Vanuatu : Luganville Resilient Urban Water Supply and Sanitation Project

Project Name

Luganville Resilient Urban Water Supply and Sanitation Project

Project Number

51335-001

Country / Economy

• Vanuatu

Project Status

Proposed

Project Type / Modality of Assistance

• Grant
• Loan

Source of Funding / Amount

Grant: Luganville Resilient Urban Water Supply and Sanitation Project

Source	Amount
Asian Development Fund	US$ 16.02 million

Loan: Luganville Resilient Urban Water Supply and Sanitation Project

Source	Amount
Concessional ordinary capital resources lending	US$ 41.66 million

Operational Priorities

• OP2: Accelerating progress in gender equality
• OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
• OP4: Making cities more livable

Sector / Subsector

• Water and other urban infrastructure and services / Other urban services - Urban policy, institutional and capacity development - Urban sanitation - Urban water supply

Gender

Effective gender mainstreaming

Description

The project will improve the accessibility, sustainability, and inclusivity of urban services, and build the climate change and disaster resilience of the greater Luganville area. The project will support the development of resilient water supply systems by (i) diversifying water supply sources through the establishment of a more operationally flexible system with expanded production capacity; (ii) upgrading the transfer and distribution system to minimize water losses and optimize conservation; and (iii) supporting sustainability, enhanced reliability, and improved quality by engaging a private contractor to operate and maintain the system for 5 years. Sanitation and hygiene in greater Luganville will be improved through the provision of new and/or upgraded public and school sanitation facilities; extensive water, sanitation, and hygiene campaigns; a new septage treatment facility; and overall sanitation services delivery improvement. The resilience of communities to climate change and disasters is supported by providing multi-hazard early warning and response systems, multipurpose emergency shelters, awareness raising, training, and capacity building of stakeholders.

Project Rationale and Linkage to Country/Regional Strategy

Vulnerability to natural hazards and climate change. Vanuatu's high exposure to climate-related and other natural hazards, climatology, extensive low-lying coastal areas, economic and social challenges, and climate-vulnerable natural resource base make it among the world's highest-risk countries for disasters. Climate change is increasing the frequency and severity of extreme weather events and slow-onset hazards, such as drought and sea-level rise. On average, disasters cost about 6% of gross domestic product in Vanuatu each year. In 2015, Category 5 Tropical Cyclone Pam left more than 75,000 people in need of emergency shelter and resulted in 11 fatalities. In March 2023, Vanuatu experienced two Category 4 cyclones (Judy and Kevin) in rapid succession, followed by Tropical Cyclone Lola in October 2023, which damaged 75% of housing across Maewo and Pentecost islands. Seismic risks are also high, with climate change increasing tsunami hazards to coastal communities.

Increasing urban development challenges worsened by climate change and disaster risks. Located on Vanuatu's largest island Espiritu Santo, Luganville is an important tourist destination and commercial hub for the country's northern provinces. The government aims to further develop Luganville into a major economic and tourism center, but urban infrastructure development and service delivery has been limited. The key urban development challenges are (i) rapid urbanization and increase in informal settlements, with Luganville's urban and peri-urban population expected to increase from 17,719 in 2020 to 37,000 by 2035; (ii) increasing incidence of poverty, with 16% of people living below the national poverty line; (iii) low and declining access to urban services, such as reticulated water supply and sanitation, as investments in urban service improvements have not kept pace with urban growth; and (iv) climate change further worsening the severe impacts of disasters on urban services and populations. Urbanization is also increasing the number of people residing in high-risk and unplanned areas outside the municipal boundaries. There are no dedicated shelters for residents when disasters occur, with school and church buildings filling this role, potentially resulting in increased disruption to education and social well-being following disasters. Resilience to disasters and climate change requires comprehensive efforts to develop policy and legislation, capacity, infrastructure, and community-level resilience. This includes adequacy and resilience of urban service delivery and provision of community shelters that cater to women, girls, people with disabilities, and other vulnerable groups that are more adversely impacted by disasters.

