Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project: Delhi Water Supply Improvement Project
Loan Agreement: October 29, 2012
Loan amount: 28,975 million yen
Borrower: The President of India
2. Background and Necessity of the Project(1) Current Status and Issues of the Water Supply and Sewerage System/Sanitary Sector in India
In India, accessibility to safe water has been improved from 72% in 1990 to 88% in 2008. The country has
been reaching its goal of establishing sustainable access to drinking water throughout India under theEleventh Five-Year Plan (April 2007 through March 2012). However, water resource development andconstruction of water supply/sewerage systems are not keeping pace with increasing demand of drinking
water stemming from India’s increasing population and economic growth. Now, the country suffers fromexcessive dependence on groundwater and persistent troubles such as insufficient volume, poor water
quality, and inadequate services. Even worse, groundwater in some areas contains substances harmful tohumans such as Fluoride and Arsenic. In particular, the fluoride level in the water far beyond the WHO
criteria of 1.5 mg/L, calling for urgent action to ensure supply of the safe drinking water. The seweragesystems in the country are also in-appropriate. Specifically, the facilities connected to the sewer systemremains extremely low—just 28% in urban areas. Due to a drastic influx of population into urban areas andrapid industrialization, wastewater has overflowed treatment capacity and is passing untreated into rivers
and the water bodies, threatening living conditions and sanitation for local residents. The organizations
providing drinking/sewage water services face technical and financial challenges in operation/maintenance,such as high ratios of non-revenue water, problems in setting tariffs and lack of technical capacity.
(2) Development Policy for the Water Supply/Sewerage Sector in India and Priority of the Project
The Government of India set a goal of providing drinking water to India’s entire urban population by 2011
and constructing sanitation facilities under the Eleventh Five-Year Plan (April 2007 through March 2012).
Under the Twelfth Five-Year Plan (April 2012 through March 2017), government announced that they would
follow the same approach. The Master Plan for Delhi-2021 formulated by the Delhi Development Authority
in 2008 pointed out remedies for the drinking water sector: (1) taking measures to reduce non-revenue
water and (2) achieving equitable water supply. Delhi Jal Board (DJB) will promote implementation ofprojects based on the M P. As a part of the M P, JICA supported the formulation of the M P through Delhi
Water Supply Operation and Maintenance Project in India (2009–2011). The project is defined as the top
priority scheme under M P.
(3) Japan/JICA’s Policy/and Operations in the Water Supply/Sewerage Sector in India
As a part of environmental measures, priority goals for improving poverty alleviation and environmental
issues under the Country Assistance Program for India by the Government of Japan were formulated. The
Country Assistance Program considers rapid growth of urban population and support the supply ofadequate and safe drinking water and the remediation of poor public sanitation in order to improve living
standards and prevent water contamination in the major rivers. Further, in rural areas, water supply projects
are supported as part of the development of basic infrastructure for the living environment of the poor. InJapanese ODA loans for India in the water supply/sewerage and sanitation sector, there are 24 projects withloans totaling 435.1 billion yen (13.6% of the entire approved amount). Under non– Japanese ODA loans,

JICA currently provides the Capacity Development Project for Non-Revenue Water Reduction in Goa(2011-2014). JICA's other contributions include dispatching policy advisors (2011-2013) in charge of thesewerage sector to the Ministry of Urban Development.
(4) Other Donors’ Activity
The World Bank (WB) and Asian Development Bank (ADB) provide assistance in the water supply andsewerage system sector as a part of poverty reduction measures. Their priority issues are: (1)reorganization of relevant institutions, (2) fostering competition between local municipalities to provide
drinking and sewerage services, (3) optimizing water fees, (4) introducing private-sector capital, and (5)considering impoverished groups. The World Bank supported a survey related to the improvement ofdrinking water facilities in Delhi.
(5) Necessity of the Project
India's National Capital Territory of Delhi (population: 16.75 million) suffers from limited water supply (only
6 hours or so in a day due to high leakage). The intermittent water supply makes things worse, since to stopand resume water supply, it is necessary to switch water distribution pumps on and off. This causes
deterioration in pipes and drains due to the pressure resulting from water hammering. Further, system
sections have not been delimitated based on purification facility capacity. Therefore, per-capita water supply
volume is not even among the system sections. To make matters worse, aging drinking water facilities andinsufficient maintenance of the systems further aggravate the leakage. Taking ever-increasing drinking
water usage due to explosive population growth along with economic development into account, thedrinking water supply in the future is expected to become even tighter, despite the development of new
water resources. This project aims to drastically improve leakage reduction to boost the volume of water tobe supplied and thereby achieve a consistent equitable water supply. The project further aims to enhancemaintenance by improving geographic information systems (GIS) related to drinking water facility data.
Therefore, the aim of the project satisfies the development policies of the Indian government as well as thesupport policies of the Japanese government and JICA. Consequently, JICA's support for this project isnecessary and very much relevant.
3. Project Description(1) Project Objectives
The objective of the Project is to achieve equitable and continuous water distribution in the National
Capital Territory of Delhi, by improving the water supply network including service network to customers,
thereby contributing in upgrading citizen’s living standard.
(2) Project Site/Target Area
Territory of Delhi(3) Project Components
1) Reconstruction and renewal of drinking water facilities (e.g. water purification plants, pump stations,water distribution pipes, and water meters) in the Chandrawal water treatment system commandarea
2) Introduction of Supervisory Control and Data Acquisition (SCADA) system and improvement of GIS
for drinking water facility data3) Consulting services (e.g. detailed designs, bidding support, supervision of construction, enhancing
maintenance management, and supporting educational activities for local residents)(4) Estimated Project Cost (Loan Amount
34,310 million yen (Yen Loan Amount: 28,975 million yen)(5) SchedulePlanned between November 2012 and December 2022 (total of 122 months). Project completion isdefined as the commencement of the service of the facilities (December 2021).
(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: Delhi Jal Board (DJB)3) Operation and Maintenance System: same as 2)(7) Environmental and Social Consideration, Poverty Reduction/Social Development
1) Environmental and Social Considerationi.

