Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: The People's Republic of Bangladesh
Project: Karnaphuli Water Supply Project (Phase2)
Loan Agreement: March 10, 2013
Loan Amount: 34,847 million Yen
Borrower: The Government of the People's Republic of Bangladesh
2. Background and Necessity of the Project(1) Current State and Issues of the Water Sector in Bangladesh
The supply of safe drinking water has not yet sufficiently been achieved inBangladesh. It is estimated that, despite a considerable improvement in 1990s, 81%of the people has access to safe drinking water in 2010. In addition, the improvementof water supply through developing the surface water has become an urgent issue,
taken into account that 90% of the drinking water both in urban and rural areas havebeen depending on the groundwater, while the groundwater level has declined due tothe excessive pumping of groundwater, together with serious arsenic contamination ofgroundwater. Particularly, the water supply coverage (pipe water supply) remained at
20% as of 2010, which forced many of the residents to purchase expensive bottles ofwater. Assuming further increases in urban
population for the coming period, it is an urgent issue in urban areas to improvewater supply using surface water. In addition, water supply facilities, including
distribution networks, have been dilapidated and maintained in inappropriate manners,
resulting in as high as 30-40% of non-revenue water in urban areas.
(2) Development Policies for the Water Sector in Bangladesh and the Priority of theProject
The “Sixth National Five-Year Development Plan (2011-2015)”has positioned, forthe purpose of achieving the UN Millennium Development Goals, the improvement inaccess to safe water supply and sanitary conditions as one of its top priorities, andhas set a goal to achieve 100% coverage of water supply. “National Water
Management Plan” (2004), “National Sanitation Strategy” (2005), “SectorDevelopment Plan - Water Supply and Sanitation in Bangladesh” (2011-2025) andother plans have articulated to improve the access to safe water through developing
water supply facilities in responding to the population increase in urban areas.
Furthermore, water demands are expected to increase in the coming period, which
requires providing enough amount of water supply and establishing efficient watersupply service system. In this regard, the Government of Bangladesh has set a target,
including the Project, to enhance water supply coverage in the main 4 cities (Dhaka,Chittagong, Khulna, Rajshahi) from 65% in 2005 up to 90% in 2025 and 95% in 2050.

Therefore, the Project is to directly contribute to these development policies, plansand strategies.
(3) Japan and JICA’s Policy and Operations in the Water Sector“JICA Country Analytical Work for Bangladesh”, prepared by JICA in February 2012,
analyzed and positioned the water supply sector as one of the prioritized issues in theurban development program. “Country Assistance Policy for Bangladesh”, issued inJune 2012, set ‘accelerating economic growth, which benefit all the population, forachieving transition to a middle income country’ as a priority area for the assistance,
articulating ‘urban development’ as a development issue. The Project is in line with thedirection suggested in the policy and the analytical work. Major achievements ofJapan’s assistance are as follows.
・ ODA Loan: Karnaphuli Water Supply Project (L/A signed in 2006), Khulna WaterSupply Project (L/A signed in 2011)
・ Technical Cooperation: Project for Advancing NRW (Non-Revenue Water)
Reduction Initiative (PANI) of Chittagong WASA (2009 - 2014)(4) Other Donors’ Activity
Main donor organizations in the urban water sector in Bangladesh include JICA,
World Bank (WB), and Asia Development Bank (ADB). WB has supported thedevelopment of water supply and sanitation in Dhaka City and Chittagong City, while
ADB has assisted developing water supply in Dhaka City, Khulna City and middle
rural cities. In 2008, a partnership framework for aid coordination regarding theassistance to the urban water and sewage sector was agreed among Government of
Bangladesh, WB, ADB, Denmark, Korea and Japan.
(5) Necessity of the Project
The Project aims at strengthening the capacity of water supply in Chittagong City
through the improvement of water supply facilities, such as a water treatment plant,transmission pipes and so forth, enabling the City to supply the water to its residents
properly and efficiently. “Karnaphuli Water Supply Project” and other water sector
projects have currently been implemented. However, further capacity development forwater supply is urgently needed, taken into account that the water demands areexpected to increase in the coming period, following the current population increase.
The implementation of the Project is expected to fill the gap between water demandand supply as well as to realize proper and efficient water distribution, which would
contribute to improve living environments for Chittagong residents. This is in line with
development policies of the Government of Bangladesh as well as assistance policiesof the Government of Japan and JICA, which underpins the necessity and relevanceof the Project to be implemented by JICA. Meanwhile, the Project is a successor ofthe on-going “Karnaphuli Water Supply Project”.

3.

