Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 23350

IMPLEMENTATION COMPLETION REPORT(CPL-35650; SCL-3565A; SCPD-3565S; CPL-35660; SCL-3566A; SCPD-3566S; TF-20465)

ON A

LOAN

IN THE AMOUNT OF US$108 MILLION

TO

TURKEY

FOR A

BURSA WATER & SANITATION PROJECT

December 21, 2001

Infrastructure and Energy Services UnitTurkey Country UnitEurope and Central Asia Region

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective July 2001)

Currency Unit = Turkish Lira (TL)TL 1,000 = US$ 0.000756

US$ 1 = TL 1,321,5542000 - US$ 1 = TL 625,219; 1999 - US$ 1 = TL 418,783; 1998 - US$ I = TL 260,724; 1997 - US$ 1 =

151,865; 1996 - US$ 1 = 81,405; 1995 - US$ I = 45,845; 1994 - US$ 1 = 29,609; 1993 - US$1 =

10,985

FISCAL YEARJanuary I December 31

ABBREVIATIONS AND ACRONYMS

BMM Bursa Metropolitan MunicipalityBUSKI Bursa Water and Sanitation CompanyEIB European Investment BankERR Economic Rate of ReturnFRR Financial Rate of Retumlpcd Liters Per Capita Per Dayu/s Liters per secondmm3 Million cubic metersNPV Net Present ValueSAR Staff Appraisal ReportUFW Unaccounted-for-WaterWWTP Wastewater Treatment PlantPMU Project Management Unit

Vice President: Johannes Linn, ECAVPCountry Manager/Director: Ajay Chhibber, ECCO6

Sector Manager/Director: Motoo Konishi/Hossein Razavi, ECSIETask Team Leader/Task Manager: Sudipto Sarkar/Alptekin Orhon, ECSIE

FOR OFFICIAL USE ONLY

TURKEYBURSA WATER & SANITATION PROJECT

CONTENTS

Page No.1. Project Data 1

2. Principal Performance Ratings 1

3. Assessment of Development Objective and Design, and of Quality at Entry 2

4. Achievement of Objective and Outputs 5

5. Major Factors Affecting Implementation and Outcome 8

6. Sustainability 9

7. Bank and Borrower Performance 9

8. Lessons Learned 11

9. Partner Comments I 1

10. Additional Information 22

Annex 1. Key Performance Indicators/Log Frame Matrix 23

Annex 2. Project Costs and Financing 27

Annex 3. Economic Costs and Benefits 29

Annex 4. Bank Inputs 31

Annex 5. Ratings for Achievement of Objectives/Outputs of Components 33

Annex 6. Ratings of Bank and Borrower Performance 34

Annex 7. List of Supporting Documents 35

Annex 8. Project Outputs By Components 36

Annex 9. Project Implementation Schedule 40

Annex 10. Key Indicators of Project Operation 46

Annex 11. BUSKI - Financial Statements 47

Annex 12. Borrowers' Contribution 49

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

Project ID: P009065 Project Name: BURSA WATER & SANITATION

Team Leader: Alptekin Orhon TL Unit: ECSIE

ICR Type: Core IC.R Report Date: December 21, 2001

1. Project Data

Name: BURSA WATER & SANITATION LI/CTFNuinber: CPL-35650;SCL-3565A;SCPD-3565S;CPL-35660;SCL-3566A;SCPD-3566S;TF-20465

Countny/Department: TURKEY Region: Europe and CentralAsia Region

Sector/subsector: US - Urban Environment; WS - Sewerage; WU -

Urban Water Supply

KEY DATESOriginal Revised/Actual

PCD: 03/31/91 Effective: 05/31/93 08/23/93

Appraisal: 06/25/92 MTR:

Approval: 03/11/93 Closing: 06/30/2001 06/30/2001

Borrower/lmplemneniting Agency: BURSA WATER & SANITATION COMPANY (BUSKI)/BURSA

METROPOLITAN MUNICIPALITY (BMM)

Other Partners:

STAFF Current At Appraisal

Vice President: Johannes Linn Wilfried Thalwitz

Countiy) Manager: Ajay Chhibber Michael Wiehen

Sector Manager: Motoo Konishi Ricardo Halperin

Team Leader at ICR: Alptekin Orhon Daniel Coyaud

ICR Primary Author: Kishore Nadkami

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly

Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcomne: S

Sustainability: L

Institutional Developmenit Impact: M

Bank Performance: S

Borrower Performnance: S

QAG (if available) ICR

Quality at Entry: S

Project at Risk at Any Tim7e: No

There was no review by QAG for the project at entry or during supervision.

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

Objectives: The development objectives of the project were to:

a. improve environmental conditions and reduce health hazards in Greater Bursa caused by: (i)inadequate collection, and lack of treatment of municipal and industrial sewage; (ii) seasonal floodingin some areas because of poor stormwater drainage; and (iii) inadequate domestic solid waste disposal,and lack of hazardous solid waste management;

b. improve the institutional arrangements regarding the management of municipal water supply, sewerservices, and of domestic and hazardous solid waste;

c. meet the demand for water supply, sewerage, flood protection and solid waste services, including thedemand from the poor living on the fringes of the city;

d. postpone the need to develop new water resources by improving the efficiency of water usage byreducing the volume of non-revenue water from the high level of 63%; and

e. implement appropriate cost recovery policies.

Assessment: The objectives were clear, realistic and important for the country given the prevailing contextin which they were defined. Consistent with the overall country assistance strategy, the sector strategy forwater and sanitation sought to: (i) improve the standards of living of the population, particularlylow-income, by provision of adequate water and sanitation services; (ii) alleviate environmental degradationfrom sewage, and from domestic and industrial wastes; and (iii) pursue institutional reform in the sector bycontinuing to support the commercialization of newly created municipal water utilities such as BUSKI thathad been separated from their parent municipal departments. The choice of Bursa for assistance wasjustified since Greater Bursa was one of the largest urban areas in Turkey with a population of about840,000 in 1990; about 23 percent of the city's households were classified as low-income; water servicecoverage, though relatively high at 90 percent, was in need of improvement, including extension tounder-served areas; sewerage coverage was only 70 percent, and municipal and industrial wastewater wasbeing discharged untreated, mainly into the Nilufer River where water quality was rated in the lowest class(Class IV); the high and growing pollution in the Sea of Marmara to which Bursa was contributing; andthe rising incidence of water-borne disease. While the investments under the project were substantial, theywere not unusually complex or risky, or unduly demanding in regard to the implementation capacities ofthe Borrowers, Bursa Water and Sanitation Company (BUSKI) and Bursa Metropolitan Municipality(BMM) which were to be augmented by suitable technical assistance.

3.2 Revised Objective:

The original objectives were not revised.

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3.3 Original Components:

Components: The original components of the project were the following:

(A) Water supply works and equipment needed to:

(i) renovate existing springs to improve their production from 12.7 million m3 (mm3) per year totheir estimated capacity level of about 19.7 mm3 per year; a total of 35 km of new pipelines were to be laidon the mountain side; (ii) rehabilitate existing distribution networks by replacing each year, for threeyears, about 3.5 percent (1,000 km of pipes) of the most unsatisfactory sections of the existing network;(iii) increase the production of well-fields by about 32 mm3 per year by constructing 10 new wells andimprovements in pumping stations; (iv) construct a distribution reservoir of 30,000 m3 capacity toprovide storage capacity needed for the increased water demand; and (v) construct main pipelines (70 km)to extend the supply to new distribution networks and improve the supply in existing networks; and extendexisting distribution networks to supply new consumers in new areas covering 810 hectares (ha).

(B) Sewerage works and equipment needed to:

(i) extend the existing collection networks by constructing: new collectors totalling 5.4 km andcollection networks to serve 140 ha in the industrial north of the city; new networks covering 660 ha inareas to be served by existing collectors, the existing networks being converted into stormwater drainagenetworks; and new sewer connections in the above mentioned areas covering 660 ha; and (ii) treat anddispose sewage flows collected by the sewerage networks by two-phased construction of wastewatertreatment plants in East and West Bursa. The first phase for each plant was to include pre-treatment worksand anaerobic ponds of 134,000 m3 per day and 46,000 per day capacity. The second phase was to addsecondary treatment of 161,000 m3 per day and 74,000 m3 per day respectively, and sludge treatmentfacilities.

(C) Stormwater drainage works and equipment needed to:

(i) rehabilitate the existing networks covering 4,582 ha including completion of the network,replacement of damaged pipes, constructing proper catchment areas and manholes, and cleaning of thepipes; (ii) construct three open channel interceptors of a total length 9 km in the southem part of the cityto avoid clogging of the stormwater drainage system; and (iii) extend the collection system by laying about14.2 km of collectors and construction of networks in new areas covering about 337 ha.

(D) Technical assistance to B USKI for:

(i) project implementation including: detailed design and construction supervision; survey andinvestigations needed for proper mapping of the water supply and sewerage systems; and staffing of aProject Management Unit (PMU); and (ii) institutional development including: (a) a twinning arrangementwith a reputable water supply and sewerage operator to assist BUSKI in designing and implementing anAction Plan consisting of training for staff and management; increasing the volume of water billed; anAsset and Capital Investment Management System; a Management Information System; and a new tariffschedule that would help promote water conservation, control water pollution, and ensure BUSKI'sfinancial viability; and (b) a consultant study to determine the feasibility of a contractual arrangementbetween BUSKI and a private operator.

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(E) Solid waste works and equipment needed to:

(i) rehabilitate the existing unregulated disposal area including fire controls, stream diversion, bundconstruction, control of leachate, regrading and planting, collection ditches, and venting of landfill gas; (ii)develop a new landfill site of 10 ha in Hamiltler Valley X; (iii) construct a waste transfer station for 600tons per day including tipping halls, weighbridges, mobile grab, loader and tractors; (iv) provide collectionvehicles for municipal waste and industrial waste; and (v) provide facilities for two clinical wasteincinerators of 0.5 tons per hour unit capacity; one incinerator would be installed under the project.

(F) Technical Assistance to BMM for:

(i) Project implementation including design and construction supervision, including detailed design ofthe next phase of the new landfill site, and staffing of a PMU; and (ii) institutional development including:strengthening the municipal organizational arrangements for solid waste management throughimplementation of an Action Plan to: (a) increase transparency in financing, expose the solid wastemanagement service to competition, and become more accountable and responsive to citizens' needs; (b)creation of a regulatory body within the municipality for overseeing solid waste services; and (c) creation ofa municipal operational corporation to take on solid waste services.

3.4 Revised Components:

There were no major changes or restructuring in the project during implementation. However, the Bankand the Borrowers agreed to the following changes within the original components: In the seweragecomponent, it was decided to exclude the second phase of the wastewater treatment plants from the Bankloan and an amount of US$20 million equivalent was cancelled. In the solid waste component: (i) sincemunicipal waste collection services were contracted out to a private contractor, the purchase of collectionvehicles was excluded from the project and the amount reallocated to purchase of additional equipment forthe new landfill site; and (ii) the waste transfer station and clinical incinerators were excluded from theproject and the funds reallocated to construction of a sorting station/recycling plant, installation of airquality monitoring equipment, design and construction of a leachate treatment plant, and digitization ofcadastral maps.

Assessment of Project Design and Components: Project design correctly identified and addressed the mainconstraints to improvement and further development of the water supply, sewerage, stormwater and solidwaste systems. The Bursa project was the Bank's seventh operation in the water and sanitation sector inTurkey and drew upon the lessons from the earlier projects, particularly the need for institutionalstrengthening of the water and wastewater utility through greater autonomy and commercialization.Although there were growing doubts within the Bank as to the effectiveness of twinning-type technicalassistance arrangements, the jury was still out at the time, and the Bank agreed to accept this instrument ofinstitutional development. In retrospect, the Bank's cumulative experience has by now shown that this typeof arrangement has generally not been successful. A provision had also been made under the Bank loan toexplore the possibilities for contracting out BUSKI' services, in part or in whole, to a private operator.

For the solid waste services, institutional strengthening was to include creation of an operationalcorporation to take over the provision of the services, with the possibility of contracting out services toprivate contractors, and a regulatory body within the municipality to establish policies and ensurecompliance.

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Project components were well designed and defined to achieve the specific physical and institutionalobjectives to which they were related. However, greater attention could have been paid to developing, fromthe outset, a project monitoring and evaluation system that would have permitted progressive monitoring ofachievement of the larger impacts expected from the project, e.g. the reduction in pollution from the NiluferRiver to help reclassify its water quality status from Class IV to Class III; the reduction in pollution in theSea of Marmara; the extension of coverage and improvement of service to the lower-income sections; thereduction in water-bome disease in the area; and the number of new customers and areas served.

3.5 Qualitv at Entiy:

The project objectives were consistent with the Government's priorities and with the Bank's overall andsector assistance strategies for Turkey. The project appropriately took into account the Bank's safeguardpolicies applicable at the time. Quality at entry was satisfactory in terms of technical evaluation of thecomponents of the project. Appraisal was based on an advanced status of preparation in regard toavailability of final designs and land acquisition although there were some exceptions as in the case of theKI open channel interceptor which was later abandoned on account of the presence of illegal settlements.Quality at entry was also satisfactory for the institutional strengthening components based on the Bank'sapproach and experience in the water and sanitation sector at the time although it is clear that, judged bycurrent standards, the appropriateness of a twinning-type of arrangement would be seriously questionedgiven the Bank's cumulative experience on this matter. In the case of the wastewater investments, theanalysis at appraisal did not include a separate financial and economic evaluation of the extension of thetreatment process to the secondary stage whereas the Bank's experience has shown that such investmentsmay not necessarily be viable, and need to be carefully examined on a case by case basis.

The main risks to project implementation and achievement of objectives were appropriately identified asthose arising from (i) the institutional weaknesses of the Borrowers and (ii) the willingness and ability ofthe local authorities to enable the necessary resource mobilization and cost-recovery for the utilities. TheStaff Appraisal Report (SAR) also identified the risk to institutional performance posed by the centralgovernment's regulations concerning the personnel regime but no specific safeguards were introduced in thecase of the project. Experience proved that these constraints continued to adversely affect both BUSKI andBMM operations, and were one of the contributing causes to abandoning of the twinning contract forBUSKI.

4. Achievement of Objective and Outputs

4.1 Ozutco,ne/achieveinent of objective:

The overall outcome is assessed as satisfactory since the project has largely met its main physical, and to amodest extent, its institutional objectives. Although quantification of the project's larger expected impacts(e.g. reduction of pollution in the Nilufer River; reduction of pollution in the Sea of Marmara; extension ofservices to lower income groups; reduction in water-borne diseases) is rendered difficult by the weaknessesin the project monitoring and evaluation system, the degree of achievement (and in many cases,over-achievement) of the physical targets and the modest improvements in institutional performance inBUSKI and BMM provide substantial assurance that the larger impacts have been positive. Thus, theobjective of improvement in environmental conditions and reduction of health hazards in Greater Bursa haslikely been achieved with completion and putting into operation of the targeted: (i) collection systems andnetworks; (ii) wastewater treatment plants where an estimated 80 percent of the wastewater now receivespre-treatment in anaerobic ponds; (iii) stormwater drainage rehabilitation works; (iv) improved solid wastecollection and disposal services, including the closing of the old unregulated disposal site commissioning of

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the new landfill site, and introducing recycling; and (v) installation of an air quality monitoring system.The objective of improvement in institutional arrangements regarding the management of municipal watersupply, sewer services, and domestic and hazardous waste services has been met to a more modest extentthan expected. Although the envisaged twinning contract for BUSKI did not succeed, BUSKI neverthelesswas able to make significant progress on its own, including satisfactory performance in the project'sphysical implementation, where most physical targets were met or exceeded, worker productivity perconnection increased, and in meeting its financial obligations under the project, including self-financing ofpart of the investment program. To improve the organizational arrangements for solid waste services,BMM contracted out the waste collection and landfill operation services to private contractors, and theseare operating satisfactorily. The objective of meeting the demand for water supply, sewerage, floodprotection and solid waste services, including the demand from the poor living on the fringes of the city hasalso been met with the very significant extension in the number of water and sewerage connections (wherethe actual achievements substantially exceeded targets); the achievement of the targeted stormwaterrehabilitation works; and the expansion of solid waste services. However, given the weaknesses of themonitoring and evaluation system, it is difficult to quantify the extent to which services have been extendedto low-income and previously under-served groups. The objective of postponing the need to develop newwater resources by improving the efficiency of water usage and reducing the volume of non-revenue waterhas been achieved since the share of non-revenue water has been reduced, albeit more slowly than expected,to the targeted levels. Finally, the objective of implementation of appropriate cost recovery policies hasbeen met since BUSKI has successfully maintained tariffs at levels sufficient to meet its financialobligations, including project financing, and BMM has maintained the share of solid waste expenditures inits total expenditures.

