Lessons

Timor-Leste: Dili Urban Water Supply Sector Project

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Lessons

A thorough assessment of the enabling environment and government capacities must be undertaken before embarking on development projects in fragile and post-conflict countries.

This project’s design was overambitious, given Timor-Leste’s fragile and post-conflict environment.  It overestimated the institutional capacity of the executing agency, the Directorate of the Ministry of Public Works (MPW), and the implementing agency, the National Directorate of Water Services (DNSA), but underestimated the behavioral change required of consumers and the time needed for civil works procurement and implementation.  Furthermore, the project benefits were in part dependent on transforming the DNSA into an independent water utility, which was not realized during the project period. The preparation of a roadmap for the sector reform process was recommended but was not taken up by the government, except for some initial studies on public-private partnership options. Overall, as project preparation was not informed by a thorough assessment of government readiness and capacity to undertake reforms, provide counterpart staff and budget, and implement tariffs that would entail significantly changing customer behavior, it failed to incorporate these key aspects in the project design.  Such an assessment would also have facilitated the preparation of a risk management plan, which would have led to better project performance and greater resilience in the face of Timor-Leste’s still unstable political economy.

Project Cycle Stage: 
Preparation

A flexible approach to financing operating costs, operation and maintenance (O&M) contracts, and the provision of the required national expertise may need to be incorporated in post-conflict water supply improvement projects.

Given the limited capacity and budget resources of countries in transition such as Timor-Leste, a flexible approach may need to be adopted to financing operating costs and O&M contracts and the provision of the required national expertise as part of an initial capacity development and service delivery plan. In a fragile environment, it is important that the Asian Development Bank (ADB) is committed to a long-term water sector engagement, based on the partnership with government achieving critical performance and reform milestones and providing the basis for a long-term sustainability plan.

Project Cycle Stage: 
Preparation
Implementation

A well-defined partnership agreement with the Timor-Leste government is necessary to achieve water sector policy reforms and build adequate national capacity for developing sustainable safe water supply systems.

A clearly defined partnership agreement between ADB and Timor-Leste on human and financial resources is required as well as a timeline for critical actions and the implementation of remedial measures should these critical actions not occur. Given the importance of the sector to human development, livelihoods, and poverty reduction, it is important that ADB stays engaged in the water sector of Timor-Leste. Furthermore, if the government’s policy actions are slow, it is recommended that a slower reform road map be detailed, with a lower investment plan, until a conducive environment exists to continue implementing the required actions. Establishing the right institutions to support the effective and efficient implementation of future projects should also be aimed for by the partnership agreement.

Project Cycle Stage: 
Preparation

A series of short extensions, which can create unnecessary administrative burdens, must be avoided.

Implementation of this project did not occur as planned, and six extensions were required to meet the key provisions of the grant agreement.  The extensions, which stretched the implementation period by an additional 52 months, were caused by delays in consultant recruitment and civil works tender and contract awards and slow construction and civil works progress. Future projects can do better by ensuring that implementation schedules are feasible and reflect the actual capacity of the project executing and implementing agencies. A series of short extensions, which creates additional administrative workload with corresponding cost increases, should be avoided. 

Project Cycle Stage: 
Preparation

Coordination and phasing of linked activities is necessary for projects to fully deliver their intended benefits.

ADB provided $1 million for the Dili Water Supply Performance Improvement Technical Assistance (TA) to support DNSA capacity strengthening. The TA focused on improving management, human resources, and technical skills to maintain the new network systems and enhance meter management and customer service systems. In many cases, however, these skills were not applied as the project activities they intended to support had not even commenced by the time the TA closed in March 2011.  The loss of trained individuals further eroded the benefits aimed to be delivered through the linked TA.  Overall, the TA design was based on three key conditions that did not occur: (i) the MPW would allocate adequate resources to the DNSA, (ii) the DNSA would be restructured to become a commercially focused water business, and (iii) the TA and the project would be implemented concurrently. These shortfalls reduced the relevance of the TA and prevented it from having a value-addition to the project outcomes. 

Project Cycle Stage: 
Implementation

Benefits for women should be distinctively planned and pursued in all water supply projects.

