AFRICAN DEVELOPMENT BANK

URGENT WATER SUPPLY AND SANITATION REHABILITATION PROJECT

COUNTRY: ZIMBABWE
SUPPLEMENTARY GRANT















OWAS DEPARTMENT

June 2013
Appraisal Team
Regional Director E. Faal, SARC
Sector Director S. B. Jallow, OWAS/FAE
Division Manager O. Chanda, OWAS.2
Officer-In-Charge D. Kitabire, ZWFO
Team Leader: E. A. Demissie, OWAS.2/ZWFO


Table of contents

EXECUTIVE SUMMARY ......................................................................................................................... iv
I. INTRODUCTION ................................................................................................................................ 1
II. ORIGINAL PROJECT ......................................................................................................................... 1
2.1 Project Background and Origin......................................................................................................... 1
2.2 Project Objective ......................................................................................................................... 2
2.3 Project Components ..................................................................................................................... 2
2.4 Project Costs and Financing Arrangements ................................................................................. 2
2.5 Project Implementation Status ..................................................................................................... 3
III. REVISED PROJECT FINANCING ..................................................................................................... 6
3.1 Objectives and Description .......................................................................................................... 6
3.2 Revised Project Cost estimates .................................................................................................... 6
3.3 Revised Implementation Schedule .............................................................................................. 7
3.4 Project Implementation................................................................................................................ 8
IV. JUSTIFICATION FOR SUPPLEMENTARY FINANCING ............................................................... 8
V. LEGAL INSTRUMENTS AND AUTHORITY ................................................................................. 10
5.1 Legal Instrument ......................................................................................................................... 10
5.2 Conditions Associated with Banks Interventions ....................................................................... 10
5.3 Compliance with Bank Policies ................................................................................................... 10
VI. CONCLUSION AND RECOMMENDATION .................................................................................. 10
6.1 Conclusion ................................................................................................................................. 10
6.2 Recommendation ....................................................................................................................... 10

Annex I: Project Cost Estimates- Budget, Engineer Estimate and Actual Bids
Annex II : Project Implementation Schedule
i

Grant Information

Clients information
BORROWER: Government of the Republic of Zimbabwe

Financing Plan




ADBs key financing information


Supplementary Grant

US$ 13.956 million
Interest type* N/A
Interest rate spread* N/A
Commitment fee* N/A
Other fees* N/A
Tenor N/A
Grace period N/A
EIRR (base case) 14.17%


Timeframe - Main Milestones (expected)

Approval of Supplementary Financing by Zim-Fund POC 05/04/2013
Approval of Supplementary Financing by AfDB Board 10/07/2013
Effectiveness 10/07/2013
Last Disbursement 31/12/2014

Source Amount (US$)
million
Instrument
Zim-Fund 13.956 Grant

TOTAL COST 13.956 Grant
ii

Currency Equivalents


March 2013

1UA = US Dollar (USD) 1.51483



FISCAL YEAR

1 January 31 December


Acronyms and Abbreviations

AfDB African Development Bank
ADF African Development Fund
AWF African Water Facility
EIRR Economic Internal Rate of Return
GoZ Government of Zimbabwe
M&E Monitoring and Evaluation
MDTF Multi Donor Trust Fund
MMU Multi Donor Trust Fund Management Unit
NRW Non Revenue Water
NGO Non-Governmental Organization
NPV Net Present Value
PA Procurement Agency
IE Implementation Entity
POC Programme Oversight Committee
UWSSRP Urgent Water Supply and Sanitation Rehabilitation Project
VFM Value for Money
WASH Water and Sanitation and Hygiene
S&H Sanitation and Hygiene
WSS Water Supply and Sanitation
Zim-Fund Zimbabwe Multi-Donor Trust Fund