Category: Bii.

Reason for Categorization: This project is classified as Category B because it will not have
undesirable impact on the environment given the characteristics of the sector, the characteristics ofthe project and the characteristics of the project area under the “JICA Environmental and Socialiii.
iv.

v.
vi.

Guideline” (established in April 2010).
Environmental Permit: Preparation of an Environmental Impact Assessment (EIA) report for thisproject is not required under Indian law.
Anti-Pollution Measures: Drinking water facilities, including water purification plants, are designed
and constructed in consideration of minimized noise and dust. Also, the sludge produced during
facility operations will be adequately treated.
Natural Environment: Adverse impact on the natural environment is expected to be minimal
because the project sites and peripheral areas are located outside of national parks.
Social Environment: This project envisages renovation/rehabilitation of the existing facilities anddoes not involve land acquisition or resettlement.

vii.

Other/Monitoring: This project monitors air quality, water quality, noise, vibration, and the like during
the construction period. When in service, the execution agency will monitor wastewater, solid waste,
air quality, noise, and other parameters.

2) Promotion of Poverty Reduction: This project will involve educational activities for local residents,including slums.
3) Promotion of Social Development: JICA will study educational and capacity building activities, which
will be reviewed in consideration of the gender perspective.
(8) Collaboration with Other Donors:
Japan plans to provide assistance through yen loan projects using the knowledge accumulated by
Japan's municipal governments, including: (1) achieving a consistent water supply through management ofdrinking water facility data through GIS and SCADA and (2) enhancing operation and maintenance systems
at drinking water facilities.
(9) Other Important Issues:This project contributes to a stable drinking water supply by reconstructing and renewing drinking water
facilities. It also mitigates the impact of climate change by improving living conditions for local residents.
Therefore, this project contributes to climate change adaptation.

4. Project Benefits(1) Quantitative benefits
1) Evaluation Indicators (operation and effect indicators)

Indicators

Baseline(2011 actual)

Target (2023)
two years aftercompletion

Capacity utilization (%)-100

Average water supply hours per day

624

Meter Installation ratio (%)

40100

Water tariff revenue collection ratio (%)

6590

Non-revenue water ratio (%)
50152) Internal Rate of Return (IRR)
Based on the conditions below, the Economic Internal Rate of Return (EIRR) of this project wascalculated as 16.5%.
EIRR:
Cost: Project cost (excluding tax), operation and maintenance expenses
Benefits: Enhanced water charge payments and reduction in investment costs for water reservoirs
Project Life: 30 years(2) Qualitative benefits: Improvement of living conditions for residents of the Delhi territory, capacity building

for the financial sustainability and facilities maintenance by the executing agency, and adaptation toclimate change
5. External Factors and Risk Control
Economic stagnation and unstable political situation in India and the surrounding area of the project as wellas natural disasters
6. Lessons Learned from Past Projects(1) Assessment results of similar projects
A lesson learned from the results of Jamaica's ex-post monitoring of the Montego Bay Water Supply(Great River) Project was that reducing non-revenue water is absolutely critical to ensure the financial
sustainability of water supply projects. Therefore, it is necessary to include programs that reduces
non-revenue water and adoption of energy efficient systems.
(2) Lessons for the Project
To ensure appropriate O & M after project completion, funds to cover new investment costs, and stronger
financial health of DJB, JICA will make an effort to reduce the non-revenue water ratio through enhanced
operation and maintenance systems of drinking water facilities using GIS and Supervisory Control and Data
Acquisition (SCADA) system.
7. Plans for Future Evaluation(1) Indicators for Future Evaluation:
1) Facility Operation rate (%)2) Average water supply hours (hour per day)3) Installation rate of water meter (%)4) Water fare collection ratio (%)5) Non-revenue water ratio (%)6) Economic Internal Rate of Return (EIRR) (%)(2) Timing of Next Evaluation:
Two years after plan completion