Limited and climate-vulnerable water supply services. Despite the importance of Luganville as Vanuatu's second-largest urban center, fewer than 60% of households in greater Luganville have access to piped water supply and rely mainly on rainwater tanks and shallow groundwater wells that are vulnerable to drought, flooding, and contamination from poorly performing on-site sanitation systems. The Luganville water supply systemincluding the groundwater source at Sarakata well, pumping stations, water storage tanks, and transmission and distribution networkslargely uses infrastructure built in the 1940s. Aging infrastructure has resulted in an unsafe and unreliable water supply system that is under capacity for current needs and vulnerable to climate and geophysical hazards. Limited access to safe water and climate-resilient systems adds to women's work burdens and caring duties, as they are mainly responsible for childcare, cooking, cleaning, laundry, and water collection.

The groundwater source is regularly affected by and increasingly exposed to climate-related hazards. Located in the Sarakata River floodplain, less than 1 kilometer from the coast, the aquifer is exposed to flood risks, erosion, sedimentation, and contamination during extreme rainfall events from households with on-site sanitation systems surrounding the well. The chlorination system has been out of service since 2021, and water quality regularly fails national drinking water standards. The aquifer is stressed, exhibiting a substantive water level decrease of 1 meter since 2008 because of overpumping and drought conditions. Since 2012, average daily demand and physical water loss in the system exceed the main water pumping station's 4.1-megaliter daily capacity, causing the pumps to operate 2024 hours a day. The lack of system redundancy means customers experience supply interruptions when pumps are taken offline for maintenance or repair. Nonrevenue water (NRW) is estimated at 56%. Water storage tanks provide less than half of the requirements for peak day demand and are vulnerable to earthquake-induced structural failure. Households, businesses, public services, and schools frequently experience low pressure and service interruptions, with community consultations indicating that Luganville schools close as often as once per week because of water supply interruptions. The overall system lacks resilience to climate change and natural hazards and the robustness to accommodate population growth and support economic development. Substantial efforts are required to improve the water supply system through (i) investments in resilient water sources, storage, and delivery infrastructure; and (ii) reduction in NRW.

Poor sanitation and hygiene facilities and services. No centralized wastewater collection or treatment system exists in Luganville. Most households and businesses have toilets with on-site sanitation systems that are (i) poorly constructed, (ii) rarely maintained or emptied, and (iii) poorly performing because of clay soils and high-water tables, which means that septic tank effluent is not effectively treated and causes pollution. Septage collection, transport, and disposal is provided by two private operators that charge to empty septic tanks on request by residents and dispose the septage into shallow, unlined, unmanaged, and unlicensed pits on their own leased land. The Sanma Provincial Government Council and the Luganville Municipal Council (LMC) are responsible for the approval and oversight of on-site sanitation systems. There is an increasing focus to address the poor sanitation situation nationally and locally. However, without substantial investment to improve the sanitation service delivery chain, sanitation facilities, and hygiene awareness and behaviors, Vanuatu is unlikely to achieve its objectives under the Sustainable Development Goal 6. The sanitation situation in Luganville also creates major public health, marine, and freshwater pollution risks.

Lack of gender- and disability-inclusive public and school sanitation facilities. While the understanding of good hygiene and sanitation practices in Luganville is generally high, implementation is limited by the lack of available facilities and incentives for compliance (footnote 9). Schools in greater Luganville have insufficient and poorly functioning toilets and hygiene facilities, which impacts adversely on attendance, health, and convenience, especially for girls and students with disabilities. There are only two public toilet facilities in Luganville: at Unity Park and at the main marketplace, and these are in a state of disrepair and uninviting for locals and tourists to use.

Prevalence of waterborne diseases. Diarrheal diseases are the sixth most common cause of deaths for children under the age of 5 in Vanuatu. In Luganville, 8.5% of households reported at least one case of diarrheal disease within the 3 weeks leading up to the community survey (footnote 9). More than 20% of children under the age of five display stunted growth because of constant exposure to fecal bacteria through poor sanitation and hygiene, with irreversible effects on physical and cognitive development. Health problems, such as diarrhea, skin diseases, sepsis, malnutrition, and eye diseases, often lead to children's illnesses and hamper women's opportunities for employment and other economically productive activities.