iii
RESULT MATRIX
Indicator Baseline Target
Cholera fatality rate 4.1% (2011) <1% (2020)
Diarrhea morbidity in children under 5 7.2/1000(2010) <5 (2020)
40% San. (2010)
90% by 2020, 100% by
2030
80% Water (2010)
90% by 2020, 100% by
2030
reliable and stable water produced 746,000m3 (2010) 820,000m3 (2014)
Quality of water - % of samples meeting standards 70% (2010) 90% (2014)
waste water treated
76,325m3/d
(2010) 298,000m3/d (2014)
no. of people to benefit from improved service N/A 2.4 million (52% women)
Reduction in NRW 55% (2011) 52% (2015)
Revenue collection Efficiency
40% (2010) 60% (2014)
Component 1: Water Supply and Sanitation Infrastructure
No. of water treatment works N/A 6 (2014)
clean water pump units replaced (to distribution
system) N/A 13 (2014)
raw water puming units replaced N/A 6 (2014)
No. of reservoirs built N/A 1 (2014)
National statistics, DHS
(Demographic and Health
Surveys)
access to clean water and sanitation in Zimbabwe
Rehabilitation of water supply
infrastructure
O
U
T
P
U
T
utility reports, progress
reports, works
commission reports
improved service delivery
utility reports, progress
reports, works
commission reports
I
M
P
A
C
T
Poor sector financing is a risk overlong term but the
improved political and regulatory environment and
increased government focus and continued
development partners support will mitigate this risk.
stabilised and restored water
and sanitation services
O
U
T
C
O
M
E
Country and Project name: Zimbabwe Urgent Water Supply and Sanitation Rehabilitation Project
The purpose of the Project is to contribute to improved health and social wellbeing of the population through improved provision of water and sanitation servic
RESULTS CHAIN
PERFORMANCE INDICATORS
MEANS OF
VERIFICATION
RISKS/MITIGATION MEASURES
Increased access to improved
water supply and sanitation
services resulting in improved
public health
The risk of failure to operate and maintaine
rehabilitated facilities will be mitigated through the
capacity building and training of staff and provision
of essential O&M supplies

iv


Indicator Baseline Target
No. of waste water treatment works N/A 9 (2014)
No. waste water effluent Pumping units 0 functioning 9 (2014)
No. of raw sewage pumping units 0 functioning 19 (2014)
km of rehabilitated sewer line N/A 13km (2014)
sewer cleaning capacity sewer cleaning equipment no capacity 6 (2013)
Component 2 Sanitation and Hygiene Promotion
S&H needs assessment and baseline report gender
responsive N/A yes by 2013
S&H education program developed N/A yes by 2013
community groups and school WASH groups trained
(60% women) N/A 120
No. School WASH groups trained (60% girls) 60
No. of people trained N/A
6000 (60% trainees
women)
No. of people reached through the program N/A 2.4 million (52% women)
Component 3: Institutional capacity building
Qualitative rapid assessment of past trainings N/A yes by 2013
training package/module prepared N/A yes by 2013
O&M staff trained N/A
120 (20% women) by
2014
capacity building goods supplied N/A yes by 2013
Revenue and Cost Recovery Revenue and cost recovery strategy N/A 6 by 2014
Medium and long term investment plans prepared Investment plans N/A 6 by 2014
Component 4: Engineering Services and Project Management
Independent Procurement agent engaged N/A yes by Nov 2011
Implementing Entity engaged N/A yes by Nov 2011
Project Steering Committee established N/A yes by Apr 2012
project audited N/A yes 2013, 2014
Original Revised at Implementation
Component 1: 24.86 38.71
Component 2: 0.30 0.39
Component 3: 1.56 2.14
Component 4: 2.93 2.37
Total: 29.65 43.61
RISKS/MITIGATION MEASURES
INPUTS Million USD
rehabilitation of sanitation infrastructures
Risk of power insecurity: this will be mitigated
through the ongoing EPIRP and next phase project
which will improve reliabiity at the facitlities
Effective project management system established
Capacity building for operation maintenance
Risk of implementation delays. To be mitigated
through close follow-up and monitoring of progress
by the Bank through the MMU and closer
collaboration with GoZ institutions and
Municipalities, adn the project steering committee;
RESULTS CHAIN
PERFORMANCE INDICATORS
Component 2: Hygiene Promotion
Component 3: Institutional capacity building
MEANS OF
VERIFICATIO
Component 4: Engineering Services and Project Management
S&H needs assessment and program development
(gender sensitive)
Taining and promotion activities
O
U
T
P
U
T
K
E
Y

A
C
T
I
V
I
T
I
E
S
COMPONENTS
Component 1: Rehabilitation of water supply and sanitation infrastructure
v

EXECUTIVE SUMMARY

A grant amounting to USD 29.651 million from the resources of the Zimbabwe Multi-Donor
Trust Fund to finance the Urgent Water Supply and Sanitation Rehabilitation Project (UWSSRP)
targeting six municipalities (Harare, Chitungwiza, Chegutu, Masvingo, Kwekwe, and Mutare)
was approved in April 2011 with the Protocol of Agreement being signed in June 2011. The
envisaged outcomes of the intervention include: increased reliability, quality and availability of
water supply in the Project areas; restored wastewater treatment capacity; and reduced incidence
of cholera and other water related diseases.