4.2 Outputs by components:

Details of outputs by components are given in Annex 8 and summarized in this section. In water supply,most physical targets were met or exceeded including rehabilitation of springs, rehabilitation of existingnetworks, construction of new wells, and construction of transmission mains. In the case of distributionreservoirs against the planned target capacity of 30,000m3, a total capacity of 52,500m3 has beencompleted, of which 30,000m3 were constructed by the DSI and the remaining 22,500m3 constructed byBUSKI. In addition to the above capacity, a reservoir with a capacity of 3,500m3 is under construction,and two other reservoirs have been designed, each having a capacity of 30,000m3, to be constructed in2002 and 2003. In sewerage, the construction of collectors and extension of the network exceeded theplanned targets. As regards wastewater treatment, while the two wastewater treatment plants in East andWest Bursa were constructed, the facilities installed are restricted to Phase 1 of the planned investment,covering pre-treatment and anaerobic ponds. At BUSKI's request, Phase 2 of the construction, involvingextension to secondary treatment has been postponed and will now be covered under a new operation beingfinanced by the European Investment Bank (EIB). In stormwater drainage, targets were met inrehabilitation of existing networks and in extension of the collection system, but construction of the threeplanned open channel interceptors was postponed. In the case of one (KI), it was discovered duringdetailed design that illegal settlements would prevent construction. The other two are expected to becovered under the EIB operation. In regard to technical assistance for BUSKI, intemational consultantswere utilized for design and construction supervision until 1995. Thereafter, with the exception of thesewage treatment plant, design was undertaken by local institutes and construction supervision by BUSKIstaff. The survey, investigations and mapping studies were carried out as envisaged. For institutionaldevelopment, BUSKI entered into a twinning contract with a UK consortium in March 1994, butdiscontinued the contract in early 1995 (discussed later in Section 4.5 below). As a result, BUSKI couldachieve only to a limited extent the improvements that were to have been introduced with the help of thetwinning agency. The feasibility study for contracting out services to a private operator was carried out in

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1995 and the selection process for a private operator was started, but later abandoned (as discussed inSection 5.3 below).

In solid waste, rehabilitation of the existing unregulated disposal area was carried out as envisaged.BMM also contracted with a private contractor to build and operate a plant to produce electric powerutilizing the methane gas from the landfill. The new landfill was developed as envisaged and its operationhas been contracted to a private contractor. Since BMM contracted out solid waste collection services toprivate contractors, the planned purchase of collection vehicles was not undertaken, and the funds werereallocated to purchase additional equipment for the new landfill site. BMM decided not to construct thenew waste transfer station since the district municipalities privatized the collection services and, under thenew arrangements, it was not considered necessary to have the transfer station. BMM also decided not toproceed with the clinical incinerators because of delays in starting work by the contractor and impendingchanges in the relevant national-level environmental guidelines. The funds allocated for these purposes werere-allocated to other solid waste related needs including a new sorting/recycling plant, air qualitymonitoring equipment, a new leachate treatment plant, and digitization of cadastral maps. These have beencompleted with the exception of the leachate treatment plant where designs have been completed but theconstruction is expected to be taken up under a new EIB-financed project. Technical assistancefor BMMwas provided as planned for design and construction supervision but the institutional developmentassistance was suspended after the termination of the twinning contract.

4.3 Net Present Value/Econoinic rate of return:

At appraisal, the economic rate of return (ERR) on the water and sewerage investments (excludingstormwater and solid waste investments, the benefits of which were judged to be unquantifiable) wasestimated at 8.2 percent using the incremental water and sewerage revenues as a proxy for the benefitsattributable to the investments. This did not include the unquantifiable health, environmental and socialbenefits of these investments. The re-estimated ERR for the project is 9 percent (details in Annex 3). Asat appraisal, this does not take into account the unquantifiable benefits mentioned earlier.

4.4 Financial rate of return:

A financial rate of return was not estimated at appraisal, and has not been estimated for the ICR.

4 5 Institutionail development imnpact:

The project's institutional development impact has been modest. In the case of BUSKI, the institutionalstrengthening was expected to be achieved through the twinning contract with a reputable water andsewerage utility operator. The contract was signed in March 1994 but, from the outset, there wereinteraction problems between BUSKI and the consultant due to the lack of counterpart staff who couldspeak English. The situation was worsened by the hiring freeze imposed by the central government inpublic and municipal enterprises. In early 1995, BUSKI and the City Council decided to terminate thetwinning contract and to pursue instead the possibility of contracting out operations to a private operatorwhich itself was deferred in 2000 to beyond the completion of the project. With the discontinuation of thetwinning arrangement and the non-realization of the private operator alternative, the expected institutionalstrengthening outputs did not develop as planned, particularly in regard to training of BUSKI staff andmanagement, and development of asset management and management information systems. Nevertheless,BUSKI was able to make creditable progress in regard to other important aspects, notably in improvingworker productivity per connection, reducing the ratio of non-revenue water (and unaccounted-for-water orUFW) to water production, improving the bill collection ratio, and satisfactorily meeting its financialobligations, including project financing requirements and debt service. With the contracting out of waste

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collection and landfill operation services to private contractors, BMM made a major organizationalimprovement in its solid waste department.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:

Construction of civil works, particularly for the sewage treatment plants, was affected by the financialdifficulties of the local contractors which were beyond the control of the Government or implementingagency.

5.2 Factors genierally subject to government control:

Although not entirely within the control of the Government, the macroeconomic conditions deteriorated inthe early part of the implementation of the project, leading to high rates of inflation and devaluation of thelocal currency. This affected the project in two ways - (i) the constant pressure to increase tariffs tocompensate for rising costs, and (ii) constraints in hiring personnel due to the austerity measures and hiringfreezes in public and municipal enterprises.

5,3 Factors generally subject to implementing agency conitrol:

BUSKI and BMM, overall, carried out the project well in terms of meeting most physical targets andachieving some institutional improvements, but the performance could have been enhanced further withtimely addressing of certain shortcomings.

Stajjing of PMU: In BUSKI, there were initial delays in adequate staffing of the PMU but these wereresolved after a qualified consultant was hired to function as the head of the PMU. Although theabandonment of the twinning contract was at least to some extent due to external constraints in hiringappropriate counterpart personnel, a more proactive approach on the part of BUSKI may have helped toresolve the issue.

Twinning/Privatization: Similarly, while hiring of a private operator was not a requirement under theproject, once BUSKI and the City Council decided in 1995 to pursue the possibility, they could haveshown greater commitment to bringing it to fruition. In the event, even after five years, a decision had notbeen taken on whether to proceed with inviting bids from the pre-qualified firms.

Use of Technical Assistance: BUSKI also did not fully utilize the possibilities for other technicalassistance provided under the project, including for design and construction supervision, which contributedto implementation delays in some components. For example, in the case of the sewage treatment plants,BUSKI wished to utilize local consultants and its own staff for design and construction supervision, butwas persuaded by the Bank, after an extensive discussion, to engage qualified consultants with theappropriate experience.

Operational Improvements: While BUSKI made notable progress in improving operating and financialefficiency, including worker productivity, tariff adequacy, and effective bill collection, it was relativelyslow in coming to grips with the issue of the high level of non-revenue water (including UFW). Indicatorsin this respect actually deteriorated in the early years of project implementation, but starting in 1996,BUSKI made a concerted effort to address the issue, which led to sustained improvements. Consequently,BUSKI was able to meet the stipulated targets since 1998. Over the course of implementation, BUSKI hasbeen able to reduce the level of non-revenue water from 63 percent in 1993 to an estimated 45 percent in

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2000, thus meeting the target level of 47 percent. BUSKI has further reported that, in September 2001,UFW was decreased to about 35 percent, and the estimate for 2001 as a whole is 38 percent. BUSKIattributes the sharp decline in UFW to the rehabilitation work which started recently in the very oldnetworks in the older districts of Bursa where the population is very dense. Nevertheless, further progress isneeded in this area.

5.4 Costs anldfinanicing:

Costs: Total project cost up to completion of the project is now estimated at US$193.2 million comparedto the appraisal estimate of US$258.3 million. Out of a difference of about US$65 million, US$55 millionis on account of the postponement of the second phase of BUSKI's wastewater treatment plants (which willnow be taken up under an EIB-financed project). Areas where total costs were lower than anticipated werein technical assistance for BUSKI (by US$11 million) reflecting in part the discontinuance of the twinningcontract; stornwater works (by about US$5 million) due to the postponement of the three open channelinterceptors; sewerage civil works (by US$5 million); and solid waste equipment (by US$7 million) due tothe changes in the description of the project. Costs were higher than projected in water supply civil works(by US$8.4 million) and in land acquisition by BUSKI (by US$6.6 million).

Financing: The final amount of the Bank loan to BUSKI is US$93.3 million (after cancellation of US$20million at BUSKI's request in 1998). The final amount of the Bank loan to BMM was US$10.7 millionafter cancellation of an amount of US$1.8 million at BMM's request in 2001. The BUSKI component ofthe project (US$174.8 million) was financed by the Bank loan of US$93.3 million and a BUSKIcontribution of US$81.5 million. The BMM component of the project (US$16.2 million) was financed bythe Bank loan of US$10.7 million and a BMM contribution of US$5.5 million.

6. Sustainability

6.1 Rationtale for sustainability rating:

The project components are likely to be sustainable. BUSKI is one of the better managed municipal waterand sewerage utilities in Turkey. Under the project, it has demonstrated the ability to implement majorinvestments successfully, and to achieve significant improvements in operating and financial performance.The achievements under the project are likely to be sustained through the successor project that is beingfinanced by the EIB. The EIB project will include those parts of the Bank project that were postponed,(e.g. the second phase of the wastewater treatment plants, open channel interceptors and the leachatetreatment plant) while continuing the institutional development initiated under the Bank project. BMM hasmade substantial organizational improvements in its solid waste operations where collection and landfilloperations have been contracted out to private contractors. These arrangements are working successfullyand are expected to be sustainable.

6.2 Transition arrangemnent to regutlar operations:

The project investments were implemented by the existing operating entities and are subsumed into theirregular, ongoing operations. Consequently, no special transition arrangements are required.

7. Bank and Borrower Performance

Bank7.1 Lending:

Bank performance was satisfactory in the lending phase. During project identification and preparation, theBank was substantially involved in assisting the Borrowers in the design and implementation of the project.

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The Bank's safeguard policies in effect at the time were appropriately taken into account. In hindsight, theBank's support for a twinning-type technical assistance contract may now be questioned, given the evidencethat is currently available Bank-wide in regard to the relative inefficacy of this kind of arrangement.However, at the time the project was designed, the Bank's position in this regard was by no means clear andthe jury was still out as to the desirability or otherwise of twinning or other technical assistancearrangements. As discussed earlier (Section 3.4), one area where the Bank could have done more duringpreparation was in ensuring that the project monitoring and evaluation system would enable evaluation ofthe larger impacts that were being pursued under the project.

7.2 Su7pervision:

Bank performance was satisfactory during the supervision phase. The Bank carried out a total of 12missions in the field, usually staffed by a sanitary engineer and a financial analyst. Barring changes due toretirement of Bank staff, there was continuity in the staff assigned to supervision. Starting in 1998,supervision was carried out entirely by staff stationed in the Bank's field office in Ankara which alsopromoted more frequent interaction between the Borrowers and the Bank. The Bank was responsive andflexible in making adjustments within components where justified by changing circumstances, e.g.introduction of the air quality monitoring system, sorting station/recycling plant under the solid wastecomponent. The Bank was also persistent in its monitoring and follow-up of BUSKI's progress inmaintaining adequacy of tariffs and in improvement in the ratio of non-revenue water to water produced.In regard to pursuing the objective of institutional development, in retrospect, it could be questionedwhether the Bank was sufficiently energetic and persuasive in getting BUSKI and the City Council to adoptthe private operator option. Given the larger benefits of private sector involvement, the Bank couldpossibly have pursued this option more when the twinning arrangement stopped. To introduce the privatesector, the City Council would have had to pass a resolution which was politically difficult. Also, while theBank was diligent in its supervision of project progress in terms of the specific physical and institutionalcomponents, an area where greater attention could have been paid was in the setting up of suitablearrangements for evaluating the broader, overall impacts of the project (as discussed in Section 3.4).

7.3 Overall Bank peiforinance:

The overall Bank performance is rated satisfactory, although it could have been enhanced in some aspectsas discussed above.

Borrower7.4 Preparation:

The performance of the two Borrowers, BUSKI and BMM, was satisfactory during preparation. BothBorrowers collaborated well with Bank staff in project design and development.

7.5 Government implementationi peiforinance:

The Central Government had a limited role in the project with no participation in project financing andimplementation. Its performance was satisfactory.

7.6 Inipleinentting Agency:

The performance of both implementing agencies, BUSKI and BMM, was satisfactory although it couldhave been enhanced in some respects as discussed above.

- 10 -

7. 7 Overall Borrowerperformance:

On balance, the overall Borrower performance is rated as satisfactory although it could have been enhancedin some respects as discussed above.

8. Lessons Learned

The main lessons learned from the design and implementation of the project are the following:

(i) Particular care needs to be given to the design and implementation of technical assistancearrangements for institutional strengthening. In the case of the project, the growing doubts within the Bankin regard to the efficacy of twinning-type technical assistance contracts warranted that special attentionshould have been given during project preparation to establishing Borrower commitment and anticipatingpossible disruptive factors such as the lack of appropriate counterpart staff;

(ii) The Bank needs to stay focussed on institutional development objectives; once it is clear that theplanned arrangements are not likely to be successful, as in the case of the twinning contract, the Bankshould pursue altemative options, e.g. the engagement of a private operator, with conviction and vigor;

(iii) The Bank needs to be mindful of the broader objectives and impacts of the project when helping theBorrowers to set up monitoring and evaluation systems; in the case of the project, while physical andinstitutional progress indicators were well developed, the system did not provide for evaluating progress inachieving the larger objectives;

(iv) A high degree of Borrower commitment and a well-defined action program are necessary for asuccessful program of reduction in non-revenue and unaccounted-for-water; progress in the case of BUSKIbecame evident only after persistent efforts at addressing the problem; and

(v) Special attention needs to be given to establishing the technical and financial viability of local civilworks contractors; in the case of BUSKI, local contractors' financial difficulties led to significant delays inmajor components, e.g. the sewage treatment plants.

- 11 -

9. Partner Comments

(a) Borrower/implementing agency.

R.T.RURISA M"WfWOLIAN tIMIPNICALrJ

NO Y.01. .53 -1242.1 i49-(q4 No oStbj c Rkw of iCR

Mr Alpt* ORHON

Tiy TOudoi1fiUAur MUMCU Cod No: W

Ref Your It d*d Novanba 5S 2001

De Mr. O1UON,

We 1m heviowcd &o Bfan ICR documaw and we have noed two posbl iwus:

1. to Seedgn 5.4, tbe sowid teOwpmt wa umpltd st an ovel cos of 16 millinUS uwd of d 23 miI1 at sp" l e 7 mb . t is5 o d bto

culto of bashr steim mid trapt veiles, wadiad waste iemcr.