Water improvement projects significantly impact the lives of women in both rural and urban areas.  Notwithstanding this, the project’s design and monitoring framework included only one gender-based impact indicator, indicating the lack of a gender perspective in project planning and formulation. Strengthening the gender dimension of ADB water supply projects is a must, and additional indicators need to be developed to gauge each project’s contributions to improving women’s plight and status as customers and participants in the projects.  Being immersed in the need to rationalize water uses in their homes and communities, women can also be tapped to have a key role in ensuring that water services are delivered in a sustainable and optimal manner.  

Project Cycle Stage: 
Preparation
Background

As part of its Millennium Development Goals, the government of Timor-Leste targeted increasing access to safe water in the urban areas from 72% in 2001 to 86% in 2015. For the capital city of Dili, it targeted providing 24-hour water supply to 80% of the population by 2015 from 25% in 2007.  To achieve these targets, it set out to rehabilitate the tertiary network and water connections, initially in three subzones in three of the 10 Dili zones, with plans to eventually expand to the remaining seven zones.  Against this backdrop, it implemented the Dili Urban Water Supply Sector Project, approved by the Asian Development Bank (ADB) for a grant of $6 million in December 2007.

During project preparation, no water billing was undertaken by the National Directorate of Water Services (DNSA), and consumers were making no payments for water. This was to be addressed by the project, which aimed as outcome improving the management and tertiary distribution network of the Dili Water Supply System.  The improvements were to result in the reduction of non-revenue water (NRW) from 95% to 40%–50% in the whole city and 25%–30% in the project zones. The outcome was to be achieved through three outputs: (i) water losses reduced and controlled in three target zones; ii) visible leaks reduced through practical improvements and by refurbishing, replacing, or installing new stop valves and metering commercial customers; and (iii) leak detection, leak reduction, distribution planning, and distribution management skills of the technical and operations and maintenance (O&M) staff at DNSA upgraded.

To achieve output 1, connections were improved, pipes were replaced, and water control valves and meters were installed. These improvements led to NRW reduction but only for a short period, as soon after the physical works were completed, clamor for similar improvements in the seven zones outside the project coverage broke out, prompting the government to open the water control valves, resulting in the decline of water pressure and service delivery and quality. The initial improvement in billing collection also subsequently declined. Inadequate revenues and O&M funds, along with a maintenance regime that prioritized critical repairs only, spawned the continued deterioration of project assets, with consequent early major damages to key infrastructure in some parts of two of the three project zones.

For output 2, system-wide repairs were prioritized.  Visible leaks and open pipe discharges were identified, but completed only in 2013–2014.  Seven bulk meters were installed, and chambers and valves were rehabilitated or replaced albeit late and in lower numbers than planned.  The metering coverage of large customers in all zones likewise did not reach the 80%–90% target. Chlorination dosing units were repaired and replaced.

For output 3, the project tapped into the $1 million Dili Water Supply Performance Improvement Technical Assistance (TA) provided by ADB for the conduct of trainings to improve DNSA management, human resources, and technical capacities to maintain the new network systems and enhance meter management and customer service systems. However, in many cases, the knowledge and skills imparted through these trainings were not utilized as the project activities they intended to support had not even commenced by the time the TA closed in March 2011.  The loss of trained individuals further eroded the benefits planned to be delivered through the linked TA. 

Overall, the subzone approach demonstrated what could be achieved with a focused investment and support services, and this resulted in an increase in service, billing collections, and revenues. However, for the approach to work there needed to be a phased and planned investment in the other subzones, which did not occur.  With consequent actions accelerating the deterioration of infrastructure and services, the project failed to reduce NRW at levels planned at appraisal.  An assessment undertaken by the Japan International Cooperation Agency of the Dili water zones in 2015 indicated that NRW losses ranged from 70% to 95 % across the ten zones. For the project zones, NRW ranged from 70% to 95%.

The project had the MPW as executing agency and the DNSA as implementing agency.

Project Information
Project Name: 
Dili Urban Water Supply Sector Project
Report Date: 
September, 2018
Main Sector: 
Water and Other Urban Infrastructure and Services
Country: 
Timor - Leste
Project Number: 
38189-022
Report Type: 
PCR
Project/Modality: 
Sector grant
Themes: 
Environmentally Sustainable growth
Inclusive Economic Growth
Governance and Capacity Development
SDG: 
Goal 6: Clean Water and Sanitation
Goal 3: Good Health and Well-Being
Sub Sector: 
Urban policy, institutional and capacity development
Urban water supply
Loan Number: 
G0100
Source of Funding: 
COL/ADF
Date Approved: 
18 December 2007
Report Rating: 
Less than successful

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