The Project was launched in December 2011 following the recruitment of the Implementing
Entity and Procurement Agent in November 2011. Since then, significant progress has been
achieved. The technical assessments, definition of scope of works and services and preparation
of procurement documents were completed followed by launch of procurement process. The
tenders evaluation for all major packages have almost been completed. The rehabilitation works
and the sewer cleaning equipment contracts for Mutare have been awarded while those for
Harare, Chitungwiza, Chegutu, Kwekwe and Masvingo are being finalised. The audit services,
investment plan, and hygiene and sanitation services contracts are in the final stages of
conclusion. The physical works commenced in March 2013 with the handing over of the Mutare
site to the contractor who has started mobilizing its key staff to site.

Despite the good progress made in the procurement process, the high bid prices obtained for the
tenders pose challenges for the implementation of the Project. Priced bids received were
significantly higher than the budgeted figures estimated in the Project Appraisal Report and the
Engineers recent estimate. The reasons for the high bid prices were (i) the complexity of the
rehabilitation works and associated risks; (ii) the gap of information in terms of manuals,
procedures, and as built drawings for existing systems (iii) lack of recent, similar projects with a
similar scale in Zimbabwe to use as references; and (iv) perceived risks by the market in relation
to the unusual complex implementation arrangement. Considering the concluded tenders and
making estimates on further requirements during implementation, the expected total value of the
Project is now estimated at US$ 43.607 million in order to execute the project as originally
envisaged. The additional resources required are therefore US$ 13.956 million.

It is highly recommended that if the Project goals and objectives are to be met, the Project must
be completed as per the original plan. Reducing the scope of works will result in the Project
failing to achieve its objectives. The supplementary resources being requested will make it
possible for the Project to be completed as planned. Taking this into account, the Program
Oversight Committee (POC) of the Zim-Fund approved the supplementary Grant on 5 April
2013.
1

REPORT AND RECOMMENDATION OF MANAGEMENT FOR A PROPOSED
SUPPLEMENTARY GRANT TO ZIMBWBWE FOR THE URGENT WATER SUPPLY
AND SANITATION REHABILITATION PROJECT (UWSSRP)

Management hereby submits this report and recommendations concerning a proposal to grant a
US$ 13.956 million supplementary grant to the Republic of Zimbabwe from the resources of the
Zimbabwe Multi-Donor Trust Fund (Zim-Fund) to finance the shortfall in financing for the full
implementation of the UWSSRP.
I. INTRODUCTION

1.1 It is to be recalled that on 7 April 2011, the Board approved, on a lapse-of-time basis,
financing of the UWSSRP targeting six municipalities (Harare, Chitungwiza, Chegutu,
Masvingo, Kwekwe, and Mutare) for the stabilisation and improvement of water and sanitation
services. The envisaged outcomes of the intervention include: increased reliability, quality and
availability of water supply in the Project areas; restored wastewater treatment capacity; and
reduced incidence of cholera and other water related diseases.
1.2 The original estimated cost of the Project was US$ 29.561 million. The Project Protocol
of Agreement is dated 10 June 2011, and the Project was launched on 15 December 2011 after
the recruitment of the Implementing Entity and Procurement Agent was finalized in November
2011, followed by technical assessments, preparation of tender documents, and commencement
of the tendering process. By 31 December 2012, the tendering of the major components of the
Project had been completed. The tendering resulted in high bid prices beyond the budgetary
provisions of the Project. Due to the importance of implementing the full scope of the Project for
achieving the Project objectives, this report is requesting supplementary financing in the amount
of US$ 13.956 million to enable the full implementation of the Project as originally envisaged.
II. ORIGINAL PROJECT