2. Ia th. Projec Fuausin bbh ape 17, the amnt dbuse Scm the Ik 7hcL1 be10.53 iater d 10,43. The dwiam bha awisen beue Wo nal ang co* i moltcypFy=J usoui toI 100 0O0 US S wm n wblded in do dsbum DisX

eWwb In Vh rojt Cost ad Flnnig Tabl on pq 16, CowuS* ai Ev&inee wigl almo be&472 iWded of 6,62. (44aI Late Etimle )

3. Te p ded Am edx8showJdi dbu!hs KJI prject a wel3 Ie-&wiug _t may be aMdd to *e a e of dh pmpab h rax wwitluis,albmlofBMMs solid vast o smlitonon p28. "To cand d beae wA to

-Wn cfhection ottIn ofc tx, EMM SW s ib*oxte cu ad pkmigi*=Wst to de ama CiS syskm, devekd ftoe wit SUSKL

4 In Amr=9 9. hp* s_$e .ed die atahod ables of Soid Waste

We r cmie pkesed with terest nofeb rspat reprxd to solid wate ocmpw_it

1 d 2 t

- 12 -

SOLID WASTE COMPONENT (3566-TU)

Loan / Credit Disburments: Cumulative Estimated and Actual

(US$ millions)

Fiscal Year Appraisal Estimat Actual Actual as %of Estimate

FY 92FY 93 0.400 0.188 47.0FY 94 1.316 1.079 82.0FY 9s 1.112 1.350 121.4FY 96 1.708 1.041 60.9FY 97 2.236 1.158 51.8FY 98 1.752 1.897 108.3FY 99 3.108 2.424 78.0FY00 0.776 1.182 152.3

-13-

BURSA WATER AND SANITATION PROJECTSOLID WASTE COMPONENT (3566- TU

Status of Completion

Con Contract Title Contract Contract Scheduled Extended ActualNo: Signed Price Completion Completion Completion

$ Date Date Date

World Bank Financed Components __ _ _

Rehabilitation at Demirtas 07/27/94 784,474 05/26/95 12/30/95 12/30/95____ Access Road + Junction 03/21/97 410,422 September 97

Landfill hamitler X,T 07/21/93 2,520,000 9/8/1993 12/30/95 12/30/95

Landfill Hamitler M. Valley 11/21/97 1,750,000 12/23/97 11/30/99 11/30/99Compactor 11/25/94 156,000 March 95

Motor Grayder 01/12/94 110,000 April 95

Backhoe Excavator 01/16/94 100,000 April 94Front End Wheel Loader 01/12/94 93,000 May-95

Lab equipment 38,000 _

Dozer-I 12/21/95 164,000 June 96

Dozer-2 05/13/96 142,000 July 96

Cylinder 05/13/96 70,000 Sept. 96

Sorting Plant (Equipment) 07/03/98 178,000 11/3/1999

Clinical Waste Truck-I 10/18/94 41,000 March 95

Clinical Waste Truck-2 05/02/97 50,000 August 97

_ HDPE Geomembrane 07/14/99 68,000 August 99

Other Equip. (Air Qua. Monit.) 06/12/00 224,000 . August 01

Design Superv. Valley X 07/21/92 142,000 January 95

=__ Cons. Rehab. Exist. Dump. 07/21/93 600,000 October 94

Consult. T. S. &Valley Y,Z 06/08/95 147,000 December 97

Consult Leachate Treat. 09/14/00 117,758 06/30/01

=__ Superv. (Haluk Dogu) 09/21/94 50,000 06/30/01

Twinnning _ 43,000

Training 74,000

= Lab equipment&Air Qua. Mon. 12/29/94 38,000 August 95

___ Leasing (Comp& Roller) 01/16/96 711,000 Oct. 96

Mic & Sound Equip. Feb.96 23,000 March 96

Digit. Cadast. Maps KDI 11/14/96 5,120,000 _ 06/30/01

- 14 -

BURSA WATER AND SANITATION PROJECTSOLID WASTE COMPONENT (3566-TU)

Project Implementation Schedule - Cumulative Physical Completion(%)

Con 1992 1993 1994 1995 1996 1997 1998 1999 2000No:

Actual Actual Actual Actual Actual Actual Actual Actual Actual

WB LOAN

1 Existing Site Rehabilitation

Rehabilitation at Demirtas 5 63 97 100

2 Access Road

Access Road + Junction _ 100

3 New Waste Disposal Site

Landfill Hamitler X,T 1 0 53 98 100

Landfill Haniitler Main Valley 43 100

4 Waste Collection and Transport

= Compactor = = = 100

Motor Grayder 100

Backhoe Excavator 100

Front End Wheel Loader 100

Lab equipment 100

____ Dozer-I 100

Dozer-2 100

Cylinder 100

Sorting Plant (Equipment) 100

Clinical Waste Truck-I 100

Clinical Waste Truck-2 100

HDPE GeoTnembrane 100

Air Quality Monotoring 100

5 Consultant Services

=___ Design Superv. Valley X 50 100

Cons. Rehab. Exist. Dump. 9 100

____ Consult. T. S. &Valley Y,Z 25 69 100

Consult Leachate Treat. 100

Supervision (Haluk Dogu) 100

Twinnning 100

Training

Lab equipment&Air Qua. Mon. 100 -

Leasing (Comp& Roller) 72 100

Mic & Sound Equip. 100

Digit. Cadast. Maps KDI 1 13 40 78 100

6 Land Acquisition 20 41 43 62 75 95 98 100

- 15-

BURSA WATER AND SANITATION PROJECTSOLID WASTE COMPONENT (3566-TU)Project Cost by Component and Source of Funds

(US$ million)PROJECT COMPONENTS World Bank BMM Total Cost

Amount AmountSAR Actual SAR Actual SAR Actual

A. CIVIL WORKS

Existing Site Rehabilitation 0.62 0.90 0.68 0.98 1.30 1.88Access Road 0.67 0.16 0.73 0.17 1.40 0.34New Waste Disposal Site 1.78 2.07 1.92 2.24 3.70 4.30Waste Transfer Station (1) 0.58 0.00 0.62 0.00 1.20 0.00

Sub Total :Civil Works 3.65 3.13 3.95 3.39 7.60 6.52

EQUIPMENT

Waste Disposal & Waste Collect 2.97 0.58 3.22 0.62 6.20 1.20Air Quality Monotoring (Aimet) (2 0.00 0.11 0.00 0.12 0.00 0.22Clinical Waste Incinerator (1) 1.58 0.00 1.72 0.00 3.30 0.00Sub Total: Equipment 4.55 0.68 4.94 0.74 9.50 1.42

CONSULTANT SERVICES& ENGINEERING 3.90 6.72 3.90 6.72

PPFAdvance for Solid Waste 0.40 0.00 0.40 0.00Sub Total: Consult. Ser & Eng. 4.30 6.72 4.30 6.72

LAND ACQUISITION 1.60 1.40 1.60 1.40

Sub Total: Land Acquisition 1.60 1.40 1.60 1.40

TOTAL PROJECT COST 12.501 10.531 10.50 5.53 23.00 16.06(1) Clinical waste incinerator and transfer station are excluded from the project during implementation.

(2) Not included in the original scope of the project.

Project Financing

Source Total Cost %of total costSAR Actual (Actual)

IBRD Loan 12.50 10.53 84.00BMM 10.50 5.53 53.00Total Financing 23.00 16.06 1

-16 -

1USA OUYOyB KHiR 5!LEei01Sia3usKi

BUfsA SU vrx KwAtiZAnYONH rOASWsi SUSKI

BURSA WATER AND SMTATION PROJECTWaer Su%ppy "a Saeerag

Novtsber-=001No: o2/21 ISubje^t: BUSKI's ICR Comnents

Mr. Alpteiwe ORHOlIThe World Bank Residn M dsnUtur Mume Cal. NMssG.O.P. I ANKARA

R.4 Your Nov.5, 201 Leter

Dear Mr. ORBONi,

'We hav meviewed tbe B.k's ICR Rcpatt and ws would like to errest scret m sceptiona

and amplify som observations

Our specific commaes ame detsaed ia our ateach repord Our report identifies vuoutis small

corrections xqwred in tbc ICR a weL as certai letgal met astutionai biditaps which UUSKA

Mananrvent caAnot change or amend. Therefor BUSKI adireem oudired below context

of these handicrap in te become nmoe vatbla and aust be asesssed accor&t4yr

a f1)wISial Development

i. BnU81's t,bilky to tuisc tb ineal fiidt required for investincats and timlny

paymet of the principal debt and financ;ng crges, especially in view of Owe defantiz

of the similar ntities in the Turksb sh5er,

ii Morn effective use of the loan realized by c4noeUing the excess portion of the loan at

the expir5 of te grace period, and

iii. Ncgodgion fi: the amendnwcrt of the loan disbuntertnt;

b. Institutional Development:

- 17 -

i. SUSKI has manged to peifonm the procuement and implmentaion (with intenaw

supervision) of all p*kyskal aMt nouhysicai componanb of te Fnoject with reladtiy

limited extenal tecbial assistxace;

ii. As elaborated in the BUSKI ICR, the reduction of UFW by BUSKt. without extal

speciaist asSisnCe. should be commended, as an obvious poo of instititonal

deveiopmenm.

iii. It is especially noteworthy tha BUSKI forcsaw the unaoilablc failum in 'twvnmnin

and took tocaVUttemai measures for li5tu[tiol development The impact of this

approach on sustainability shoal not be ipgored.

In view of the above and in spite of the R:R aumhor's asusinmcru of physical er-achievement"

(Section 4.1 of ICR) and credilable progress in instituional strenitning". the ratings of

satisfactory for physical .n e:ivirotwal achievemerts and, especially, 'inadost for finacal

and institutional devckpncnts' sam unftai. Tho asscsments becume inaprupriaeimpeopet.

particularly in comparison with the achievemes in te other Bank proccs, which are either

completed recentiy or ae presently underway.

Based on our version of ie ICR Report and the comments we have genemutd now, the Bank

ratins shuld be reconsidered both in the context cf the othcl 11ank projects in the Tikish water

sector and with respect to the Biank's tigid operadonal procedures w6ch need t be addresSed by

iba Bank to impove project inplermneations.

Sincemely

Bh1 SBOL I.Gcn. Man. General Mnager

- 18 -

CRMITQUES REGARDING THE BANI'S ICR

., In Section 3.1 of the ICR. in pusS sectioriWl irstizonal refom, the decelopment of

separate water uiilities like BIUSKI wese aessed to be "opeptirg as eommeciid entitia¶ Mhis

observation, though appears o W tmle at first sight is, unf twately, not true, Sevorai principal

defioiencses exiSt

a. 7he Boat of the ublity consisIs of ofitcers ather appointed dirctly by the Mayor or

propcwd for conflmation from the lntenor Minister thus te¢ poteriial for

deisionsimplementaLions indepcradnt fiom the Mayor docs not exist

b. The white-color staffaie subject to the national employment law (657). w4ich restimts

the personnel cadres to the permissioaiallocations of the Central Goveomnet and dres

not permit for campswaxim basld on prsoruwr3 pnrfsrnance cvaloation".

c. The -blue-uclur" swlTare sakbect to the same tinon montact siged evezy two yam

on behalf of all the municdpalides in the city.

in vicw of the above. thOugh the separtion ftun the Imurcipal body has been beneficial Nhis has

not been suficient to attain the flexibility. agility and the indepen: required for a 'commercial

atity'. This deficitney is Lic cr=x of the fiure for the twinning arrmgemenm ad at the sme

tum. thc main reason for wanting to eoage the privivt senor to achieve the efficimcy and

efetivencs requiredposaible in opentions as wzIl as invesUnents.

2. in retrospcct. the dicatencsa of the reltiunShip among ie forecastd tariff levels,

construction of the Pnase 2 Wastewater Treatment Plants and impItmentation capacity of BUSKI

was noted dvwing the projet appraisal It was mtually apteed hat this component be remined in

the prjct scope siace it would be relatively easy to reduce the prrjcct scope ford Sc loan

amount) latcr dwing pTojcct implenenttttion if thee doa&tiorwdcvelo,rncnts ecasrted could not

k* realized. However, the potential to increase the scope and the loan amount by a sXcod trAnche

did not exist n accordancz wiSh the prevailing Bank procedures.

- 19 -

3. In Scion 4.2, uwtere Projec Ots nt assessed by ctmportna the ditibuaion reserir

cAPAtitif wac misNIy wntMen in tems ot 'd po ye', ae thnm 3 for the wbolo

projet dumlon A furtr mistake oT misudtaashigs has occwrnd wi th commnt

Icoa of the two reaining rmevois has bow postponWd'. Apbnt the SAR target

capacity of 30.000 ml. DSl. he aonal war auwhority, ho iteuded the constructioni of a

30W & resmvoir f116) in their constructionit pam (alady sonnnady, itheefo

BUS5K revised har consction prgm.L BUSId ha commilsMored 22 500 m3 of 4 new

rsetvoikr, consmu5 tib of an aMitioul 3 SW m' voirnis underwsy and wvlt be omnmissiond

in 2002. A fiuther two reseoim of 30 000 m3 eapaaty is beng dsed ad will be consructed

in2M an4 2003.

4. Again in Section 4.2. dt timing of du fasibility study for pnvae operar sevbes should

have been 1995, rather On 1994.

5. in Section 45, wber impact of tit elopan is discussed, fd filJure of the

-winw i(' conect is ban5d on "ack of counUrpart staT wit could sak EBtlish. rnovcr in

BUSISJ aff and ihe husing fregz imposed by the cena lbvwumn. Lilkeall public entities,

aUsrI almost hba no stff tarv%er. What w aid axt bilhgual ct n rsaff nnd hiring

freeze were BUUSKI's need for mtore stff ega k Cxistd aecuse of the squem3ion

responbilitnes BUSId asumd for dkc sny inesatua contrab siped. Putbeme. the

backlog of demeuns fer BUSKI acrvkes, nd the high mainkrtace ad rpir needs forced

IUSK to t to recrit me saff fe operatons nd stuprqsv tasks. Lrtcr in 1995, do

govew tinertli fTee was bypassed by o Dsclasg upto 709" selctd stAff through a munic

Corprin in spite o tho s scwss, the payment levels posible would not pernit BUSlI to

mrtn'u bilnul suaff It was tme difficiues wibkh encousged BUSKI Manamet and the

Municipal poliucs to consmdt enagemnt of pvatie opuatos. In view of txe lack of

succssful cxamplcs, both BUSKI pennel and te Municipal politicians were apprehensive.

The cational and -municipal lectons mw4nced cnd tt political tnover ia uniunttiona:1y.

lcd pstponent oftte tender for a private oato.

6. In Section s. m&ny 4lessons were i-dentiflid as learred from the Busm Prject

- 20 -

ai. lImrptanct of instiujtiol snengthening is undeniable- however the comment to 'speciaL

eutzion shwuld have bern given" to the risks of twttwimg" assistance i wt realistic. Now.

looking hock at the expettene gained at Antlya evea enpsem ent of a privte oprator and the

csiablisistent of a spcial project mnuAmenI entty docs not appear to hove solved all the

problems.

b. The Idurction of eoni-cvevlue and uawcounteA-for.water beyond what cm be ahieved by

obvious piysieal measures like network rnmewal and major rehabiltitions. requires expertise an

agility which are both limitod in a public entity. All ncasures beyond a normal investecnt

prVgam requimes a specialist group with appropriate cxpcrtim ad incentive nV4Aniar to pure

diligently the detection and cogtiol of both physical aod ommerc bsses.

I T- .e specid atention requircd for checking of local cil conotors is overstated. It is

irue that the ontrs.ro for the sewage treament plant ha aufftred under the 1994

mcr0ocnorimic cnsis, hovcve:. mesures which coutd hwe counscr-balanced this handicap,

could not be imr.plemented uner poliHcal hesitancy. Again, the Stignincae of independent

ptosi.onal managnemnt fr cutidi like BUSKI becomes thb overriding priodiy.

In sununary. the cux ot he sditions is at gMcating a totaly COMMCCiac entiy which wiUl

aSSurIe the service responsibility ,nore professional and independent managmyent and fiftdom

irhm ccntral goenimcrnt staffing low) and wi : a-ranse to have *he ervice5 providedferfonrTmd

urdcr ,ompetitiwe conditions (by tendering to professional pivate operators).