Weak institutional capacity and low financial sustainability of urban services providers. The Department of Water Resources (DOWR) of the Ministry of Lands and Natural Resources (MLNR) manages urban water service policies, planning, resourcing, and provision in Isangel, Lakatoro, Luganville, and Saratamata. The DOWR is constrained by limited human and financial resources. Revenue from water bills is not directly available to the DOWR for operation and maintenance (O&M) and is instead deposited to the Department of Finance and Treasury's provincial office. The DOWR receives an annual budget allocation for O&M, which is normally insufficient to fund preventive maintenance and renewals. The Utilities Regulatory Authority (URA) is the economic and service-level regulator for water supply. The URA's main objectives include (i) ensuring safe, reliable, and affordable regulated services; (ii) maximizing access to regulated services throughout Vanuatu; and (iii) protecting the interests of consumers. In 2012, the URA conditionally approved a tariff increase of more than 10% for the Luganville water supply system, but this determination lapsed when the URA's conditions were not met within the required period. The DOWR has a vision for the Luganville water supply system to ultimately be operated and maintained through a private operator, potentially with a concession agreement similar to the arrangement in Port Vila, which is performing well. The Asian Development Bank (ADB) is supporting the DOWR in developing options and implementing its strategy for the delivery of urban water supply services. Significant investments in the system and enabling environment will need to be made over several years to achieve this long-term strategy. In the short and medium term, the DOWR must be supported to operate and maintain the system. The LMC, under the Department of Urban Affairs and Planning, is similarly constrained in terms of human and financial resources and is unable to provide and maintain the urban services required for a resilient Luganville. Capacity building of the government and communities is required to strengthen the sustainability of urban service delivery.

Impact

Improved inclusivity, effectiveness, and sustainability of well-maintained infrastructure and services

Enhanced resilience and adaptive capacity to climate change and disasters

Outcome

Accessibility, sustainability, inclusivity, and climate and disaster resilience of urban services in greater Luganville improved

Outputs

Climate- and disaster-resilient water supply facilities upgraded and expanded

Urban sanitation and hygiene facilities and services improved

Climate- and disaster-resilient and GESI-responsive multipurpose shelters provided

Capacity to sustain resilience of urban service delivery improved

Geographical Location

Luganville

Safeguard Categories

Environment

B

Involuntary Resettlement

B

Indigenous Peoples

C

Summary of Environmental and Social Aspects

Environmental Aspects

The project readiness financing is undertaking environmental due diligence to ensure that any negative environmental impacts of the project are identified early and devising strategies to avoid and/or minimize these impacts. All environmental risks associated with the project will be managed/mitigated to ensure compliance with ADB SPS and country environmental systems.

Involuntary Resettlement

The project readiness financing is undertaking due diligence to ensure that any physical or economic displacement is identified, addressed and implemented as per the requirements of the ADB SPS and country safeguards systems.

Indigenous Peoples

There are no distinct and vulnerable indigenous groups as defined by ADB SPS that will be affected directly or indirectly by the project.

Stakeholder Communication, Participation, and Consultation

During Project Design

A stakeholder analysis and consultation plan is prepared under the project readiness financing. A series of workshops, household surveys, focused group discussions and interviews have been conducted including with vulnerable groups to inform them about the project activities and to seek inputs on the shelter designs.

During Project Implementation

Continued stakeholder engagement will be conducted as per the community engagement and participation plan. A grievance redress mechanism prepared through stakeholder consultation is in place for the project readiness financing and will be updated as required for project implementation.

Business Opportunities

Consulting Services

Procurement, including consultant recruitment, will follow the ADB Procurement Policy (2017, as amended from time to time) and the Procurement Regulations for ADB Borrowers.

Procurement

Procurement will follow the ADB Procurement Policy (2017, as amended from time to time) and the Procurement Regulations for ADB Borrowers.

Contact

Responsible ADB Officer

Tran, Maria

Responsible ADB Department

Sectors Group

Responsible ADB Division

Water and Urban Development Sector Office (SG-WUD)

Executing Agencies

Ministry of Finance & Economic Management

Timetable

Concept Clearance

16 Jan 2019

Fact Finding

10 Apr 2024 to 26 Apr 2024

MRM

-

Approval

-

Last Review Mission

-

Last PDS Update

06 Jun 2024

Funding