2.1 Project Background and Origin

2.1.1 The political and economic situation in Zimbabwe for the last decade has severely
affected all sectors of the economy including infrastructure. With limited resources for
maintenance, most of the infrastructure including water supply and sanitation infrastructure has
fallen into disrepair with inevitable deterioration that seriously compromising service delivery.
The dilapidated state of the infrastructure was a major contributing factor to the severe cholera
outbreak during 2008/09 rainy season. Until the delivery of water supply and sanitation services
is improved, the threat of outbreaks of water-related diseases, including cholera, will remain. A
rapid assessment to establish the status of the main water supply and sewerage infrastructure in
most of the bigger towns throughout the country was carried out in 2009 and 2010 with support
2

from development partners, identifying emergency, short-term and medium term rehabilitation
works.
2.1.2 As a result, the six urban areas of Harare, Chitungwiza, Mutare, Masvingo, Kwekwe and
Chegutu were chosen for this Project. The Project is part of the ongoing efforts to improve the
Water Supply and Sanitation infrastructure. The Project entails urgent repairs and rehabilitation
of critical installations including pumping stations, electro-mechanical works, and water
treatment plants. For sanitation, the urgent repairs include critical trunk and outfall sewers,
booster pump stations and treatment works, as well as treated effluent disposal facilities. The
Project will also support community sensitization and promotion of improved sanitation and
hygiene. In addition, the Project will provide capacity building support to the municipalities and
assistance in developing medium- and long-term development plans for water and sanitation
services.

2.2 Project Objective
2.2.1 The main Project objective has not changed and is to provide urgent support for
restoration and stabilization of water supply and sanitation services in the municipalities of
Harare, Chitungwiza, Mutare, Chegutu, Masvingo and Kwekwe, and to improve their
sustainability.

2.3 Project Components
2.3.1 As appraised in 2010/11, the UWSSRP was the first intervention proposed for financing
under the Zim-Fund. The Project was prepared through wide consultations with donors in
Zimbabwe and various arms of the national government and local authorities. The Project
components have not changed and are as follows:
A. Rehabilitation of Water Supply and Sewerage Infrastructure
B. Promotion of Improved Sanitation and Hygiene Education
C. Institutional Support
D. Project Management and Engineering Services.

2.4 Project Costs and Financing Arrangements
The total Project estimated budget at appraisal was US$ 29.651 million (approximately
UA 19.053 million). The tables below provide details on the original amounts allocated by
component and category of expenditure.
3

Table 1: Project Cost Estimates by Component
Components US$ (million)
A Rehabilitation of Water Supply and Sewerage
Systems in the Six Urban Areas
24.857
B Promotion of Improved Sanitation and Hygiene
Education
0.300
C Institutional Support 1.561
D Project Management and Eng. Services 2.933
Total 29.651

Table 2: Project Cost by Category of Expenditure







2.5 Project Implementation Status
2.5.1 The Project became effective for disbursement only in May 2012 due to the time taken
for the Government of Zimbabwe (GoZ) to fulfill the conditions precedent to first disbursement.
This delay slowed down the initial technical assessment phase for the preparation of detailed
scope, specification and design of Project interventions. The overall slippage from the
implementation schedule set out in the Appraisal Report is currently estimated at 12 months.
Despite the delays, the Project has made steady progress and achieved the following milestones:

Completion of the technical assessments and definition of scope of works and services
for all six municipalities;
Preparation of procurement documents;
Launch of procurement process including prequalification process;
Completion of tenders evaluation for all major packages;
Negotiation with recommended bidders either completed or near completion;
Award of Contracts (supply of sewer cleaning equipment-UWSSRP/009 and works
contract for Mutare UWSSRP/004); and
Commencement of physical works for the Mutare package.

2.5.2 The detailed status of implementation of the Project by component is as follows:

2.6 Rehabilitation of Water Supply and Sewerage Systems Infrastructure
2.6.1 The tendering process for all works packages have reached advanced stages. The Mutare
works package (UWSSRP/004) was awarded in February 2013. The Contractor, Technofab-
Category of Expenditure USD (million)
A Works 24.857
B Services 3.994
C Miscellaneous 0.800
TOTAL PROJECT COSTS 29.651
4

Gammon Joint Venture, has mobilised and physical works commenced shortly thereafter in
March 2013. These works are scheduled for completion by the year-end 2013. The contract for
the supply of sewer cleaning equipment (UWSSRP/009) was also awarded in February 2013, and
delivery of all equipment will be completed within six months from the date of the confirmed
order, which is expected to be 30th October 2013.