(b) Cofinanciers:

Not applicable.

(c) Other parsters (NGOs/private sector):

Not applicable.

- 21 -

10. Additional Information

The following additional information is provided in Annexes to the ICR:

Annex 8: Project Outputs by Components

Annex 9: Project Implementation Schedule

Annex 10: Key Indicators of Project Operation

Annex 11: BUSKI - Financial Statements

Annex 12: Borrowers' Contribution

- 22 -

Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix Projected in last PSR ActuallLatest Estimate

(End-of-project projections at appraisal,where available, are shown below inparentheses against each item)

WATER SUPPLY, SEWERAGE ANDSTORMWATER DRAINAGE

Waterproduced 127.6 mm3 103.0 mm3Water billed 65.0 mm3 56.2 mm3Unaccounted -for-water (UFW) 47% 38%

Population served by water supply 95% 95%Water connections 293,100 359,900

Population served by sewerage 80% 82%Sewerage connections 196,160 n.aNew sewerage connections 40,880 n.aPercentage of wastewater treated 87% 87%

Employees per 000 connections 3.7 3.3

Percentage water production billed 51% 54.5%Bill collection ratio 93% 96%Average self-financing ratio 56% 67%

SOLID WASTE

Percentage share of solid waste related 1.5%expenditures in municipality's totalexpenditures (n.a.)

Revenues from solid waste tax (n.a.) TL 265 billion (US$ 0.42 million)

Output Indicators:

IndicatorlMatrix Projected in last PSR Actual/Latest Estimate

WATER SUPPLY

Rehabilitation of existing springs to improve Completed. Yields increased from about 13their yields and construction of about 35 km mm3 in 1993 to about 28 mm3 in 2000.of new pipes. About 57 km of pipes laid.

Rehabilitation and improvement of existing Completed. About 1,585 km of pipes laidnetworks. under the project. BUSKI has laid an

additional 680 km form other resources.

Construction of 10 new wells to increase Completed. 12 new wells were constructed.groundwater supplies and installation of three The additional supply is about 61 million m3new pumping groups. per year.

Construction of new distrbution reservoir of A total of 52,500 m3 of additional capacity30,000 m3 capacity to increase storage has been constructed, of which 30,000 m3

capacity. was constructed by DSI and 22,500 m3 byBUSKI. Another reservoir of 3,500 m3capacity is under construction, and two more,with a capacity of 30,000 m3 are planned for2002 and 2003.

Construction of 70 km of main transmissionCompleted. About 89 km have been laid;

- 23 -

lines and extension of existing network tosupply new customers in about 800 ha of about 10 km, financed by BUSKI fromnew areas. intemal funds, are in progress.

SEWERAGE

Extension of sewerage network by Completed. An addibonal 354 km ofconstructng new collectors and new sewers, collectors and sewers were constructedusing existing sewers for stormwater under the project. In addition, BUSKIdrainage, and constructing new sewers. constructed another 713 km from intemal

funds.

Construction of wastewater treatment plants Phase 1 was completed for both the eastemin eastem and westem Bursa; Phase 1 was and westem plants. Phase 2 will be taken upto consist of pre-treatment works and under a separate operabon funded by theanaerobic ponds; and Phase 2 of expansion European Investment Bank (EIB).to secondary and biological treatment.

STORMWATER DRAINAGE

Rehabilitation of existing stommwater drainage Completed. About 172 km of stormwaternetworks coverng about 4,500 ha. drainage sewers, ranging from 200 mm to

1600 mm diameter, were constructed; inaddition, BUSKI constructed another 15 kmfrom own resources.

Constructon of three open channel Not completed. One of the three interceptorsinterceptors to prevent overloading of the could not be constructed because of illegalstormwater drainage system. settlements; the other two are induded under

the EIB-funded operation.

Extension of the collecton system by Completed. About 17 km constructedExtension of the collection system byconstructing 14 km of new collectors and covering an estimated area of about 400 ha.sewers to cover about 340 ha of new areas.

TECHNICAL ASSISTANCE FOR BUSKI

Detailed design and construction supervision. Intemational consultants were used fordesign and construction supervision up to1995. Thereafter, local consultants wereused for design and BUSKI staff took overconstruction supervision.

Survey, investigations and mapping of the Three consultancy contracts were used forwater supply and sewerage system. preparation of digital base maps, surveys and

the BUSKI GIS system.

Institutonal strengthening through a twinning A contract for technical assistance through aarrangement for design and implementation twinning arrangement was signed with a UKof: consortium in 1994 but discontinued in 1995

- a training program for BUSKI staff and ~~~~due to difficulties in assigning adequate- a training program for BUSKI staff and counterpart staff in BUSKI in the face ofmanagement; austerity measures and hiring freezes in

- program to increase the volume and public enterprses caused by deterioratngpercentage of water billed; macroeconomic conditions. The Bursa City

Council and BUSKI thereafter pursued the- an Asset and Capital Investment possibility of engaging a private operator toManagement System; take over BUSKI operations but this was later

dropped due to persistent delays in the- a Management Informaton System; and process and problems encountered in similar

contracts in other water utilities in Turkey.- a new tariff schedule to encourage water BUSKI carried out the various activities fordemand management and assure financial insbtutional strengthening on its own withadequacy. assistance from local institutes in some

cases as indicated below.

Training program for BUSKI management Training programs for management and staffand staff. were implemented with the assistance of

-24 -

Uludag University; training actvities wereincluded under the consultancy contracts forsupervision, survey, invesbigatons andmapping; BUSKI also has an in-houseprogram for supervision.

Program for increasing volume and Starting 1992, BUSKI contractedpercentage of water billed. meter-reading, bill distribution, and meter

repair and maintenance to privatecontractors. The billing period was changedfrom quarterly to monthly.

Asset and Capital Investment Management Not completed. This was expected to beSystem. developed through the twinning

assistance,and later, the possible pnvateoperator. The network mappings and otherwork provide an informational basis for thefuture development of this system.

Management informaton System. Not completed. This was also expected to bedeveloped through the twinning assistance,and later, the possible private operator. It isnow included under the EIB-funded project.

New tariff structure and schedule. Partially achieved. BUSKI has been makingmonthly adjustments to the tariff based onindexation to inflabon to preserve adequacy inreal terms. However, the design of astructure and schedule to encourage waterdemand management among consumers hasyet to be undertaken.

Preparation of a feasibility study for Completed. An intematonal consultantcontractng out services to a private operator. prepared a study in 1997 that recommended

an "affermage" type of contract. The processof selection of a private operator was notcompleted for the reasons mentioned above.

SOLID WASTE

Rehabilitaton of the existing dumpsite Completed. In addition, a concessionincluding carrying out of fire control works, contract has been given to a private operatorstream diversion, bund constnuction, leachate to construct and operate a methane gascontrol works, regrading and replanting, based plant to produce electric power.collection ditch construction, and venting oflandfill gas.

Development of a new landfill site including Completed. The first stage involving the Xan access road of 2.5 km, site excavabon and T Valleys was completed in 1995 and theand clearing, construction of a bund, second stage involving the Main Valley inbuildings for administration and maintenance, 1999.installaton of a weighbridge, and supply ofearth-moving equipment,

Construdion of a 600 tons per day waste Changed. In July 2000, BMM agreed with thetransfer station with two covered tpping halls, Bank to exclude the transfer station. Instead,two wieghbridges, one mobile grab, on loader it was agreed to include a sortingand two tractors. staton/recycling plant which has been

completed and is in operaton. Extension ofthe recycling plant was deferred by BMM dueto budgetary constraints.

Purchase of collecton vehicles and Changed. Collecton of municipal waste wascontainers for municipal and industrial waste. contracted to private contractors. Funds for

purchase of vehicles were reallocated toequipment for the landfill site includingcompactor, motor-grader, excavator and

- 25 -

loader.

Construction of two clinical waste Not constructed due to initial delays byincinerators of 0.5 ton per hour unit capacity, contractor and subsequent changes inand purchase of two clinical waste collection national-level environmental guidelines.vans; only one incinerator was to be installed Two clinical waste collection trucks wereunder the project. purchased.

ADDITIONAL INVESTMENTS (added in thecourse of project implementation)

Provision of facilities and equipment for an air Completed. Four monitoring stations,quality monitoring system. induding two at the landfills and two in the

city, have been set up and are in operaton.

Design and construction of a leachate Postponed. BMM expects that it will now betreatment plant. included under the EIB-financed project.

TECHNICAL ASSISTANCE TO BMM

Design and construction supervision. Provided for rehabilitation of existngdumpsite, new landfills, sorting/recyclingplant, and leachate treatment plant.

Institutional strengthening of BMM's solid Substantially completed. Waste collectionwaste management activities. and landfill operations have been contracted

to private operators.

End of project

- 26 -

Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)Appraisal ActuallLatest Percentage ofEstimate Estimate Appraisal

Project Cost By Component US$ million US$ millionWater supply civil works 33.50 41.90 125Stonuwater civil works 24.20 19.20 79Sewerage civil works 32.10 27.20 85Wastewater treatment civil works 64.20 9.50 15Water, sewerage and stonnwater equipment 41.70 44.25 106Consultancy Services and engineering 23.90 13.80 58PPF advance re-financing 1.10 0.37 34Land acquisition 14.24 20.77 146Solid waste civil works 7.60 6.52 86Solid waste equipment 9.50 1.42 15Consultant services and engineering 4.30 6.72 156Land acquisition 1.60 1.40 88PPF advance re-financing 0.40 0.16 40

Total Baseline Cost 258.34 193.21

Total Project Costs 258.34 193.21Total Financing Required 258.34 193.21

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Procurement MethodExpenditure Category ICB NCB P eher 2 N.B.F. Total Cost

1. Works 143.30 18.30 0.00 0.00 161.60

(67.10) (8.60) (0.00) (0.00) (75.70)2. Goods 49.70 0.30 1.20 0.00 51.20

(23.40) (0.10) (0.60) (0.00) (24.10)3. Services 0.00 0.00 28.20 0.00 28.20

(0.00) (0.00) (28.20) (0.00) (28.20)4. Miscellaneous 0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) (0.00) (0.00) (0.00)5. Miscellaneous 0.00 0.00 1.50 0.00 1.50(PPF Refinancing) (0.00) (0.00) (1.50) (0.00) (1.50)

6. Miscellaneous 0.00 0.00 0.00 15.80 15.80(Land Acquisition) (0.00) (0.00) (0.00) (0. 00) (0.00)

Total 193.00 18.60 30.90 15.80 258.30(90.50) (8.70) (30.30) (0.00) (129.50)

- 27 -

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

: R Exspenditure category t00t00IB ProcUrement Method 2 N.BF. Ttl CosNCB ~Other _ _ _ _ _

1. Works 88.40 15.90 0.00 0.00 104.30(48.10) (8.50) (0.00) (0.00) (56.60)

2. Goods 44.60 0.50 0.60 0.00 45.70

(26.00) (0.20) (0.20) (0.00) (26.40)3. Services 0.00 0.00 20.50 0.00 20.50

(0.00) (0.00) (20.50) (0.00) (20.50)4. Miscellaneous 0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) (0.00) (0.00) (0.00)

5. Miscellaneous 0.00 0.00 0.50 0.00 0.50(PPF Refinancing) (0.00) (0.00) (0.50) (0.00) (0.50)

6. Miscellaneous 0.00 0.00 0.00 22.20 22.20(Land Acquisition) (0.00) (0.00) (0.00) (0.00) (0.00)

Total 133.00 16.40 21.60 22.20 193.20

(74.10) (8.70) (21.20) (0.00) (104.00)

Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

' Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staffof the project management office, training, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)[Percentage of Appraisal

Component Appraisal Estimate { Actual/Latest Estimate AppraisalBank Govt. CoF. Bank Govt. CoF. Bak Govt. CoF.

Water supply, sewerage 117.00 118.70 0.00 93.33 81.54 0.00 79.8 68.7 0.0and stormwater drainage

Solid waste 12.50 10.50 0.00 10.69 5.53 0.00 85.5 52.7 0.0

Total 129.50 129.20 0.00 104.02 87.07 0.00 80.3 67.4 0.0

- 28 -

Annex 3. Economic Costs and Benefits

At appraisal, an ERR was calculated for the water supply and sewerage part of the project using theincremental water and sewerage revenues as a proxy for the benefits attributable to the investments. Theaverage selling price applicable in the first year that the project became operational was taken as aconservative proxy for benefits on the assumption that most consumers would be willing to pay more thanthis for essential water supplies. Capital costs (net of taxes) used in the calculation were limited to thosefor the investments in water supply and sewerage (excluding stormwater). On this basis, the ERR wasestimated at 8.2 percent. The SAR indicated that the project economic benefits would be higher thanindicated by the ERR if the unquantifiable health, environmental and social benefits of the project weretaken into account.

For the ICR, the re-estimated ERR is 9 percent excluding the unquantifiable benefits mentioned above.The ERR is higher than estimated at appraisal since the project capital costs do not include those for thesecond stage of the wastewater treatment plants which was postponed to beyond the project. Exclusion ofthe second stage wastewater investments increases the ERR as estimated on the above basis.

In addition, there were important, though unquantifiable, environmental, health and social benefits from thesolid waste component.

- 29 -

Re-Estimation of Economic Rate of Return

(US$ million)

Year Project Other Incremental NetCapital Capital Operating BenefitsCosts Expenditures Cash Flow

1994 3 10 -131995 6 10 -161996 13 10 -231997 20 10 -301998 28 10 -381999 32 10 -422000 20 10 24 -62001 6 10 24 82002 24 242003 24 242004 24 242005 24 242006 24 242007 24 242008 24 242009 24 242010 24 242011 24 242012 24 242013 24 242014 24 242015 24 242016 24 242017 24 242018 24 242019 24 242020 24 242021 24 242022 24 242023 24 242024 24 24

ERR 9%

-30 -

Annex 4. Bank Inputs

(a) Missions:

Stage of Project Cycle No. of Persons and Specialty Performance Rating(e.g. 2 Economists, I FMS, etc.) Implementation Development

Month/Year Count Specialty Progress Objective

Identification/Preparation2/14/91 1 1 Sanitary Engineer4/17/91 2 1 Financial Analyst, 1 Sanitary

Engineer9/3/91 2 1 Financial Analyst, 1 Sanitary

Engineer1/30/92 3 2 Financial Analysts, 1 Sanitary

Engineer

Appraisal/Negotiation2/15/92 2 1 Financial Analyst, 1

Sanitary Engineer

Supervision3/15/93 S S7/15/93 HS HS3/8/94 3 2 Financial Analysts; I Sanitary S S

Engineer7/4/94 2 1 Financial Analyst, 1 Sanitary S S

Engineer2/24/95 S S9/22/95 2 1 Financial Analyst, I Sanitary S S

Engineer4/27/96 2 1 Financial Analyst, 1 Sanitary S S

Engineer3/7/97 2 1 Financial Analyst, I Sanitary S S

Engineer11/28/97 2 1 Financial Analyst, 1 Sanitary S S

Engineer11/16/98 2 1 Financial Analyst, I Sanitary S S

Engineer6/5/99 2 1 Financial Analyst, 1 Sanitary S S

Engineer12/11/99 2 1 Financial Analyst, I Sanitary S S

Engineer9/16/00 2 1 Financial Analyst, 1 Sanitary S S

Engineer

ICR06/07/01 3 2 Financial Analysts, 1 S S

Sanitary Engineer

- 31 -

(b) Staff.

