Introduction:
The water sector plays a critical role in Malawi’s economy, as most of the constraints to growth are related to water. Water-reliant sectors contribute an estimated 35 percent of the country’s GDP. The total renewable water resource available in Malawi is estimated at 17.3 km3/year, or 1,027 m3/capita/year, which is very close to water scarcity. Due to population growth, per capita, water availability has been declining at a rapid rate. Further, water resources in Malawi are highly variable between wet and dry seasons and from year to year, and the country’s stock of water storage infrastructure is one of the lowest in the region. Unsafe drinking water and poor sanitation in both rural and urban areas remain a binding constraint to Malawi’s growth and poverty reduction. It is estimated that Malawi loses about US$3.8 per capita or 1.1 percent of the country’s annual GDP due to poor health outcomes attributed to, among others, low access to safely managed sanitation services. While the country has made significant progress in improving access to water supply (access rates for drinking water supply have increased from 42 percent in 1990 to 87 percent in 2015), progress on sanitation has been slower (from 29 percent in 1990 to 40 percent in 2015). Moreover, official access figures often mask poor levels of services. High population growth, dwindling water resources, lagging infrastructure development, and aging water systems create large gaps between supply and demand, leading to unreliable services. Globally, Malawi is currently ranked number five out of the top 10 countries (with a population greater than one million), with the highest proportion of the population at risk of frequent water shortages.
Lilongwe City, in particular, faces unique water security challenges. Lilongwe River – the only source of water for the city is highly variable and very vulnerable during dry years. The river has been dammed twice to create storage for the dry season. The two dams – Kamuzu Dam 1 (KD1) and Kamuzu Dam 2 (KD2) constructed in 1966 and 1989 respectively – have a combined storage of 24 million m3, which is barely able to sustain current demand during the dry season. Water is abstracted at an intake point on the river about 20km downstream of KD2 and treated in Treatment Works 1 (TW1) and Treatment Works 2 (TW2), with a combined production capacity of 125,000 m3/day. However, on average, the plants are operating at 70 percent capacity, producing an average of about 90,000 m3 /day. Current peak water demand is estimated at 130,000 m3/day, and this is projected to increase to 170,000 m3 /day by 2025 and 220,000 m3/day by 2035. Thus, the water supply system is under strain and the city is already facing water shortages which are expected to become severe over the coming years unless major investments in new water production are undertaken.
Sanitation is also a major challenge in the city. A recent city-wide survey showed that only five percent of the population is served by a sewer system, while the majority relies on onsite sanitation systems (70 percent pit latrines and 25 percent septic tanks). Existing sewers and sewage treatment plants are dilapidated due to lack of maintenance, resulting in environmental pollution, as most of the sewage ends up in the environment without treatment. Faecal sludge emptying and collection from onsite systems is mainly done by small-scale private sector operators, with minimal regulation from the city council. There has not been any major investment in sanitation in Lilongwe since the 1980s. Given the current levels of sanitation services, city authorities need to urgently plan for integrated sanitation investments and address some of the priority infrastructure needs to reduce public health risks and environmental hazards due to poor sanitation. Recent cases of contamination of the city’s drinking water by a leaking sewer pipe have created a sense of urgency to fix the city’s ailing sewerage system.
Lilongwe Water Board (LWB) is a statutory corporation established in 1995 with responsibility for water and sewerage services in Lilongwe City. LWB currently provides water services to about 70 percent of the city’s population. The water distribution network is estimated at 1,758km in length, serving a total of 67,581 connections. The network is generally characterized by low operating pressures and frequent interruption of water supply due to insufficient hydraulic capacity and elevated levels of leakage. Non-revenue water (NRW) is estimated at 36 percent. LWB’s financial performance remains highly unstable, with operating ratios varying between 1.0–2.8 over the past seven years, and collection rates stagnating at around 85 percent (see Annex 6 for further details on LWB’s operational performance). Recent assessments show that LWB needs to augment its water production capacity in the medium to long term to meet growing water demand. At the same time, priority investments in network rehabilitation are needed urgently to address hydraulic bottlenecks and control water losses before more water is produced. In addition, LWB must diversify its water sources to reduce the water security risk to the city. With the projected rapid growth in water demand, LWB and the Government of Malawi (GoM) has embarked on an ambitious investment program to secure water supply for Lilongwe.
LWB’s medium-term investment plan is packaged in what is called the “Lilongwe Water Program”. The Program consists of a series of investments designed to address the immediate and medium-term water security needs, and support a long-term solution to Lilongwe’s growing water demands (see Table 1). Over the next five years, LWB plans to raise the height of the KD1 dam (by 7m) to increase abstraction capacity, which would enable full utilization of the installed production capacity and allow for an additional 50,000 m3 /day expansion in treated water production capacity (TW3), reaching a total production capacity of 175,000 m3/day – enough to meet projected 2025 demand. This sub-project (KD1 raising) is financed by the European Investment Bank (EIB) and is already at the procurement stage. Recent yield assessment12 of the Kamuzu dam system confirms that the required 175,000 m3/day can be abstracted at a reasonable assurance level of between 96 and 97 percent, considering environmental flow requirements.