2.6.2 The other bids received for the remaining two works packages (1) Harare and
Chitungwiza, and (2) Chegutu, Kwekwe and Masvingo were judged to be high compared to the
engineers estimates and budget. Following a request from the Zim-Fund contributing donors, a
value for money (VFM) analysis was conducted. The assessment concluded that there was no
VFM for the two works packages due to some items being priced higher than market value.
Following the VFM outcome discussions, the POC authorised the MMU to proceed to negotiate
with the recommended bidder with a view to remove the high priced pond desludging activities
from the scope and retender those activities following revision of specification and requirements.
The preparation of the bidding documents was completed and tendering is in progress. The two
main works packages, as re-scoped to remove the pond desludging activities, have been
successfully negotiated for revised scope in line with the Banks Rules and Procedures for
Procurement of Goods and Works.

2.7 Promotion of Improved Sanitation and Hygiene Education

The terms of reference for this component were prepared based on the recently prepared
Urban Hygiene and Sanitation Promotion Guidelines and other guidelines for participatory
health and hygiene education and consultation with the participating municipalities. The
activities under this component include comprehensive review of similar activities carried out in
the recent past in urban areas, and conducting pilot baseline survey to establish the demographic
and social economic situation of communities in typical high density areas. On the basis of the
findings of the baseline study, the appropriate promotion and education program will be designed
and implemented. The recruitment of a suitable NGO to carry out this assignment was concluded
in April 2013 with activities commencing on 20
th
May 2013.

2.8 Institutional Support

2.8.1 Following an initial scoping assessment of each municipality, a capacity building
program was designed. The institutional capacity building will include training module
development and training in water and waste water treatment process, operation and maintenance
of sewer cleaning, occupational health and safety procedures, and water quality monitoring. This
component will also engage each municipality to develop cost recovery strategy with improving
service levels to residents. The recruitment process of a suitable service provider is in progress
with the contract anticipated to be finalized in June 2013.
5

2.8.2 This component also envisages providing planning support for each municipality in
medium (2020) and long-term (2030) water and sanitation investment plan preparation. The
outcome of the exercise will enable the municipalities to prepare bankable investment plans on
the basis of their priorities and in view of their medium and long-term requirements. The contract
for the service provider was concluded in April 2013 with activities commencing on 20
th
May
2013.
2.8.3 The provision of capacity building goods/equipment will be synchronized with the work
of the institutional development consultancy and investment plan preparation services.

2.9 Project Management and Engineering Services

2.9.1 The GoZ procured the services of Lahmeyer GKW Consult GmbH (formerly Poyry
Environment GmbH) as an Implementing Entity (IE) for the Project with assistance by the MMU
through advanced contracting procedures with the procurement process commencing prior to the
approval of the Project by the Board of the AfDB. In line with the Zim-Fund Operations Manual,
the IE provides project management, coordination, technical assessment, preparation of technical
documents for tenders and supervision services. The IE and GoZ entered into the Implementing
Entity Agreement in November 2011, with the IE mobilization commencing in December 2011.
2.9.2 In accordance with the the Zim-Fund Operations Manual, the GoZ similarly recruited
Crown Agents (UK) as a Procurement Agent (PA) for projects financed under the Zim-Fund,
initially with resources from the Fragile State Facility. The PA is responsible for providing
procurement services and is acting as the procuring and contracting entity on behalf of GoZ. The
GoZ and the PA concluded the Procurement Agent Agreement in November 2011, again using
advanced contracting with the assistance of the MMU, and the PA commenced its services in
December 2011.
2.9.3 Following the recruitment of the PA and IE, the Project was officially launched in
December 2011. Both the PA and the IE have performed well to date and shown an admirable
willingness to ensure achievement of the Project objectives under difficult circumstances.
2.9.4 To date, the IE has been active in conducting technical assessments, providing technical
inputs for tender document preparation process, prequalification, tendering process, evaluation
process, and contract award negotiations. With the technical input from the IE, the PA is
effectively leading and administering the procurement process. The procurement process for
most of the packages is near completion and the next phase of the PA role will focus on
administering the contracts on behalf of GoZ. The IE will have the role of engineer to supervise
the works and services to be provided.
2.9.5 The Project audit for the year ending 2011 was postponed as justified by the absence of
any financial transaction and low level of activities during that year and the projects first audit is
due by the end of June 2013 and will be cover all project activities up to December 2012. The
6

recruitment of the Project auditor was concluded in May 2013 and the auditor commenced its
service as of 29 May 2013. The auditor services will include both the Zim-Fund [Phase 1] water
and power projects.
2.9.6 Despite the good progress made in the procurement process under each of the above
components, the high bid prices obtained for the tenders pose challenges for the implementation
of the Project. Priced bids received have been significantly higher than the budgeted figures set
out in the Project Appraisal Report, as well as the engineers estimate at bidding stage. Further
details on the bid amounts and additional resources requirement is covered in section 3 of this
report.
III. REVISED PROJECT FINANCING