Stage of Project Cycle 1 Actual/Latest Estimate

No. Staff weeks US$ ('000)Identification/Preparation n.a. n.a.Appraisal/Negotiation 229Supervision 29 484ICR 6 22Total 35 735

- 32 -

Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantia], M=Modest, N=Negligible, NA=Not Applicable)Rating

Z Macro policies O H OSUOM O N * NAL7 Sector Policies O H OSUOM O N * NAO Physical OH *SUOM ON ONAO Financial O H OSU*M O N O NAO Institutional Development O H O SU O M 0 N 0 NAO Environmental O H *SUOM O N O NA

SocialEl Poverty Reduction O H OSUOM O N * NAE Gender O H OSUOM O N * NAO Other (Please specify) O H O SU O M O N * NA

E Private sector development O H O SU * M O N 0 NAO Public sector management O H O SUO M O N 0 NAO Other (Please specify) OH OSUOM O N * NA

- 33 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

El Lending OHS OS OU OHU,El Supervision O HS S s O u O HUEl Overall OHS OS O U O HU

6.2 Borrowerperformance Rating

El Preparation O HS * S O u O HUEO Government implementation performance 0 HS * S 0 U 0 HUEi Implementation agencyperformance HS *S O u O HUEl Overall OHS OS 0 U C HU

- 34 -

Annex 7. List of Supporting Documents

1. Staff Appraisal Report, November 11252-TU, dated January 29, 1993

2. Loan Agreements and Guarantee Agreement, dated March 25, 1993

3. Regional and Departmental Files

4. Information Submitted by the Borrowers

- 35 -

Additional Annex 8. Project Output by Components

Water Supply

Rehabilitation of existing springs: The rehabilitation work and construction of transmission lines to therelated distribution reservoirs is almost completed. Against the target of 35 km, about 56 km of pipe havebeen laid. As a result of the rehabilitation, the yield from the springs is measured about 28 mm3 per year ascompared to the estimated 12.7 mm3 prior to the rehabilitation.

Rehabilitation and improvement of existing networks: A total of about 1,585 km of pipes were installedunder the project. In addition, BUSKI laid an additional 680 km from internal sources resulting in about2,265 km of pipes being installed under the rehabilitation program.

Construction of new wells: Against the target of 10 new wells, 12 wells were drilled and equipped with 12submerged pumps. A new pump station was built and four horizontal centrifugal pumps were installed forseasonal use when the spring and Doburca water supplies decrease. An additional 61 mm3 of water isavailable annually as a result of the new wells and pumping station.

Construction of new distribution reservoir capacity of 30,000 m3: Against the appraisal target capacityof 30,000 m3, a total of 52,500 m3 of capacity has been constructed, of which 30,000 m3 were constructedby DSI and the remaining 22,500 m3 by BUSKI. In addition, a reservoir with capacity of 3,500 m3 isunder construction, and two other reservoirs with a capacity of 30,000 m3 are planned for 2002 and 2003.

Construction of main transmission lines and extension of the existing network: Against the target of 70km, 89 km of transmission lines have already been laid and another 10 km are in progress.

Meters: About 230,500 meters were procured under the project of which about 223,500 have beeninstalled; the remaining 7,000 are expected to be installed by end of 2001.

Sewerage

Extension of the existing sewerage network: About 1,067 km of collectors and new sewers werecompleted, of which about 353 km was constructed under the project and the remaining 713 km by BUSKIfrom internal funds.

Construction of wastewater treatment plants in East and West Bursa: The wastewater treatment plantswere to have been constructed in two phases - pre-treatment and anaerobic ponds in the first phase, andsecondary and biological treatment in the second. Phase I has been completed for both plants which are inoperation. BUSKI decided to postpone Phase 2 and the part of the Bank loan allocated for the purpose wascancelled. Phase 2, involving biological treatment, will now be taken up under a project being financed bythe EIB.

- 36 -

Stormwater Drainage

Rehabilitation of existing stormwater drainage: About 172 km of stormwater drainage sewers, ranging

from 200 mm to 1,600 mm diameter, were constructed under the project; BUSKI constructed another 15

km from its internal sources.

Construction of three open channel interceptors: Construction of all three interceptors has been delayed.

During detailed design, it was found that construction of one of the interceptors would not be feasible on

account of illegal settlements. BUSKI expects that the other two interceptors will be financed under the

EIB loan.

Extension of collection system: Against the target of 14 km, about 17 km of box culverts were

constructed.

Technical Assistance for BUSKI

Detailed design and construction supervision: An international consultant employed for design and

preparation of the bidding documents also helped with the supervision of the construction contract up to

1995. Thereafter, BUSKI staff carried out construction supervision work except for the wastewater

treatment facilities. A local consultant was engaged for preparation of the water supply network designs.

Detailed designs for sewerage and stormwater drainage works were included within the contracts for the

construction. Detailed design for 170 km of sewerage lines, and for design and preparation of the

biological treatment works were completed under the project.

Survey, investigations and mapping of the water supply system: The work was undertaken under three

consultancy contracts. Findings and results were utilized in development of BUSKI's GIS system, and for

new design and rehabilitation of the network.

Institutional strengthening through twinning: BUSKI entered into a twinning agreement with a UK

consortium in March 1994. In August 1994, the consultant prepared an inception report. Interaction

between BUSKI and the consultant were hampered by the lack of counterpart staff in BUSKI who could

speak English. In late 1994, under a program of austerity measures introduced by the Government to deal

with a deteriorating macroeconomic situation, hiring freezes were placed on public and municipal

enterprises. Due to the continuing difficulty in providing counterpart staff, BUSKI terminated the twinning

contract in early 1995. Instead, BUSKI and the City Council initiated exploration of the possibility of

engaging a private operator to take over BUSKI operations. An international consultant, financed under

the project, recommended an 'affermage' type of contract for BUSKI. Nine consortia were pre-qualified for

inviting of proposals. However, the process was delayed, first due to municipal elections in Bursa and later

due to the problems encountered by the contracting parties in similar contracts elsewhere in Turkey. In

2000, the Bank and BUSKI decided that it would no longer be possible to include this component for

financing under the loan since it could not be completed prior to loan closing.

Training program for BUSKI management and staff: This was expected to be developed with the help of,

first the twinning agency and later, the private operator. Since this did not occur, BUSKI pursued the

training on its own through a combination of in-house and external training through the Uludag University.

Training activities were included under the consultant's contracts for surveys, investigation and mapping.

Some training in financial management was provided by the auditors.

- 37 -

Program for increasing the volume of water billed: Starting in 1992, BUSKI engaged private localcontractors to carry out meter-reading, identify illegal connections, distribute bills, and install and maintainmeters. Under the project, BUSKI also strengthened its computer hardware and software related tocustomer service and relations.

Asset and capital investment management system: BUSKI was unable to introduce this since it wasexpected to be developed with the help of the twinning agency or private operator. BUSKI expects topursue this under the EIB-financed project.

Management information system: For the same reasons as the item above, BUSKI has not been able toinstall a fully developed MIS. Some improvements were made in the context of the results and informationprovided by other work such as the survey, investigations and mapping studies. Integration is needed withBUSKI's GIS system. These will be pursued under the EIB-financed project.

New water and sewerage tariff schedule: BUSKI was successful in introducing a tariff adjustment systembased on monthly indexation of tariffs to account for inflation. However, a more comprehensive review ofthe tariff structure and schedule, particularly with a view to influencing water demand management, wasnot undertaken.

Feasibility study for contracting out services to a private operator: This was carried out in 1995 by anintemational consultant who recommended an "affermage" type of arrangement for BUSKI. Progress inselecting an operator was delayed, and eventually, deferred for the reasons explained earlier above.

Solid Waste

Rehabilitation of the existing unregulated disposal site: The existing disposal site was rehabilitated asenvisaged and works completed for fire control, construction of 51 gas wells, drainage channels forleachate control, capping with impermeability layers, collection ditches, planting and erosion control. Inaddition, under a concession contract to a private contractor, a plant has been set up, and is in operation,to utilize the methane gas from the dumpsite to produce electric power.

Development of a new landfill site: A new sanitary landfill has been constructed in two stages. In the firststage, landfill construction was completed in the X and T Valleys, including access road, bridge, siteexcavation and clearance, impermneability layers, drainage pipes, administration building and a smalltreatment plant. In the second stage, the Main Valley landfill construction was completed.

Solid waste transfer station: In July 2000, BMM and the Bank agreed to exclude the transfer station fromthe project and to include instead a sorting station/recycling plant. The latter has been completed and is inoperation. Extension of the recycling plant has been deferred due to BMM's budgetary constraints.

Collection vehicles: Collection of municipal waste has been contracted out to private contractors. BMMand the Bank agreed to reallocate the funds to purchase of other essential equipment for operation andmaintenance of the landfill site including a compactor, motorgrader, backhoe excavator, loader, andbulldozer.

Clinical incinerators: In July 2000, BMM and the Bank agreed to exclude these items from the projectbecause of initial delays on the part of the contractor and subsequent changes in applicable national-levelenvironmental guidelines.

- 38 -

Additional investments included during implementation: BMM and the Bank agreed to the inclusion of:(i) an air quality monitoring system under the project. Four monitoring stations (two at the landfills andtwo in the city) have been set up to monitor and analyze data in regard to SO, CO, NO, PM, HC and O .The stations are in operation; and (ii) design and construction of a leachate treatment plant. Designs havebeen completed but construction has been postponed due to BMM's budgetary constraints. The plant isnow expected to be financed under the EIB project.

Technical Assistance for BMM

Design and construction supervision: This was carried out as planned for the unregulated disposal siterehabilitation, new landfill sites, and waste management works.

Institutional strengthening of BMM's solid waste organization: Action plans were to be developed forwaste collection and transfer, clinical waste and industrial waste. By a special arrangement, BMM hastransferred the waste collection and transfer responsibility entirely to the District Municipalities which haveentered into contracts with private operators. BMM has also contracted a private operator for the landfilloperations. In addition, BMM has entered into a contract with a private operator to set up a plant forproducing electricity from the methane gas from the landfill. The plant is in operation. Improvements havebeen made in clinical waste collection, including through purchase of special-purpose trucks, but theplanned new incinerators have been delayed pending changes in national environmental guideline. Toexpand the base and to improve the collection of the cleaning tax, BMM has integrated the cadastral andplanning information to the Bursa geographical information system together with BUSKI.

- 39 -

Additional Annex 9. Project Implementation Schedule

Water and Sewerage

I GNOWo I C1tras31 94s 1 991 19s71819991 30O12iOi I

I WI]1 _._§Pfirv T_ _ 51 1

2W2 SgRhb.k2) 1 25 59 85 f'__ 3._ __ E _ _ _.d_

_4 PY4 Sain Re 46 IO(

W2.1 RW cp1J6w__R242sR .St _ __ _ 523 Te2r2

W5.I IR~~~~~~~~Q~k1)16 3 49 6wI-M. w Rairs c i) 13 1 _ _ __-__--- --- --a W2,-3 _ _ M a-in E Pvdic _Pc 13 69 _ . ._0._0a__ _ . _

__W24 Main P:id Ol 3) ___11I W3.1 Rd-hN &_uri 8 1 80 1

1 W32 jNd.&Gi~~~~~~New (~~~t2) ~13 53 92 IO1 oW33 Rd~~. ~&Qi~*w(F37 19 91 10

1 W3.4 Rdih Ne&CcsNewbN (h1 _4 __ _.I1 W3. 5&C7w_ 15j _ _ I

_1f W3.6 -----&Ca-Swti 89 689=I_ W3.7 73 Nd & CaN,L____ 47 1O_

I E3.11 ,__fi&E _ _ 4311 N' Zbkv Net (1993)

2[-W6 R~~ofl~s&1cam 45 1W-21U S2.1 XS14+Ss e 151_zS32 _ Y,S12& YS38SWCdkxxs ._ _ 2' -72 1,8 a_

T _33_ _ A Cdb o(YS34,37&39) 39,==4S3.1 16 K I,_ _ _ 63 831 1_

7 -! W , .Ntw Nov lS___ _a __93 10_ _ ___ 1 DiQnadlOf SW&WW

26SWLI (Ph1) 48 - 1LDmaQid f Watr,SW&

SNw. I ww 33 8433 10I__. SWI.,__, W, Nt,-----_--------____ .- 3,_tl _..C3AOf`WAx SW& WWIk

28 SWWI.2 P-2 65 100

__31,3 As2A L)_ _ __..._ __ __ _ . .

33 EL _ Dutde -- _ __ 94 _ _ _ __31.4 99 P 2_, _ _ _ _____

_ EI.7 _, Ducte Im P!xsS,3,_ , (P_, K_ __I.__O_a_._. _

__ _ _ . _ _ _ _ . _ _____ __5 __ _ _ _ ___ _ __ ____41 F26 __._ o fBa LaV:s 71 96 __ _39 2.7 EI RUIIWS IVfv) 100__4 E25 PnxuofE_r&__ __ 1o

_43 E2.6_ _ V -s__ ._ _ .__ _ _____

F2 nxm1iofTrVO E2.8 Rn(AIMM ofLgh Ecg & h-t0.

- 40 -

Water and Sewerage

___E E2. 1 41_ y4 pE9 MIl_A...._ A u_ _ __ E2.1.1 MM 1 _ .____.. la _ _ _ 5E E2 12 _ P PY41EsE ipdcj: 3L. _I_.___.__Oa_. __

51 E3.1 SfdP!ees -_~~ __ _ __-_2 E33 1_1 lo

_ 53 E3APL a ,(,of ,___,k_, .7 IO(54 E4.1-A uitofFbnm 1u

_9E42 Fbns 1 ____._ ____ _l __ E43 _ __,___tofFb4nx_ 1__

9 Ala Fh 1 v 1 ____ Aib Fu rta D_ _ 1__

61 A2 \S S* 8Iea*&CI y 8 _ A.3a_ _ 1UicnIQ93tD(135 ___I )8 a_ __ _ _ 63 A3b _ MU,bl(9, (BS6 MM_, ._ _. __ a___ ____64 A3c PMUfniO3at O397 1 10l6eA R_vUfmi17b9 _ _ I __30 4E 72 10

-- 67 AA CaHx&p s*Cm __ __3 1_ _

69 A8 Phj2 Dd. D*&Sq.im_ _ _ 67*

70 A9 Tech Ass. P1 __ _.hi __ 6' IO71 _ _ P.1i 2e Pi _._ 19 70 98 910_a____

Fh2hmAv&&9,yMIRmmB72 B2_ ___ __ _ 1 43 56 73- 9 10_73 CA h I T.im_Cata _ _ _

--- 4 -. _. GEC-----_____--4-5-a------ _74 GI GISCa~aimvySavim -2 459 1 _

_75 C.3_ __, _ieSaxrtiJ --_ ___._ ___ __ _____.__C2 Nd"ak 66I0

_7f,___ A(l,9g __i __=_ 3 Tl _ _ __ _.__C.4_ A1999 - 32 6 1 _ _

N_ C,6 Aidibrg(19992001) ___ _._______________ ._.___ __ ____ _

> Exqdkoxrp1eozd1yS 94X2)1.

4 Exobbbe bX2(2(w/o o}t

u 6q fr, be=yr Sp SL 20DI.