To help kick-start the Program, the Government of Malawi (GoM) has requested the World Bank to support priority investments in water production and distribution, as well as sanitation improvements. In addition, GoM would like the World Bank to support a set of technical assistance activities designed to (i) enhance LWB’s capacity to plan future investments and to strengthen the pipeline of investment-ready projects under the Lilongwe Water Program; (ii) enhance the capacity of LWB and LCC to deliver improved water services and safely managed sanitation services; (iii) enhance LWB’s capacity to manage its investment program. GoM has also engaged IFC to act as a transaction advisor for a possible public-private partnership (PPP) for water production expansion investments, following a series of studies that showed that it may be feasible to implement priority water production investments under a Build Operate Transfer (BOT) contract with the private sector. The World Bank will thus play a catalytic role through the proposed Lilongwe Water and Sanitation Project (LWSP). Participation of the World Bank is key to the Program and is expected to help catalyze additional financial commitments from other development partners and the private sector. The World Bank has been a long-standing and valued partner in the Malawi water sector for more than 20 years, supporting vital institutional and sector reforms and investments to improve access and quality of service. The proposed investment operation will build upon and leverage the World Bank’s deep familiarity and involvement in the sector.
Project Scope:
The project scope consists of four components that contribute to the PDO: (i) Component 1 – Network Rehabilitation, Expansion and NRW Reduction; (ii) Component 2– Priority Sanitation Improvements; (iii) Component 3–Technical Assistance; and (iv) Component 4–Institutional Capacity Strengthening. Below is a summary description of each of the components.
Component 1 – Network Rehabilitation, Expansion and NRW Reduction
This component involves investments in priority network rehabilitation to remove bottlenecks, increase the hydraulic capacity of the existing network and reduce losses, and network expansion to increase coverage. Key investments include upgrading of 142km of existing distribution network and creation of pressure zone boundaries, construction of 27km of transmission mains; eight associated pumping stations and four storage reservoirs with a combined storage of 2,600m3; and performance-based water loss reduction through improvements in network maintenance, active leakage control, speed and quality of leak repairs and pressure management. These interventions alone are expected to help reduce water losses from an estimated 36 percent to about 26 percent and improve the quality of water services (pressure and hours of service) for LWB customers. The component will also finance approximately 186 km of a distribution network expansion to areas of the city that are currently not served by piped water. However, network expansion will only be undertaken if water production is increased either through improvements in the efficiency of existing treatment plants, savings from physical water loss reduction activities, construction of a new treatment plant or a combination of these three. 26.
Component 2 – Priority Sanitation Improvements
This component will finance various investments to increase access to safely managed household and public sanitation in Lilongwe. These investments include rehabilitation and expansion of the sewerage network (107km); installation of 5,000 new sewer connections; rehabilitation and upgrading of the existing Kauma sewage treatment plant; support to the construction of 8,000 improved sanitation facilities targeting the poor and vulnerable households; sanitation marketing campaigns; and construction of improved sanitation facilities in 10 markets and 10 schools.
Component 3 – Technical Assistance
This component will finance technical assistance (TA) activities designed to support the preparation and supervision of all infrastructure investments planned under the project and to enhance LWB’s capacity to plan future investments under the Lilongwe Water Program. The TA activities are organized into two sub-components: (i) technical assistance for water supply, which includes consultancy services for engineering designs and supervision of distribution network infrastructure planned under the project; preparation/update of safeguards instruments; preparation development of a framework to guide investment planning under the Program; assessment of groundwater resources potential; and preparation of a water supply master plan for Lilongwe city, including feasibility studies for priority investments identified in the master plan16; and (ii) technical assistance for sanitation, which includes consultancy services for engineering designs, supervision of priority sanitation infrastructure planned under the project; preparation of environmental and social impact assessments, environmental and social management plans and resettlement action plans for priority sanitation investments planned under the project; preparation of a sanitation master plan for Lilongwe City; feasibility studies for other priority sanitation investment identified in the master plan; and diagnostic studies on urban development and governance issues in Lilongwe and future scenarios for urban services provision.
Component 4 – Institutional Capacity Strengthening
This component will finance a set of activities designed to (i) strengthen the capacity of LWB to implement the project and to provide improved water services to its customers; and (ii) strengthen the capacity of LCC to implement the sanitation component of the project, operate and maintain the sanitation infrastructure and support the reforms needed to provide and promote safely managed sanitation services in Lilongwe. For LWB, the component will support the implementation of LWB’s institutional capacity development action plan code-named “Pathway to Success Program” (PSP). PSP is a five-year (2016-2021) change management program to strengthen corporate governance; improve leadership skills at all levels; improve staff productivity, work culture and motivation; improve customer service; and modernize LWB’s internal processes and systems – all critical areas for achieving the project objectives. The PSP has been under implementation for one year. The project will build on and support the implementation of the program to enhance its impact on the service delivery outcomes that LWB seeks to achieve under this project. This component will also finance incremental operating costs for LWB’s Project Implementation Unit (PIU); preparation of dam safety management plans (including instrumentation plan, O&M plan and emergency preparedness plan) for both KD1 and KD2; and implementation of priority dam safety measures for KD2 (which include relocation of gauge boards, installation of chainage markers, installation of vibrating wire piezometers, maintenance of standpipes piezometers, detailed inspection of fuse gates and concrete spillways during seasonal drawdown periods, cleaning and re-commissioning of relief wells, and maintaining the embankment structure free of shrubs and trees); and independent review and expert advice to LWB on implementation of dam safety measures for both KD1 and KD2.