3.1 Objectives and Description
The Project objectives have not changed and remain as described in section 2.2 above.
However the total population estimated at appraisal in the Project beneficiary municipalities has
changed from 4.15 million to 2.4 million following the national population census conducted in
August 2012. This has been reflected in the revised Project Log frame.
3.2 Revised Project Cost estimates
3.2.1 The bidding process for most of the Project packages has been completed and the current
status of the budget in relation to the received bid prices is provided in Annex I. The received bid
prices exceeded the budget by a margin ranging from 25 % to 108 %. The principal reasons for
the high tender price outcomes were due to (i) The complexity of the rehabilitation works and
associated risks with shorter duration for execution in operational plants; (ii) the gap of
information in terms of manuals, procedures, and as built drawings for existing systems (iii)
Lack of recent, similar projects with a similar scale in Zimbabwe to use as references; and (iv)
Complexity of implementation arrangement and perceived risks.
3.2.2 Considering the concluded tenders and making estimates for outstanding contracts and
requirements during works execution phase, that include the new packages dealing with the pond
desludging activities, that was removed from the scope of works for the two remaining
rehabilitation packages, the extra management and engineering services, and the contingency, the
expected total value of the Project is estimated at the revised total amount of US$ 43.607 million
as shown in Table 3.1 and 3.2 below. Additional resources amounting to US$ 13.956 is therefore
required for the Project to achieve its original objective.

7

Table 3.1: Revised Project Cost Estimates by Component

Components
At
Appraisal
US$
(million)
Revised at
Implementation
US$ (millions)
A
Rehabilitation of Water Supply and Sewerage
Systems in the Six Urban Areas

24.857

36.867
B
Promotion of Improved Sanitation and
Hygiene Education

0.3

0.375
C Institutional Support

1.561

2.035
D Project Management and Eng. Services

2.933

2.253
Total

29.651

41.531
Contingency at 5%

2.076
Total

29.651

43.607
Additional Resource Required

13.956


Table 3.2: Supplementary Financing Categories of Expenditure

Categories of Expenditure Amount in US$
Works 11.805
Services -
Miscellaneous 0.075
Goods -
Contingency 2.076
Total 13.956


3.2.3 Further details on costing contractby-contract is provided in Annex I.

3.3 Revised Implementation Schedule
The revised implementation schedule is being determined based on the anticipated
commencement of the Harare and Chitungwiza (UWSSRP/002) and Chegutu, Kwekwe and
Masvingo (UWSSRP 003) rehabilitation works contracts. The proposed new works packages for
the pond desludging activities for UWSSRP/002 and 003 will be scheduled to run parallel with
the main works contracts. There have been several delays in the Project since its beginning due
to delay in recruitment of the IE and PA, delay in project effectiveness, late advance payments to
8

the IE and PA, late completion of the technical assessment, longer period taken for the
procurement process, and delayed conclusion of the works and services packages. It is now
envisaged that the Project components will be completed by end-March 2014. In this regard, the
deadline for last disbursement was extended from 31 December 2013 to 31
st
December 2014,
which will apply equally to the supplementary financing. A revised project implementation
schedule is at Annex II.
3.4 Project Implementation
3.4.1 Implementation Arrangement: The original institutional and implementation
arrangements of the Project will continue. The POC provides an overall strategic and policy
oversight for the Zim-Fund. The MMU under the Banks oversight provides portfolio
management support. The Implementing Entity and Procurement Agent procured through the
program provide project management and procurement services respectively on behalf of the
Government of Zimbabwe. The Project receives guidance from a Project Steering Committee
comprising beneficiary municipalities and key Ministries.
3.4.2 Monitoring and Evaluation: Zim-Fund has recruited a consultant to develop the M&E
framework for the Project, and the M&E framework will be rolled out from June 2013. The
Project result matrix has been updated on the basis of the technical assessment and recent data
available. It was also prepared in line with the new template approved by the Bank.
3.4.3 Social and Environmental Management Plan: An Environmental and Social
Management Plan specific to each municipality was developed for implementation and
monitoring. The Plan has been systematically included in the works packages for implementation
by the contractors and its implementation will be monitored and supervised by the supervising
engineer.