9 EVt>dl)b,-. dbySJu20021.bmoWmy

fAnugl adi bS 1999EarId 2000 wm m*cIJDI 0 Auctwiibe mv&in 20E

- 41 -

I I I I I I II ' II --L-'-i--I--i~~~~~~~~~~~~~~~~~~~~--------

11111111 I 'III I 3 ~ ~~~~I 1 13

lej 1^ 1.111 j 1w i~ 1111 111111im t I ... _

I- Pd l- -4- 1-11-1-4--I--I-- II ttI I 44I444 - - * ------- ----- I-. --- - ------ 4--- -------

l-P4~~ I -Ii-I-14-I4--t--I--I* …I ---*] ~ -- -I-f I I I 4--I-- -- -f-- -- -4--- -------11111111111111-l'+i, i II+-tl + 3 1I 11111!-1 III-iIIII!lgklll+|| 1111111

-+- -----1- 1i-t ---i- i -- 133L'+- 1 t f,3l T1 gM 8 | :[

1111 m, IIIIH MV81 ~Ii I1 1 1 1 11 1 1 1

I I4I I I I H1 111111111 I I-1+ II I I I I I 1 I I I I I I I -- t----+--3-1----+----3-- I I-t+----j-+--I -|----++--I- I ---- -t- --- +-i I I I

Water and Sewerage

E2._9 __pmamm"CA"ts _ _ 2850_I 473L 3601_ 1 30601---- --

_O2. YR 4F W EZI I __*_ R 9_ _1%9 tk6' 2YI2,6_F_- t-F-~F 2Y96_

_ 5 F212 -- _ Rxi 6 1/; 5()9,154t _12W7 1 _9W9 1 _ __ _ 9697 _'3E3 Sled_____ 4 _7M _16295 1 30359___o__W__W__

_9E33 l_SEd il3__ _ *2X912 5;12 3DI097_ -- 3-IL---097-_ 34 _SElk4 _ __24; 1, 23l 2 X9__12_ F_ _ __ 2212S99__SE4.1-A I:,Dnx_ __ _ Z722S12 81729 _ __2 _ t- -t_

_ 5 E4.1-B iP f bm s ___ %I99 1 7_829 14qO99-L--- __ L__ ___1 14/10S

_ Si E4_ RutdP s _____~~Z21099 _ 2p R0+--- -F F M_91 E5_ __|(U:___-----;2- ~~~7/-I-H --- g 22Z599_ __ __ ___ 2_ 9 Ala ll9 vit l _4~~~~~49__1 573 14495 1 _I___1__ 1 _44

: ~~~~~~~~~~~~~~~~~~~IA 1 i I I , ,

61 jA_ _+s2 7,85 + 2 R6 7/1097 1 2111297 p1 IV.% ---- S%

_ 61 A3a_ ___ (IIsBb(B%______: 17//9 1 40 1996 1 __ 1__,_ ,_ _ 996

_4Az3c i"AUftlll(B9tDC397____ 17A35 | 49= 2171S7 2 _ _P____ 7S97

__6 A4____ECaE __2452~1 110T 1A493+_,11 24995 1 2 2 Z497_39

A8__ sPh2Dd&___L~~~~~~1/ VID1 __( 000L 00 L_ t L_ 3M#

_:Pfi_ h 1 kAtmet&9ivl_P ___ 1559% T12 55J9 1049S1 29 i63 (M _---- 1- 639I s~~Ph2hcmWt&&SlqMllbl4 um I!

| 2 74GI IEaFra 1 19 2B79 /8% 1 22112 19 312Z 1 76 1 I 7A0

C-~ 4 -- - - ~~ 5t 6 16997 ' t - t 6S--- 79~~~~~~~ .__--i -- 7t87~99)~IS9!--- t| t INs99~

M_gC-6 -9Sw2 41E----'_.1-i9 3-0'601-= - - i=---o 30601

-43 -

Solid Waste

Con Contract Title Contract Contract Scheduled Extended ActualNo: § Signed Price Completion Completion Completion

l _ $ Date Date Date

World Bank Financed ComponentsRehabilitation at Demirtas 07/27/94 784,474 05/26/95 12/30/95 12/30/95Access Road + Junction 03/21/97 410,422 September 97

Landfill hamitler X,T 07/21/93 2,520,000 9/8/1993 12/30/95 12/30/95Landfill Hamitler M. Valley 11/21/97 1,750,000 12/23/97 11/30/99 11/30/99

Compactor 11/25/94 156,000 March 95Motor Grayder 01/12/94 110,000 April 95

Backhoe Excavator 01/16/94 100,000 April 94Front End Wheel Loader 01/12/94 93,000 May-95

Lab equipment 38,000

Dozer-I 12/21/95 164,000 June 96

Dozer-2 05/13/96 142,000 July 96Cylinder 05/13/96 70,000 Sept. 96

Sorting Plant (Equipment) 07/03/98 178,000 11/3/1999Clinical Waste Truck-I 10/18/94 41,000 March 95Clinical Waste Truck-2 05/02/97 50,000 August 97HDPE Geomembrane 07/14/99 68,000 August 99

Other Equip. ( Air Qua. Monit.) 06/12/00 224,000 August 01Design Superv. Valley X 07/21/92 142,000 January 95

Cons. Rehab. Exist. Dump. 07/21/93 600,000 October 94Consult. T. S. &Valley Y,Z 06/08/95 147,000 December 97

Consult Leachate Treat. 09/14/00 117,758 06/30/01Superv. (Haluk Dogu) 09/21/94 50,000 06/30/01

Twinnning 43,000

Training 74,000

Lab equipment&Air Qua. Mon. 12/29/94 38,000 August 95

Leasing (Comp& Roller) 01/16/96 711,000 Oct. 96Mic & Sound Equip. Feb.96 23,000 March 96

Digit. Cadast. Maps KDI 11/14/96 5,120,000 06/30/01

- 44 -

Solid Waste

Con 1992 1993 1994 1995 1996 1997 1998 1999 2000No:

Actual Actual Actual Actual Actual Actual Actual Actual Actual

WB LOAN

I Existing Site Rehabilitation

I Rehabilitation at Demirtas - 5 63 97 100 - -

2 Access Road

Access Road + Juncthon 100

3 New Waste Disposal Site

Landfill Hamitler X,T 10 53 98 100

Landfill Hamitler Main Valley 43 100

4 Waste Collection and Transport

Compactor 100 = ==

Motor Grayder _ 100

Backhoe Excavator 100

FTont End Wheel Loader =_=_= 100 = = =

Lab equipment 100

Dozer-I 100

Dozer-2 100

Cylinder 100Sorting Plant (Equipment) 100Clinical Waste Truck-I 100Clinical Waste Truck-2 Too| HDPE Geomembrane 100

Air Quality Monotoring ___ 100

5 Consultant Services

Design Superv. Valley X T 50 100

Cons. Rehab. Exist. Dump. 9 100Consult. T. S. &Valley Y,Z 25 69 100

Consult Leachate Treat. 100

Supervision (Haluk Dogu) = = = = = 100

Twinnoning - 100 -

Training

Lab equipment&Air Qua. Mon. 100

Leasing (Comp& Roller) 72 100

Mic & Sound Equip. - 100

Digit. Cadast. Maps KDI . 1 13 40 78 100

6 Land Acquisition _ 20 41 43 62 75 95 98 100

- 45 -

Additional Annex 10. Key Indicators of Project Operation

A___ __E _ _ _ACILJUAI ES__A_B19M IM 9 I S I aioi0 109 1995 IW9 igs 7mo

pnixBiOTnl3) 993 1(Oa 114.1 1a. 127 16oD 1137 110.7 106B 103tmiarbrodmG) 40.7 486 54.8 614 65. 385 40O 460 53.6 56

u-tliva n3) 5&6 634 59.3 614 62 675 73.7 64.7 532ixftmr V/I) 54 2 5) 48 4 63 65 53 4Tp,~epearD eons 4.3 a3 3.7 3.7 3 43 a8 36 34 3

POP.sXfoo) 934 1IB7 1,171 1257 1 no no 1p37 no 1,177pbxkkn smed V/4 93 63 95 95 9 93 94 95 97 97ar.wx 216,) 244,763 ;3o 9PO 29310 237,fl 27007W 31Q1CO3 351,700 35=r3NanTEis 15,0O0 13=O 9MO 9=l 10,1V 18pOD 2=XX 15=00 21,C0 8;0

pqxi*saraed V/@ 73 75 77 79 a 73 75 77 8) 82crraodc 15520 155) 169810 187,010 1%161 na no na na narewvcnmiJs 9,70D 9Z0 800 8,300 9ZI na na na 85 87

cL m ft I-Mn) 332 532 64.6 78.1 85 275 292 322 454 49.aeab pr3 P%) 0.74 1D0) 1.C9 1.17 1Z 070 0.70 0.70 0.8) 0a, shrrn0 3 S$) 057 053 Of3 03 0.71 0.40 030 03) 03D 03cFk I- 839 69)D 71.D 72 T 8) 72 84 5 6

waft r/ 69 53 53 53 S 87 70 81 2 51it E6s/53 50 60 D S 100 82 52 6i

-46 -

Additional Annex 11. BUSKI Financial Statements

BUSKI - Income Statements (US$ million)

1991 1992 i 1993 1994 1 1995 t 1996 1997 1998 1999 2000

WATER SALESANDSEWAGEFEES1 20.78 21.91i 21.73 20.781 31.731 33.221 31.92 42.94' 48.511 51.11

WATER AND SEWAGE SERVICEREVENUES 0.74] 0.77 1.02. 0.81 0.951 1.511 1.54 2.20. 1.471 0.98

Total Revenues 21.52- 22.68 22.75 21.59| 32.68| 34.73! 33.46 45.14 49.98i 52.08

COST OF REVENUES -19.99' -18.95 -16.62 -13.831 -20.09 -20.811 -24.85. -24.71 -26.311 -28.55

Gross Profit 1.54 3.731 6.13. 7.75 12.59 13.931 8.61 20.44 23.671 23.53

GENERAL AND ADMINISTRATIVE I 56 -4.26EXPENCES 4 -1.70 -2.69, -3.65 -3.401 -5.97 -5.41 -5.83 -7.18. -5.67 4.26

Irn nie fromOperaom 0.16 1.041 2.49 4.36| 6.62j 8.51 2.78 1326; 18.001 19.28

FINANCIAL INCOME/(EXPENSES) -1.55, 1.94 1.55 -0.451 -0.19 -3.441 -18.52' -20.84' -2.98i -3.25

OTHER INCOME 3.57. 4.06 3.14 1.89 3.41 3.081 3.05 3.86 4.241 3.82

Incoffebefwe lller Bank Share 1.86 7.04 7.18i 5.80 9.84 8.15 -12.69 -3.72 19.25 19.85

ILLER BANKSHARE IN THE .STAXUThORY PROFIT I -0.01 -0.01 -0.03 -0.01 -0.04 0.00! 0.00 0.00 0.00 -0.18NrETMONETARY LOSS 0.00 0. 0 0°00° 0.00 0.001 0.00° 0.00° 0o00. -14.021 -4.25

Net lncome forthe Year 1.85: 7.031 7.151 5.79 9.801 8.151 -12.69i -3.72 5.241 15.41

Note: BUSKI's 1991-2000 financial statements are audited by independent external auditors.

The US$ figures are calculated taking the yearly average exchange rates for 1991-1998.

The year end exchange rate for 2000 is used for calculation for the years 1999 and 2000.1999-2000 financial statements are prepared in accordance with IAS 29 (Financial Reporting for Hyperinflationary

Economies). IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy bestated in terms of the measuring unit current at the balance sheet date and the corresponding figures for previousperiods be restated in the same terms. The financial statements of prior years, including monetary assets andliabilities reported therein, which were previously reported in terms of the measuring units current at the end ofthose years are stated in their entiTety to the measuring unit current at December 31, 2000.All items in the statements of income are restated by applying the relevant (monthly or yearly average) conversion

factors.

- 47 -

BUSKI - Balance Sheet (US$ million)

1 1991 1 1992 1993 1994 1995 1996 1997 1995 1999 2000ASSETSCURRENT ASSETS|

Cash i 5.57 3.689 3.70 5.05 6.01: 6981 1.330 937 10.30 931Arcunts Receivable, net 671 6.64 4.39j 4.95j 6.64 6.70 5.31 7.84 0 00 0.77Marketabtesecurities 0.00 0.00 0.18Due From Related Parties 0.90 0.38 045 024i 0.93 0.70 0.35 0.45 1.85 1 38Inventories. net 1.16 0.75i 0.39i 3.62 4.03 7.62 5.86 11.490 1230Other current assets 0.18 043 0.44j 0.64j 0.19 2.75 3.58 2.91 1.65 102

Total CurrentAssets a 13.36 12.30 9.73 11.28 17.39i 21.16 18.20 26.62 34.46 35.07DUE TO RELATED PARTIES |120PARTICIPATION | 000 0.01 0.00 0.00 0.00 0.00j 0.00 0.01 001PROPERTY, PLANTAND EQUIPMENT,net 7.95 10.17 17.97 12.70 22.43. 30.74 36.82 52.16 129.97 1477CINTANGIBLE ASSETS 0.18 0.25 0.77 0.62, 1.57 2.02 2.60i 2.39 342 232OTHER NON-CURRENT ASSETS 0.34i 0.13 0.28 027 0.31:

TotalAssets 21.49 22.72 28.83 25.79j 41.52 54.20 59.89 81.48 167.86, 185.12

LUABILMES AND EQUlTYCURRENT LtABILtTIES

Shor6termn Porion of Long-term Bank Borrowing 1.15 1.151 4.04 8.00 8.44 7.91Accounts Payable 027 5286 0.93 2.97 080Due to Related Partes 8.69 5.12 2.82j 0681j 0.17 0.16 0.14i 0.14 0.12 006AcauedExpensesandOtherCurrenLiabilibes 4.19 1.19 3.69. 2.33j 5.07 5.54 5.45. 4.14 4.52 408

Total Current Liabilities 14.03 7.46 6.50i 3.14i 5.24 5.98 14.91, 13.21 16.05 1Z85DUETORELATEDPARTIES 0.13 0.06. 0.56 0.55: 0.71 0.60 0.34 0.11. 002LONG-TERMPAYABLES 0.10 0.16 0.17i 0.10i 0.07 0.06 0.06 006 011 008LONG-TERM BANK BORROWING 1.10j 4.02j 10.19 22.18 34.18 55.34 68.04; 64.01WATER DEPOSITS 0.95 128 1.65i 103i 0.86 0.92 0.76 1.26 12.581 20.94RETREMENT PAY LIABILITIES 2.83 347 3.80, 2.34 3.44 3.40 3.63 5.02 2.91. 3.75

Total Uabilities 17.90 12.51. 13.28, 11.19 20.37, 33.26 54.15 75.24 99.80i 101.65CONTINCENCIES AND COMMITMENTSEQUITY

Ca"b!' Resaluabon Surplus 2.79 4.92i 6.03. 7.62 7.55 8.59 11 33 0.000 000Adjustyient to Revaluatin Surplus -0.34 0.61 0.33 1.01 0.16 -0.42 -0.42 0.00 000Retained Earnings 3.59 7.77 10.02j 824i 12.52 7.11 6.95 -1.59 62.83 6806Net Loss i 6.12 -9.38 -3.09 5.24) 15.41

Total Equity 3.59 10.21 15.54 14.61 21.15i 20.94 5.74 6.23 68.06j 83.47Total Liabilibes and Equity 21.49 22.72, 28.83 25.79 41.52. U4.20 59.89 81.48i 167.86 185.12

Note: BUSKI's 1991-2000 financial statements are audited by independent external auditors.The US$ figures are calculated taking the year end exchange rates for 1991-1998.The year end exchange rate for 2000 is used for calculation for the years 1999 and 2000.1999-2000 financial statements are prepared in accordance with IAS 29 (Financial Reporting for HyperinflationaryEconomies). IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy bestated in terms of the measuring unit current at the balance sheet date and the corresponding figures for previousperiods be restated in the same terms. The financial statements of prior years, including monetary assets andliabilities reported therein, which were previously reported in terms of the measuning units current at the end ofthose years are stated in their entirety to the measuring unit current at December 31, 2000.All items in the statements of income are restated by applying the relevant (monthly or yearly average) conversionfactors.

- 48 -

Additional Annex 12. Borrower's Contribution

BMM's Contribution

PROJECT EVALUATION REPRT:Project Description

The solid waste maagetnet service in Brsa is provid under the umbrella of theBunu Metrpoltan micipality's (BMM) Solid Waste Division which cowate all teacivities related to solid waste disposal.

The Loan Agreemen (the Bursa Waw and Sanitation Project - Solid Waste)mwbcd 3566-TU was signed between Republic of Turkey and the Intenafional Bank forRecostnation and DOevelopmient on March 25, 1993.

The objectives of the Project woea) to improve environmental conditions and reduce health hazards in the Bursa

Metropolitan Area,b) to improve the institutional mrnoments rgarding the manuaem of municipal

solid waste svices, incuding the demn=W flom the poor Hying on finge ofBursa andw

c) to implemen appaoia cst reowvery policies

The Bank agreed to nmke available to the Republic of Turkey a Loan in an amount ofUS Dollars 7, 500,000.00. And the closing date was set as June 30, 2001.

