stage

Procurememt of consultancy services

Design , ESIA and RAP

Tendering stage (works)

Construction stage

Procurememt of consultancy services

Design , ESIA and RAP

Tendering stage (works)

Construction stage

Procurememt of consultancy services

Design , ESIA and RAP

Tendering stage (works)

Construction stage

Procurememt of consultancy services

Design , ESIA and RAP

Tendering stage (works and FSM services)

Construction/FSM service delivery

Procurememt of consultancy services

Design , ESIA and RAP

Tendering stage (works)

Construction stage

World Bank -financed packages

EIB+KfW- financed packages

AfDB-financed packages

On-site sanitation investment package (WB)

On-site sanitation investment package (AfDB)

20232024201720182019202020212022

Sewerage investment package A (EIB/KfW) - New Ngwerere and new Chunga WWTPs

Sewerage investment package B1 (WB) - Priority (Year 1) sewerage works in Ngwerere and Machinchi sewer sheds

Sewerage investment package B1 (WB) - Year 2 -5 sewerage works in Ngwerere and Machinchi sewersheds

Sewerage investment package B2 (AfDB) - sewerage works in Chunga and Matero sewersheds

Sewerage investment package B3 (EIB) - sewerage works in Manchinchi sewershed