IV. JUSTIFICATION FOR SUPPLEMENTARY FINANCING

4.1 The supplementary financing proposal was approved by the Program Oversight
Committee of the Zim-Fund, which is composed of the Zim-Fund donors and GoZ
representatives, on 5 April 2013, after consideration of the importance of achieving the original
objective of the Project. The Project is in alignment with the Bank Group Country Program Brief
and the Banks Strategy for 2013-2022. The inadequate provision or lack of clean water supply
and sanitation services has affected the vulnerable and poorer segment of the residents of the
beneficiary municipalities the most. It therefore significantly responds to the inclusive agenda
and should be supported for the achievement of the full Project objective.
4.2 This supplementary financing proposal meets the applicable general conditions and
specific conditions for supplementary financing set out in the Bank Group Policy and Procedures
for Supplementary Financing (ADB/BD/WP/97/83). The execution of the Project has
9

commenced and is progressing satisfactorily from the technical perspective but will require
additional resources to achieve its objectives and the GoZ is not in a position to provide
additional financing. In this regard, the Zim-Fund POC took into account the factors enumerated
below in approving the supplementary financing:
a) There is need to build upon the recent water supply and sanitation interventions so as to
improve the deteriorated water supply and sanitation infrastructure in the beneficiary
municipalities. A delay in improvement of water and sanitation services has high tangible
and nontangible economic and social costs.
b) The Project Appraisal cost estimates were derived from the emergency works in 2009
and prices then-prevailing in the country. The estimates were not based on a detailed
feasibility study but were prepared rather as an urgent response with technical assessment
and project execution combined. Notwithstanding the IEs scoping which took into
account the available budget, the bid prices were surprisingly high for certain value
works and goods items. Although re-scoping is possible to match the available budgets,
this would result in the original objectives of the Project not being met.
c) The various elements of the works identified for rehabilitation are interdependent and the
intended objective cannot be achieved if some of the elements are removed. In particular,
two of the principal outcomes of the current intervention would be at risk, namely: (i)
stabilization of bulk of water supply in several of the project municipalities; and (ii)
reduction of pollution of water sources with untreated sewage discharges in several of the
project municipalities.
d) An alternative of reducing the scope to match the available budget would be the removal
of one or more of the beneficiary municipalities from the Project. This would however
result in a significant proportion of the originally identified target communities being
excluded with a corresponding reduction in the overall impact of the Project. The
removal of any municipality is also sensitive and would risk damaging the reputation of
the Zim-Fund in the eyes of the local governments and the population.
e) The project is technically and economically viable even with the revised cost. The
economic cost benefit analysis of the revised project has been carried out by comparing
the with and without project scenarios. The revised EIRR for the project is 14.2%
and NPV (at 10%) is US$ 15.6 million, which is lower than the estimate at appraisal,
EIRR 22% and NPV US$ 37.2 million. However, the value is higher than the opportunity
cost of capital for similar projects estimated as 12%. As such, the project is considered
economically viable.
10

V. LEGAL INSTRUMENTS AND AUTHORITY

5.1 Legal Instrument
The legal instrument to finance the supplementary grant will be a Protocol of Agreement
between the Republic of Zimbabwe and the Bank, in its capacity as the administrator of the
Zimbabwe Multi-Donor Trust Fund (Zim-Fund), for a grant from the resources of the Zim-Fund.
5.2 Conditions Associated with Banks Interventions
5.2.1 Conditions Precedent to Entry into Force of the Grant
The Protocol of Agreement will enter into force on its date of signature by the Recipient and the
Bank.
5.2.2 Conditions Precedent to First Disbursement of the Grant
The conditions precedent to first disbursement of the initial grant, which will be extended to the
supplementary grant, have been fulfilled. As such, disbursements may be made from the
supplementary grant upon entry into force of the Protocol of Agreement.
5.3 Compliance with Bank Policies
The proposed supplementary grant complies with all applicable Bank policies, including
the Bank Group Policy and Procedures for Supplementary Financing.

VI. CONCLUSION AND RECOMMENDATION
6.1 Conclusion

Priced bids received have been significantly higher than the budgeted figures from the
estimates arrived at during the Project Appraisal stage and by the Engineers estimate.
Considering the concluded tenders and estimates on the outstanding packages and the
requirements during execution, the expected total value of the works is estimated at US$ 43.607
million, thus a requirement of additional resources of US$ 13.956 million is needed in order to
achieve the objectives of UWSSRP.