BMM succsfully completed major envairnment invetets under th scope ofthe Poect in the last eight years. SolW waste pout of the Proeat incudes th followingmajor componens

)- CIVIL WORKSa) Existing Dumpaite Rolabltaionb) Now Wae Dispoal Site Developmem

2- XQU`1PNMWProcurement of-,a) 3 Co{:pctors, Mot CGrayder, Exavator, Loder, 2 Cylindes.b) Lab Equipmec) Gonmmbrane linc,d) 2 Clinical Waste Truck,c) Equipment for On Sorting PIS*f) Air Quality Monitoring Network

3- CON SULTANCY SERVICESa) Existing Site Reabilitation Coristancy,b) Deiled Design of the now landfill,* Consuhtancy of L1aohae Treatment Plait.4) Digiti2ation of Cadastal Maps.

4- LANID ACQUISITIONAll tbc land acquisitions required for the ladfill were financed by Bursa Metropolitan

Muliipality.

-49 -

TifE MAIN PROJES IN THE FRAME OF SOLID WASTE COMPONENT

1- EXSTING DUMPSUT REHABLITATION

Commencement of Woc 7 Sept., 1994Completion of Work DOG, 1996Tot Area 16 ha,Stored Solid Waste 2.oo00o.oo nTotal Cost : I80,000 USD.

CoOstUCtoa Stagea) The sopes we aragpd at a spe of 4,5 4Rd all fires in th dumpsite were

put out, 5I gas wells wme drilled and the collected methae gas was releasedto the atmosphere

b) The waste at the surfice of e landfill was compacted to generate 2-3/o slopesfor dainage of the rinwatsm and to prevent the wate fom enteing the wastebody

c) Al the body and slops were covered by a 30 cm. gravel layer (16132) for

d) 40 cm clay maerial was spread and compacted to prevet the penetration ofra water ito ft wase body.

a) Above the clay layer, 40 cQ vegetation soil was placed and flnally,surfte wasproteced against esin by terracing and trees.

f) Leacwe was colected with HDPE pipes and groen to the City TreatmentPlant.

g) Interception ditches were coaducted around the ladfl to prvent the sfwr&cwates tM eerig the dump awe sod to drain them away from the sie

2- CONSTRUCTON OF E W SANITARY LANDFILL AT HAm±TLER

ialler Valley was selected as the new sa ry landfill sito following acomprehensive feasWity study The site is 20 km away from downtown and cOvers 77 ha overa main and fOui adjoining valolys (XYZ, ad T) with a capacity of 20.000.000 m3 of solidwaste The site is e;pected to serv umtil ,20

constuction of X,T and Main vlleys wee complcetd. X mad T valleys were closed tolandfilling and lanMfilling at the Main Valey is continuing

X-Vdlqy Ctwwdio T-VMyCmgutm Ma VDy .ste*

Ccn,wncmcmall of w'od Auuguu, 1993 NARY, 1995 Al,n 1996- c DecCbeT. 199S Deo ~, 199s Dwa,I, 1999

TotaAm 3 .71. Lhai ha,stora#wcxwtyv 30000ina' 1.000.000 -'' 1. 0ow-ITowa cs 1 540 (K) UJSD I1370.000O USE)14000S

-50 -

In the above tabe the cost for the X valley appears high redtive to the costs of the Tand Main Valleys, because the conruction of the X-vaJley included the following additiondworks wich serve the whole landfilt:

- consftuction of a acess road to the landfil ad intnal site roads;- geomane liers were puhased to be used fbr both the X and T Valleys;- consaucto of the adninisaton building, the laboratwy snd the waste rcption

facilities ( weigbbridge and other accessories);- drainge piping for the whole area and- overall fenci and site prop8rtios.

3.50MNG PLANT FOR RECYCLABLE WASTES

Strilug Date : August 1998Completion Date : February 1999Cap&city 7-10 too f hourTotal Cost :160,000 USD

The recycling project was started in 1995 in seleted pilot areas ( with a populationequal to 1OS% of Burn populatkM) by distuibudtng collection bags to resideces for oollectionof recycable metarials. These are than collected cnes a wek by the disurict muncpal kies s dbroUght to the ting plnt where te materials are orted n to glass, paper, aluminium,.etcThe plant presently processes approximy 2Qto /mouth of recyded waste.

Today the populatic (in pilot areas) is about 30% of Bursa popultion

4. AIR QUALIY MONITORING NETWORK (ARNET)

Starting Date :Mach 2000

Completion Date May 2001Number of Station : 4Total Cost 224,000 USD

The aim of the project is to monitor the airpolution in the city and to collect data. So 4staions ( 2 in ladfills and 2 in the city center) including 02, CO, Nox, HC, SPM and 03analysers were established in the city. There is a main computer tw oect data and a publicbillboard to show the data insartanousy .

s INTEGRATION OF CADASTRAL AND DEVELOPMENT PLANS 110T BUIRSAGIS SYSTEM

Ihe cadatal and development data wiU form the base of Buru GIS System. Toachicyc this a contract was signed on 14 November 1996. This componcet has beca addod tothe Project scope to corelate lt e cleawng tax7 database in the 01S media with themunicipal development plns, the cadastral maps and BUSNU's ( Bursa Water and SewerageAdministration) customner dtabase to improve colections and the Project cost recovery.

- 51 -

OVERALL ASS! SMENT OF PROJECT IMPLERMENTATlON

AlD realised works, as explained above, show the success in reaching the pro*ecttargets. The subprojects, that couldn't be realised, thoug thyw were in the scope of theproject, are the transfer ston and th meiinerator for clinical wastes. Waste Transer Staionwas cancelled , because the construction was not feasible. Instead of tbese componerts, otherprcTS were r oied The constucion of the incinerator was co _tacted to a fin This firmhas gwe bnupt so thc coutract was cancelled. In place of the incineratr we had agreedwith the Bank to consruct a btatment plant for leacae waterMufartunately this c wntacould not be signed even after tendering, because the financial crisis in February 2001required endering, for which there was not enough time left befove th loan closm

Bursa Metropolitan Municipality showed good performance durig the Projectimplementaion as far as preprig tender documents and tcdering vwaou for vaiousoontracs. We have learned all the intricacies for use of an inernational loan. We haveaoompished very important improvements in waste management for Bursa. Dispos ofsolid wastes is a big problem especially for great cites; thus, such an integral poJect udconesuction of now landfills has been very beneficial for Bursa.

The were also some difficulties in using a loan. Such troubles originated at timesfrm the Municipality and at tines from the World Bank. We considr that the use of uchloans wod be better if in the fiLzue a swante unit would be extmblishd to mn theProjet implementation. Tho unit, that prepar the tender ad the teams of efernand theunitha realises the contract were different. Normrally the wbole work should be dont by oneand e same unit. Besides tis, if some evaluation were done quiker by the World Bank, itwould be easner to proceed with tie works, as desired.

Eesides these, tbe people responsible for the Project should receive special triningfiom the Bank. Such persons should be informed about the aims of loan, how to use it, andhow the terms of references should be prepared. Such information would solve manyprnbles. One problem, was that the rated people changed severd times due to the kngProject implernentation.

In sumnury, the old waste dumpsite which had been serving the city for nearly 30yesrs, has been rehabili1td into recreational park tD be opened to public use in the ficeTe landfill gas collction system was contracted through a BOT for oner genration, as thefit example of its kind in Turkey. The new lasl developed hs ben pu to ue for abot 6years nd expected to srve until 2020. Along with the pnivate operaton amn _etea the sitehas become an example and aspiration for many municipalities. Tle GIS system, which wa abyplrudut yf the Piruect, also has significat instiuioa hpact both in Bursa again for mayodhr municipalities, as an importat step for institutional effectivess and oost recovery.

- 52 -

BUSKI's Contribution

PREFACE

Th1 is the Implenpematn Comletin Report (ICR) tor the msa Wawer and Sanitato prqect-Wa Supply and Seweage CoMpnent prpared in accordace with Schedle 5-lmp platix Proramn, Section 2.b of the Loan Agreemet for Loan Number 3565 TU, whichwas signed on Marci 25. 1993.

The Oiso e vO%cd %n June 30, 20()1, oc*Opt fbr one oWultancy COMpoM=t, which wwas ntedextension until Augut 30, 2001.

The Loan Agreemnt was signed for 117 million US SB; however, upon the Borrower's.(B3USKI's) reqwuest, tie Loa was reduced by cancellation of 20 million US Ss *m the originlI17 mi?Uion $, down to 97 million 5s. As of the Ftnal Disburement dac± of October 30, 2001,95.39 nillion US s3 would be disbursed. The total project dimnt came to 17723 nilionUS Ss, out of whicb 81.84 US Is was raised by BUSKI as intemal fuids. Dnring the Projectperiod, BUSKI has ioplki'ntcm d smtaller vo oamury works mniung to 44 milion llS SL.

'he following report will elabortne only those elements which reiforce or compleame thecont= of the Banik's own ICR, to which BUSKI's ICR wil be ammexod.

- 53 -

1. ASSESSMENT OF PROJECT OBJECTIVES

The implem entation of project componens are assessed against the project objecives as shownin Table 1.

TABE 1: IMPACT OF PROJECr COMPONENTS ON OBJECMIVES

PROJECT OWEBCIWS _ _

Proj Iuve ReAtloa4Exjanu of .nvo'Comp_icas E.vknmnt _ctwodE for _ EScitq Impqx

& peI_m Sbtm Radm CaHaard Improvem W.S. s.weaw DvBate NRW Rm*ve

A. Wate SUDO* W. T .. _4 .B.S 2 e Woiks .+ . _4C.Sto Dras W. + _ D.Tecb.ich Assiat_me

ii.mappimg '4 '4 '4 '4 + '4iii.Ibve nhULCapbiiies 4 '4 '

I.TuAnint i + + + '42.BilUke + + + ' 43.A&CMngWI ' + + + ' '4.M[S '4 '4 5.Tmiff Schedul

zvPSP _ _ _ _ '4 _ _ _ _ _ 4'A, As: NRW = oon-Reveue Woter Y: DkimplpC: cail PSP =Pzvat S Pagticpatin +: bdizt posmpetMIS: Ma,mmt Inftia Sym

The nonphysical acomplhshments are diswssed in Section 2.

The physica objectives of the projet for rehabilitation and expansion of water mspply, sewerageand storm drainag systemns are shown in Table 2. The SAR targets are already compared in theBank report. In addiion to the 2104 kms of network investments relized with the Banikcofinancing BUSIJI has realized an additional 1421 kms with interal find.. Oveall 62 ICBcontracts and 12 LCB's and 3 Intenational and 3 nationral shoppingp wee successfilllycompleted. The only major component which was not implemented was the 2'0 Stage of the

- 54 -

TAILEt M4 V RATRUREIMWMGErWESWIiM-1 IAOF AME MJ)

_~~YUL _ _ __ ____CONtRACtM5 (hM Q . .. N° .u 3 1r4t M Ib k D t 1

_ ____ _ ___ _. I...tl.cwgilbW at c.*gMrY 14............. _&d IGNTt ___O__ 9 _ ql Q 0 ] w ,

2~3.2CIt.mQfYl2.~t~~2 Cicllmit ((*CIAm 0.00 oleo 0.n I0. 111 014 (Lb L.00 11. __ _______

:33C<aMoflS3Y4474S C0*0i t AY QO oleo1 0 0 M1_ 2.11 000 1.47 13.76 3}4 D__ 2 so G M=k

lIWl tA 1U . f4 SW&WW N PM1 I (ENTA) _ . &ol OA 11571 CM am _2_ Cm 1 XR

1,4.4AR. NMo*dkhCau NM Pac4 (aWOAS) %0 1A9 3 4 .7 am4! (LOD 1.65 247I 0.7 3511 U_

118WVI.tl=^alSC...LOEeW&WWXMKd apM OM ag e . 37.n 21134 0 .01 II 2.70, 4 _ _I __Io=_

MWWIj CafL Otrwf SWAWW NO . PUH2 AAI uoe tW too1 i 24D1 i7 e o ls15 DO" 2 16 d

t.W2Aj% FMt*2 (ATILSO ,201 6IL .0 L91 0D 0. . 0.93 3IQ

twi3.3 RA NIL A C r NW h*W 3 aOVEV 7." to"; 0.0 237 0. 0.z W 000 .9 0

M7 Id3* NM.dA.Co6a. 1A. a1WL 0.17 C1 I . *.

_ f(iWrMI 4W1 UI.71 Il.0 11.O451 LU 0.01 0.3 Q O . OI w. DOb.dkd adasmelW

?1,7&* NW t C P&2 o14NUCk2 I1MSA 54 L" am 121 4.0t3 W 0.00 _0

NI ACM m bb (¢9=S V.)ZLSU 4Aoj 23 L26 QOG LOD c,o eON1 oa

c J.WI 12 ibhdAGM E!ft. I MtAN4RAYO C4sw im 06"W, im AWM XD, PWO,

(71 LWi A5R*i04 P-MAWI- gmLxbq,) 11.15tll OAi 0.001 am 0. 0 oxm,twfwg"wS~ C*tt f1

I 3.2PPslXPl _m w1 au hO1 0/ 12.a 0O .OC to 0P OA .0 i .

3.W3.IR*akNuLAC~MIw I N P 1 NTrAS_ 5170. 1610 1.76 . 0*0 0. 0.l GIN 0

W.tm.Din 2Wm i 1i 3 1Fil4 OM alai 3 4 1 40 OA A4M 0.4 0ul0 40

i,W = ^ d FIIF904hblL1 Qao ~~~~~~~~~~~Gm 45 O,OI O.OI OA to am tool !:O

CombAt_ou JARSAN) ILSO___ am __Q31 CO a_ _ tool

t4 V a 111~~~~~~~~~~~~~~~~~~~~iA 55p.4 4 gm bP731 o IS ,l2 LX all

tJa S<;A u

tIIOIALIGIISU~~wo W,ai ?7 12 LF t a Le G.;

wow 6U M o"urd _

r :4e Dww xwCamw

2. APRAISAL OF BllSKI PERFPORMANCE

BUSKI has been xceptionally successful during project implementation as will be demonstratedbelow:

2.1. BUSKI has successfuly implemented a tariff adjustment system based on the consumer priceindex (CPI). The adjusnts were initially quarterly, and monthly, since 1994.Implementation continued through 3 municipal terms, inspite of 3 polidcally different terms.Politically, all 3 mayors have explained to the Burs citizens, the necessity to maintain thehighe tariffs in the country at a place believed to have abundant waten fiom the mountainand which requires minimal Uratment and pumping costs.

2.2. The Project SAR had projected for tariff levels at 1 $/n' or more. BUSKI tariffs varied fomthe lowest 0.47 Ym3 upto 0.85 trme. This may appear as one BUSKI devixtion; however, aswe shall elaborate. LWter in Item 7, the impact of this deviation has not been significantbecause of other difficultes enoountered duiing imple_mtationm.

2.3. BUSKI had a mininul wastewater teatment target, permitting the majority of the funds to beused for improvement of the networks. BUSRI has, by a smar decision, concentrated onwater supply rehabilitations and expansions to improve cost recovery measures.

2.4. Realizing the importance of raising adequate intenal funds, BUSKM has taken drasicmeaures for improvement of her billing and collection performances.

a. engged a private sector for meter reading, billing and invoicing, as well as private sCevicecutoffs and reconnections to reduce delinquent payments.

b. enaged the private sector to develop special software to update cusomer records andreltd affairs.

c. periodically invested substantidal sums in hardwarc and software to upgrade the customerdatabae.

d. th metw reading frequency was increased fiom quarterly to bimonthly and monthly tospeed up the colletions and prevent inflationary erosion Further improvements (likereduced meter readers) were realized using hand computers and mobile pnnters.

e. all meters are rnewed and standardized over a 2 year period to imprve meteringaccuracy and reduce unaccounted4br-water(UFW).

f. BUSKI has engagd private sector to melt away the backlog of denwnds for semces,historically performed by the public service agencies, such its metr replacements and newof new water nd sewerage connections.