Project Descriptions(1) Project Objective(s)The objective of the Project is to increase sustainable access to safe water for thepeople in Chittagong city, by constructing water supply facilities, thereby contributing
to the improvement of the living environment of the citizens.
(2) Project Site/Target Area: Chittagong City, Chittagong Division, Bangladesh(3) Project Components (Including the Procurement Method)
1) The construction of water intake facilities, water treatment plants, transmission
pipelines (international competitive bidding)2) The improvement of distribution pipelines (international competition bidding,domestic competition bidding)3) Consulting service (detailed designs, bidding assistance, constructionsupervision, etc) (a short-list method)(4) Estimated Project Cost (Loan Amount)
Total Project Cost: 44,390 million Yen, including ODA Loan Amount 34,847 million
Yen(5) Schedule
From March 2013 to January 2022 as planned (107 months in total). The time ofstarting the operation (January 2021) is to refer to the completion of the Project.
(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Executing Agency: Chittagong Water Supply and Sewerage Authority: CWASA
3) Operation and Maintenance System: Chittagong Water Supply and SewerageAuthority: CWASA(7) Environmental and Social Consideration/Poverty Reduction/Social Development
1) Environmental and Social Consideration① Category: B
Reason for Categorization: The project is not located in a sensitive area, nor
has it sensitive characteristics, nor falls it into sensitive sectors under the JICA
guidelines for environmental and social considerations (April 2010), and its
potential adverse impacts on the environment are not likely to be significant.
② Environmental Permit: The Report of Environmental Impact Assessment (EIA)
for the Project was approved by the Department of Environment, Ministry ofEnvironment and Forest in September 2007.
③ Anti-Pollution Measures: Antiseptic solutions, etc, which are utilized in thewater treatment plant, will be managed properly in accordance with the nationalstandards. In addition, both drainage water from the water treatment plant andnoises and fluctuations from the pump station are to meet the national drainage
standards and noise/fluctuation standards.
④ Natural Environment: Since the Project area is not located in and around asusceptible area, such as national parks, negative impacts on national
environment are estimated to be minimal.
⑤ Social Environment: Since the land required for the Project will be managed
within the area which was acquired for Phase 1, there is no need for further
land acquisition and resettlement for the Project.
⑥ Other / Monitoring: The executing agency of the Project is to conduct
monitoring activities on water quality, noises and fluctuations during theconstruction and the operation.
2) Promotion of Poverty Reduction: The Project is to supply water to areas including
slum areas where 40% of the total residents in Chittagong City reside.
3) Promotion of Social Development (e.g. Gender Perspective, Measure for
Infectious Diseases Including HIV/AIDS, Participatory Development,Consideration for the Handicapped etc.): No information specifically mentioned(8) Collaboration with Other Schemes and Donors
GIS database, established in the on-going Technical Cooperation Project for“Advancing NRW (Non-Revenue Water) Reduction Initiative (PANI) of Chittagong
WASA (2008 - 2010) “, will be utilized for the improvement of distribution pipelines inthe Project. Meanwhile, WB has been supporting the construction of water andsewage facilities in the City, which requires clear demarcation in terms of water supplyareas.
(9) Other Important Issues: No information specifically mentioned.
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicator)
Target (2023)

Indicator

Baseline(Actual Value in 2012)

Population Served*(1,000 persons)

1,363

2,008

Amount of water supply (㎥/day)

219,000

505,000

Rate of facility utilization (%)

100100Unaccounted-for-water rate (%)

33

23

Percentage of population served(%)

4751

Water supply amount per capita(Liter/ person / day)

107

120

* Targeting water supply through pipes by CWASA2) Internal Rate of Return【Expected value 2 yearsafter project completion】

Based on the conditions indicated below, Economic Internal Rate of Return (EIRR)of the Project is estimated to be 10.51%.
【EIRR】
Cost: The Project cost (excluding tax)
Operation and management cost/benefit: Willingness to pay regarding new watersupply, cost reduction effects (costs for alternative water sources, etc)
Project life: 30 years(2) Qualitative Effects
Improvement of living environments for residents in Chittagong City
5. External Factors/Risk Control
Delays in civil engineering works caused by flooding and other natural disasters;
setting the optimum level of water tariff for securing financial soundness of the
Executing Agency
6. Evaluation Results and Lessons Learned from Past Projects(1) Evaluation results of similar projects
Ex-post evaluations of similar projects, such as “Sri Lanka Towns North of Colombo
Water Supply Project”, suggested a lesson that it is important for the whole process,including intake, treatment, transmission and distribution, to be carried out as planned
as a unified project to generate the target outcomes to be expected.
(2) Lessons for the Project
For the improvement of water supply service in Chittagong City, it is an important
issue not only to increase water supply capacities but to improve water distribution
networks. Based on the aforementioned lessons, the Project is planned to beimplemented as a single project for the improvement of the intake, transmission anddistribution networks. Therefore, there is no risk that water supply with stable quality
and quantity is not ensured due to dilapidated distribution networks even if the water
treatment plant is newly established.
7.

Plan for Future Evaluation(1) Indicators to be Used
1) Population served, amount of water supply (m3/day), rate of facilityutilization(%),Unaccounted-for-water rate (%), percentage of population served(%), water supply amount per capita (Liter/ person / day)2) Economic Internal Rate of Return (EIRR) (%)(2) Timing of Next Evaluation：2 years after the completion of the Project
END