WASHINGTON, March 30, 2010 - The World Bank Board of Executive Directors today approved an International Development Association (IDA) credit of US$80 million in support of the Water Supply and Sanitation project in Ethiopia.
The additional financing is provided for the ongoing Water Supply and Sanitation Project (WSSP), which has been implemented since November 2004. The objective of the original project, which remains unchanged, is increased access to sustainable water supply and sanitation services, for rural and urban users, through improved capacity of stakeholders in the sector.
“Approximately 1.5 million rural people have benefited from improved water supply and sanitation services through capacity building in 204 woredas and construction of 3,364 rural water supply schemes,” said Yitbarek Tessema, the World Bank’s Task Team Leader for the project.
Similarly 0.15 million urban residents have obtained access to improved water supply and sanitation services from increased production as well as improved distribution and enhanced performance of local operators. In addition to its progress in improving access to water supply and sanitation, the project has leveraged considerable amount of financing to the sector as a result of the capacity building support. DFID is currently co-financing the project with GB£ 70 million through a Bank-managed multi-donor trust fund.
While the rural component of the project has been substantially completed, its urban component has encountered a financing gap. The US$80 million additional financing is to cover the costs associated with the financing gap in the Urban Water Supply and Sanitation Component of the project. This is due to (i) higher than expected per capita costs for piped systems; (ii) larger than expected populations in participating towns; (iii) the shifting of project funds to the Global food crisis project; and (iv) the earlier change in the disbursement policy (which allowed financing of the taxes, and hence increased IDA contributions to the project cost).
The World Bank has approved the additional financing considering that the resource available for the urban component can only partially fund construction of water supply facilities in the 50 towns originally targeted by the project. Within the original project objective and following the same implementation arrangement, the additional financing will be used to cover the financial gap in these 50 towns to meet the original project objective. The project will be implemented by ministries, regional bureaus and woreda offices of water, health and education until March 31, 2013.