- 56 -

2M5. For institutional impmvement, BUSKI requested Baik's agreement/approval For supeRisionof the infiastruature constuction works. To faciliatte this process

a. the network operafionl resposbilities are consolidated in a new operations department,

b. the water and serage department concentrated on the supervision ftnctions;

a and to overcome the lega restrictions for employment of now staff BUSKI ha5outsourced from a tnunicipal commercial corporation.

l. Armngeents were made for training of the staff internally and externally tbrough thelocal university. BUSKJ has permitted taff to pursue masters proganumes at the localunivesity.

2:6. BUSKi Management has decided to cancel a potion of the loan, realizing that timing forimplemeOtatien of the 2 Stage of the wastewater treamnt plants was delayed beyond theloan grace period, and improved financial managemt Ths cancellation has relievediBUSKI from unnecar arily higb payment instalhments~ pemiitting BUSKI to raiselallooagemm iftemaJ fwds both as matxig tR4s or for internal in'vestments, This canceUatiQnrequeat was accocpained by a request to eitber split the loan into two tnches to induce anew grace period for the secod tranebe or to increase the loan disbursement percentage. TheBaEk's agreement to indeew the lon disbursement percentage fromn tbe oiginal 47Y% to 70r/aduring 1998 and 1999 has substantially increas BUSKI invesments, pamitting3 BUSKI tocomplete essmtially atl ageted lavestmetts in a timely man=.

2,7. The downszing of the loan was in line with the original project structtuing, even if BUSKIhad been ale to incrase the tari:ff to the levels specified in the SAR-upto IS and more, itwas not going to be posible to speed the implementation because,

a. Destgns were not available at tebeginning due to the lack of the required maps.

b. People have beea complaining when too many crews are aetive in the streets,congesting traffic, and thus, fon:ing BUSKI to carry on a more retrained/pacodconsbuction proram <rnote: Bursa, because of the maoar older districts have a lot ofsma tets and emain amteries)

2.8 Significaat improvement in mananement of UFW was realized in spite of tho high populationgrowth and the old distibution network (Tab le 4). The comparnson of the UFW S AR targetswih BVSKI realzaion are shown in Figure I .The UFW has dcreased from the hih of65P% down to abot 35s by the end of 2001. The sharp drops/improvements in UFWcoed to the rehabilation of the very old networks in the older districts of Bursa startedin 2000. This rehab program is prmo ng aniy stowly due to the very narrow and seepsueets, where use of consUtion oquipment is diicult. This work is still contituing and isexqecVed to be completed by 2003. This already has helped to avoid the sumnmer service

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TALE 3: IECENT UNACCO ANT4F Qi-WATER (U5W RUIATS~.._ __ _ _ _ _ m -_*.n-U5 fsi31 VW4SU wl U4 &*= *M Aj~ $WM d4 xwo-23S Ih TOTAL.

u.1 Wow fi,n Tmalnku,RotAlb 4a3 6617 4 4,144 3.I 5,964 5.775 4825 4,799 4.542 a 0 0 44 SUL.Di. _3 . 3 . 2 53 j 9 72 II 74 _ 7I"Alapr 0 4 16 10 1 2 4* 4 38 51s3 Abbb" 0 to0 10 4 3 4 4llJ KAMP 10 10 tO 12 it It 2 671.CA w 0m 173 1.66 1613 iN I 7 SO 8041±4 D I Riwrr U 0I 16 16 I$ 14 73Ml7 kinikXu 0 1 4 p 6 43 3 405 303 2,4011.2.S2WimW 0 a 51 33 i 71 77 1 so484f1" Yiom44v 16 lc I 117 146 134 51 41 2, 37 7510,3x4 M*tv* 145 In77 VI 1II 35a 1 46 73 54 1{

i.2at fi siet 4 S 1,119 1,N93 953 So 7 630 7,n73141 I9 9a~~~~~~~~~~~~~~~i 4 95 16 71 314 n m O

1.2 P3 273 2 *41 au 185 5i4s a7s 1.. 1MY4 36 116 o 193 m MG W3 40 In 3144LL4As0tsy 11 9 O 0 0 a 0 .0

1 AvA 0 47 IV7 32 7 0 348 360 381 ,321LU YiAYK3 tit ti n 711s7 5 77 3 59_WAf km We,b , 6a sm 3 _501 _ 256] W4 7 i i , I _747 9 _. 1822

t T1atl1prfifti-1.241.3) &. 3 7 79 ,1 7.795 t427 7fi77 70.

cD 2.1MmyMCm-M#t u4 34 33 29 31 31 43 41 36Li O&WlJ. 9 2 2 It 2 2 i t 6 SI

2 W:e 8pPwryFre4 ef_t: _,,, _ 4S 36 35 39 33 39 43 54 4- 371

J wgam aii. 43499 4,0~2 4.4,1,4JI5 4.441 5,~f 5,772 5J73. 4913 -31

J UM& at woo WV) <>341) b d __%"I 24 3,40 3101 _ ,3 2L,17T _ % 40I 3t5 43.0 439 .46 31S9 3111 !4 354

WW 1 A O 0 5f3 4 $ ' 4 $ A 47 449421 o. 40 79 432 44?. X 95 49t 535$ 500 515 466 475 45 4.6 45,3 416 51 4.4

8 - ; __ .. .___- - - --- - -

6.0 -- s _________________-.____ ----- ,-. - -_.. ___ _ -------------

5a0 \.^ ¢, w_W .4 H; !!_4 .............. v .r ' --' ,., ............ , ~~~~~~~~~~~~~~~~~~~~~.......

30.01 2 3 4 5 6 7 8 S10 ii t2

Mh

curtailings experienced in 1994. The water savings permitted BUSKI to face the consequences ofthe DSI delays in the completion of the second dam, which is to double BUSKI prese stoagecapacity-

2-9.The programme BUSKI is implementing to reduce the iJFW is summarized in Table 3.

Figure 1. Comparloa of UFW witb SAR Target

70 - ___ _ I

60

I R 50_40

3020

10

1991 1992 1993 1994 19M196 1997 IN99 1999 200 01 2002 203 2004 200S

YEAR

W arget-ed in S&AR UFW Reled by e I

2.10. Accounting Improvetenew BUSKI had been using the public accounting system in theeariy 1980's. Following introducton of of the uniform chart of acconts BUSKI has steadilyimproved her accoumting system uing upto-date hrdware and software through cost-centered accountn upto inflation accounting for the 2001 acounta Asset inventories andassessment of the ratd depreciation was also upgraded to commercial levels.

2.11. GIS System . Following the preparation of the digital topographic maps and theinftsructure maps, an urban GIS system was deveoped for Bursa. Paralle coordinatedefforts with Bursa Metropolitan Municipality (BU) has triggered development of MIS andwork order systems both in BUSKI and BMM. Application developments started withexteral/internal consultacy supports, has been carried by.

3. BANK'S PE;R1ORMANCE

3.1.The Bank has tried to improve/standardize the Bank procedures troughout the loan priod;unfortunedy, all those efforts did not necesarily help the project implementation, Thebureauracy seems to increase all the time. Once the first tender, procumett or RFP document

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TABLE 4: lU SKI PROGRAMME FOR REDUCTIION OF UNFW

PHS1CALNXAVEtS_ I. NIeteing all Sprig Soure and Ground Water well

- 10 srng and 6 ground-watr groups are ftow-metered.:2. Rebabllltlon of Dsbtlon NAtwm*

- Improve natenal sedection and consucdon methods- Improw technical specs and standards required

> Use dcditle rmpjpea wky; l rdegree ofAiDPE: m*ted vse qfPC pp,house commoma are replwed wi LVPE

> Speci mecrkofiting are uwd3. Pseure Control in tie Netwrk

- As the aetwork is rebabilitated/renewed, conrections scree the preue zones arm cutOff.

4. D;foit Metring- 240 zones are eatd; flowmeters are purchased and about 40 will be installed and willbe penodically moved to other zonos asr onarse.

COMM'ERCIAL 'EASU=tES1. Measurement of U 1steteed Ceomitions

- Mosques are metered, athojugb they use fiee watr (425 are bein meaW4- Maer meters e insaled to bouses comples:

(Ala4dy 1058 are weurrd; A& tixapegn wil cotinw.)All mu icipalties, stret fountains and prks are metered:>' Various nmicipwes recieve hua waters; Lirpaymem re kw;)' Sieetfowvlste allmetered wd illedat dxloes domesfrtic ~es t

iniidas)' Parks ae meterd wdcbw 0 toch rek*edd iaiict muiialves it abate 11 96

of dmstic tai2. Rewua of Costuer l)atabas

- Mayillegl users are registered. Old inactive coshtmrs are cancelled to update th

3. R.ewai of Old Metan- BUSK(I enewedstanarized 360,000 do2estic recotrs.

41. Impraveumet of Matr Reading nd BlUIn Usin lr!ae Sector- Frequency iu increased fi om curtel to monthly; and usin.g hanhld computers,bliDins are malde at the time of redin& thus, aviigthe hasIng deay.

1. MappIng of the Networks- Al exsing etorkcs and new cnstrucions are digitally mappet

2t. Meddlling of the Ntworic- AayBis and designls :for now netwowldng was made by using CYBEiRNET

Progrmm; howeve,operti_ l se does no1t yet exist3. EstabIhet of Freude D)etectisa Teas

-2taes, ah with te pera are asiged; need mlore training and instuettonL1)PE: Low Dsity Polyety0neMDPE: Medium Dens Poltethylene

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3.7-The experienced Bank's Project Task Team has facilitated successfizi implementaions,providing appropriate flexibility and timely guidance through the project duration.

3.3.The Bank's agreement to increase the disbursement level for a perod of 2 years hassucessfully accelerated Project implementaion. Probably, a similar or better impact couldhave been created if the lomn was strucued i nches with corresponding staged grceperiods.

4. MAJOR FACTORS SLOWING PROJECT IMPLEMENTATION

4.1. External Factors: The financial crises which occurred in 1994 and in late 2000/way 2001,had significant negative impacts on the Projec. In1994, the drop of the tariffs fiom 0.75SVm3 down to 0.47, BUSKI had to cancel an ICB tender for procume of ductilop dueto the sharp escala of the achange rates. Not having the pipes, the pipelaying coactswere also delayed by abot a yea. However, the impact of the 2001 crisis was somewhalimited as Er as the Project inpknntaton unfortuately, it had a signflcant negativeimpaa on BUSKI's repayment capacity.

The eartxqake of Auust 1999, fotmatdy, had caused only very minor damages in BUSKIterritory. BUSKI's headquarter building had to undergo a substantial reinforcemen.

4.2. Internal Fctors: Unavailability of topographic and utltity maps in 1993/94, and the legarestictions for photometnc map productn has delayed designs, at least, by a year inthe early part of the Project.

S. PERFORMANCE IN THEMATIC AREAS

5.L.Poverty Alevistion and other Social Objectives: BUSKI Project was targetng oveallwater and sewerage infrsucture improvements, which impacted all the ciizens in Bursaposiively with availability of mwro water and improved water quaiy. Even though directbenefis to the poor, who mosdy live in the fringes of the city, cannot be easilymeasured/determined; it is possible to ste tht BUSMI has been able to improve service onthe mountaineous slopes of Bursa with the rehabilitation of the mounta springs snd the new

umping stations/reservoirs built in these areas. At the lower peripheral areas, BUSKI haslaid kms of new networks, fbr both water and sewene purposes.

52Environmental Objectives: BUSKt has realzed substantial success by therehabilitationexpansion of her water supply, sewerage and stomm drainge systems. Acoess tosuch services have exceeded 90% levels. The wastewvte treatment torget of 50%/o BODremoval has been achieved since the commissing of the Fwrst Stage of the two plants in1998. Now the tendering notice is issued for the Second Stage Wastewater Treatment Plants,and fnllnwina the comrrxjsaionu in 2004. tratmet levels will rise over 90%.

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BUSKI has taken over the responbility fiom Natonat Water Works Agency (1SI) formonitoringof industil dischareao the steam flows within the metroltn boundaries.Already, BUSKI has initiated cooperation with the municiplities in the region, theProvincial Environmea Agency and the relevant departmens of the local University todevelop the ncesary fiamework for eflctive enforemen of the national and local watemanagment requiations,

53.Privat Secten Develbp_ent Objetive: BUSKI Management has shown a keen awarenessto poteal benefts fom a wide involvement of the private sector. With backing of themunicipal politicl organizations, BUSKI has engagd the private sector in many new aresFwher historically only public entites fmntioned. In addition to the usual construc&iocowbactsg Jnd the desinconsutmncy services, BUSK) vetured into nuny areas as apine. Starting with mrter reading in 1992, tw following services wero all privatized:softwar development and operaion of the computer catter, fhcility cleanig and officechore; the tecoffee sal; the personnel arrivaLdepart trnsporation; and provison of

Uransortatio for supervsio£sit visi and for officil travels in and aut of the city. Worand sewerag sevice connection, ad mtr rnewals and repairs, followed. Outsourcingpeonndel for constuctwn su;xvision has grown firth by employing technical staff(engineers and technicians) foir the routine "operation and maintenance" needs.

Dring 1996, BUSKi had the feasibility for engagemet of a prvae opeaor for all BUSKIfiuncons studed. Bas on the encourgig outome BUSK General Assembly hadunnimously approved for a managemnot (with affernage flavour) contrac over a 10 yearduratun BtSI had colected the prequaification applicans, but culd not prooeod withthe tendering when the local nd ntional eections were announced in 1997. Following anearly total newal of the Genral (municipal) Assembly, the subject has been underinvestgatio and review by the new Assembly. The indicaions are positive for a newdecision to go ahead with a now tendering process. The process is likely to be sarted in late2001, following a decsw mi November 2001.

6. SUSTAIINABIIU

Susainability of BUSKJ's pwronmanc is cricalUly based on maintaining the tariff levels, so thatdebt repayments and opeatnal cost are met, and some finds remain for rehabilitation andexpansion vestmnts. Overall, BUSKI tariffs prmitted aliocating "a-third" of her revewes toeah of the above cost conr This proportioning pamtted for comfwtably meetng the reveneneds until the financial crsis in Febuary 2001. BUSKI has been raiing the base tariff levels atlo/ levels biannualy above the inflatn to catch up with the acoelaaton in the curencyexchae mtes. These aranements claruy reflect BUSI's detemination to maintain the costrecovery targets.

on the institunal side, the personne trainings have become routine The Localgerda 21acrVettestarted in Bunsa several years ago, Ugered the institutional sensitivity to public

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perceptions/deniands in BUSKI as well as other municipal entiies. Tie Totat-Quality-Managemet (TQM} progmame BUSKt ha5 beon implementing in 2001 is expeted to led toISO 901 certification in early 2002. Following the ISO 9001, DUSK will start to pursue theISO 14000 rue. As an outgrowth of this offort the Public Relaons Division and the call-centerhas rised BUSKI sensitivity to public conmplaintcritiques and commints to vewy high levels,Already, the local media newspapers md the TV had a streng plWom to rflect customer andpublie complgints and demands. Under the Public Relations Divisions' responsiblity, the BUKIJcal1center was strengtbened, andwere provided with the fiax and ermaail aooesse,

The water tratment psnt and other sites of interest to the cizem are opened to vsits of spcialinwest grops. Ihe sebools, especial1y scotdary and high, are fiequent visitors of BUSKIfai&itis

Major stimulan fw Continuation of BUSKI aztivites, both technical and institutional, are builtinto the new loan agreement sWned in December 2000 with the European Investment 3 nk (EJO)for an 8g mitlion Euro subsidized Loan to build the 2"" Stage Wastewater Treatmen PLants,(biologicaL treatient with nutrient removal) and to compite the deficiencies in water supply,sewerage and storm dmragn e systems during the 2001-2006 period. The Upgraded WasteaterMasterpha along with the designs and the tende documets, all prepared in 2001 as the Lastconutancy package under the IBRD programme, have paved the way foT the EIB investmenAprogamme and illuminated the investment track until the extended horizm f2030.

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