6.2 Recommendation
Considering the many socio-economic and environmental benefits of this Project, it is
recommended that the Bank approves this supplementary grant, from the resources of the Zim-
Fund, for the amount of US$ 13.956 million for the UWSSRP.

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Annex I : Project Cost Estimates- Budget, Engineer Estimate and Actual Bids
ZIMFUND UWSSRP: PROJECT COMPONENTS FINACIAL STATUS
6-Jun-13
Component Project No. Description
Budget as
appraised
Cost Estimate by IE
Contract
Value /
Lowest
Compliant
Bid Price /
Revised
Estimate
Actual Contract
or revised
estimate
Additional
Resource
Required
Comment
[USD] [USD] [USD] [USD] [USD]
Rehabilitation of Water Supply and
Sewerage Systems
UWSSRP/002
Rehabilitation of Water Supply and Sewerage
Systems in Harare and Chitungwiza
10955000
10402511.86
16073315 11345690 390690
Contracts have been negotiated in line with
recommendations from the VFM assessment and pond
desludging items were removed from the scope resulting in
revised contract amount
UWSSRP/003
Rehabilitation of Water Supply and Sewerage
Systems in Chegutu, Kwekwe and Masvingo
8342000
7392528.25
11789394.5 9231294.5 889294.5
Contracts have been negotiated in line with
recommendations from the VFM assessment and pond
desludging items were removed from the scope resulting in
revised contract amount
UWSSRP/004
Rehabilitation of Water Supply and Sewerage
Systems in Mutare
5560000 7919360.78 9717543 9080343.05 3520343.05
Letter of award issued on 30.01.2013. Contract price
reduction was due to removal of bill item for access road.
The item removed will be executed through provision sum
included in the contract
UWSSRP/009
Supply and delivery of sewer cleaning ,
related equipment and associated services
Included in 002,
003 and 004
3300000 4117369.4 4117369.4 4117369.4 contract negotiated and awarded
UWSSRP/012 Harare and Chitunwiza Pond desludging included in 002 included in 003 2337938 2337938
these works are the reduced scope from UWSSRP/002 and
have been advertised in May 2013
UWSSRP/013 Chegutu Pond desludging included in 003 included in 004 754233 754233
these works are the reduced scope from UWSSRP/003 and
have been advertised in May 2013
Sanitation and Hygiene Education Prograrm
UWSSRP/005 Sanitation and Hygiene Education Programme 300000 300000 387,873 387,874 87873 contract negotiated and awarded

- 2 -


Component Project No. Description
Budget as
appraised
Cost Estimate by IE
Contract
Value /
Lowest
Compliant
Bid Price /
Revised
Estimate
Actual Contract
or revised
estimate
Additional
Resource
Required
Comment
[USD] [USD] [USD] [USD] [USD]
Institutional Support
UWSSRP/006
Institutional Development Consultancy
Services
538280 590400 590400 590400 52120 Prices not yet available.
UWSSRP/007 Investment Plan Consultancy Services 522480 1047600 945075 945075 422595 contract negotiated and awarded
UWSSRP/010
Specialist Software and related computer
Equipment
included in 011 included in 011 Prices not yet available.
UWSSRP/011 Capacity Building Goods 500000 500000 500000 500000 0 Prices not yet available.
Project Management and Eng. Services
UWSSRP/001 Implementing Entity Services 2872820 2211066 2211066 -661754 Actual contract, signed November 2011
UWSSRP/008 Project Auditing Services 60000 60000 42379.03 42379.03 -17620.97 contract negotiated and awarded
Total 29,650,580 31,512,401 41,530,873 11,880,293
Contingency at 5% 2,076,544 2,076,543.6
Total Additional Funding 43,607,417 13,956,837
Notes: 1. The phsical contingency assumed at 5% overall will cover additional payments for the IE services due to project delay, project audit requirement beyond the current requirement due to increased
project duration, and any additional requirement beyond the current contract amounts and due to unavoidable circustances.
2. In the Cost Estimates the estimated cost for UWSSRP/009 separated from UWSSRP/002, 003 and 004
3. The cost estimate for UWSSRP/004 originally considered the re-use of pipe materials on site for which the contract estimate was at US$4.686 million. However, EU rules regarding the use of
Asbestos meant that this was not permitted, with considerable increased cost. The revised engineer estimate stands at US$7.919 million

Annex I I : Project I mplementation Schedule


Annex 3 : Map of the Country and Location of the Project Areas