Micronesia, Federated States of : Preparing the Chuuk Water Supply and Sanitation Project

Project Name

Preparing the Chuuk Water Supply and Sanitation Project

Project Number

53284-001

Country / Economy

• Micronesia, Federated States of

Project Status

Active

Project Type / Modality of Assistance

• Grant

Source of Funding / Amount

Grant 6026-FSM: Chuuk Water Supply and Sanitation Project (Project Readiness Financing)

Source	Amount
Asian Development Fund	US$ 5.00 million

Operational Priorities

• OP1: Addressing remaining poverty and reducing inequalities
• OP2: Accelerating progress in gender equality
• OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
• OP4: Making cities more livable
• OP5: Promoting rural development and food security
• OP6: Strengthening governance and institutional capacity
• OP7: Fostering regional cooperation and integration

Sector / Subsector

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

Gender

Description

The project readiness financing (PRF) grant will prepare the ensuing project - Chuuk Water Supply and Sanitation Project (CWSSP) and facilitate a transition to a smooth project implementation. It will help streamline the initial contract awards and expedite the disbursements. The PRF will finance consulting firms and individual consultants, as well as the equipment, to achieve three outputs: (i) creating an enabling environment for the ensuing investment project of CWSSP; (ii) identifying the investment scope, preparing the project readiness, and procuring key project components; and (iii) developing a smooth transition to implementation by strengthening CPUC's water supply operations. The PRF aligns with the ADB's Strategy 2030 operational priorities to: (i) address remaining poverty and reducing inequalities (OP1); (ii) tackle climate change, building climate and disaster resilience, and enhance environmental sustainability (OP3); (iii) make cities more livable (OP4); and (iv) strengthen governance and institutional capacity (OP6). The PRF is included in ADB's COBP 2020-2022.

Project Rationale and Linkage to Country/Regional Strategy

1. The latest official statistics for the Federated States of Micronesia (FSM) estimated the total national population was about 103,000, of which 47% resided in the capital area of Chuuk State. Weno is the main urban center with about 14,000 population (about 30% of Chuuk's population) and has an area of 127 square kilometers. The Chuuk State's population is projected to increase to 50,000 by 2025 with most of the growth in Weno and Tonoas islands.

2. The FSM is highly vulnerable to natural hazards, particularly severe tropical storms and droughts, and is highly susceptible to climate change impacts. In 2015, Typhoon Maysak struck the states of Chuuk and Yap, causing four deaths and damaging houses, crops, and public infrastructure. About a third of the national population was affected, and the damage cost is estimated at 4% of the country's 2015 gross domestic product. Chuuk State experienced two major droughts during 2016-2019, which resulted in Weno's surface water sources drying up and stressing groundwater resources. Climate change projections show that temperatures will continue to rise in the FSM, as will the sea level and ocean acidification. The intensity and frequency of days of extreme rainfall are projected to increase, which exacerbates the need for infrastructure that is resilient to climate change and natural disasters.

3. In Chuuk State, access to public water supplies is limited. Only 8% of households obtain drinking water from the public water supply systems which are provided by the Chuuk Public Utility Corporation (CPUC). The majority households rely on rainwater tanks (69%) as the source of drinking water. Other household water sources include wells and springs (19%), and bottled water and streams (5%). Rainwater harvesting is not secure due to the seasonal rainfall patterns and more frequent and severe dry periods as a result of climate change. The CPUC water production is 2,900 cubic meters per day in which 95% is from deep wells and 5% from the Pou River. CPUC filters the water abstracted from the Pou River and chlorinates all the water produced. The Pou River headworks and treatment plant constructed in 1982 are dilapidated and require rehabilitation. CPUC has identified another potential surface water source in the Wichen River, which would expand its water supply, reduce the reliance on groundwater, and substantially cut pumping costs. However, the development of the new water source requires adequate funding.

4. In Chuuk State, public sanitation service is also limited. The Weno sewerage system commissioned in 1973 serves about 400 households in the northern and western side of Weno Island. Parts of the sewerage network and the sewage pumping stations are dilapidated and requires rehabilitation. CPUC has made continuous improvements of the Weno sewerage system since 2015 together with the Weno road upgrading program. However, substantial investment is required to expand coverage of the sewer network and to rehabilitate the dilapidated parts of the sewer system. Beyond the island's sewerage network area, septic tanks and pit toilets are widely used, particularly among poor communities. Septic tank and pit toilets discharge effluent directly into the shallow aquifers that underlie the island, becoming a major contributor to groundwater contamination and individual household wells. Consequently, diarrhea, particularly among infants is endemic.

5. CPUC is mandated under the Chuuk Public Utility Corporation Act of 2006 to deliver electricity, water supply, and sewerage services to the people in Chuuk State. CPUC's performance has been improved significantly after the institutional reforms began in 2010 financed by the Asian Development Bank (ADB) and the United States Department of Interior. CPUC fully recovered its operation and maintenance, depreciation, and debt servicing cost in fiscal year 2019 with revenue generated from utility service tariffs. However, further institutional reforms of CPUC's framework for water supply and sewerage tariffs are still needed as CPUC's water supply and sewerage services are relatively underperforming and are dependent on cross-subsidies from CPUC electricity sales.

6. CPUC's such underperformance on water supply and sewerage services is largely due to the high rate of nonrevenue water (NRW) in CPUC's water operations. CPUC delivers water services to 480 households in Weno. However, in early 2019, a detailed CPUC survey in one of the water supply zones in Weno indicated that the actual number of households connected to the CPUC water supply system was substantially higher than the CPUC records showed. This large number of undocumented consumers to the CPUC water supply network explains the high NRW in CPUC's water operations, estimated over 50%, and substantially reduces its water supply revenue. CPUC recognizes that reduction of NRW is essential to enable it to collect water supply and sewerage revenue, which will then allow CPUC to expand its water supply and sewerage customer base. To reduce NRW, CPUC plans to: (i) strengthen both its demand management capacity to optimize its water supply network operations and eliminate undocumented connections; and (ii) strengthen its water leak detection capacity to identify physical losses from the pipe network.

7. The FSM government has proposed the Chuuk Water Supply and Sanitation Project (CWSSP). The project will improve CPUC's utility operation and customer management, expand CPUC's water supply services, reduce NRW, and increase revenue from water supply and sewerage services. CPUC's sewage system on Weno will also be expanded and rehabilitated. A project will also provide educational activities that promote good sanitation and hygiene practices that help prevent water and sanitation related disease and foster water conservation and increase willingness to pay for water and sanitation services.

Impact

Project Outcome

Description of Outcome

Progress Toward Outcome

Implementation Progress

Description of Project Outputs

Status of Implementation Progress (Outputs, Activities, and Issues)

Geographical Location

Nation-wide, Chuuk Islands

Summary of Environmental and Social Aspects

Environmental Aspects

Not categorized as activities limited to preparing the ensuing investment project and activities are limited to consulting services. The ensuing project is expected to be Category B for environment.

Involuntary Resettlement

Not categorized as activities limited to preparing the ensuing investment project and activities are limited to consulting services. The ensuing project is expected to be Category B for involuntary resettlement.

Indigenous Peoples

Not categorized as activities limited to preparing the ensuing investment project and activities are limited to consulting services. The ensuing project is expected to be Category C for indigenous peoples.

Stakeholder Communication, Participation, and Consultation

During Project Design

The grant will design the project and will involve extensive stakeholder participation.

During Project Implementation

Business Opportunities

Consulting Services

The Implementing Agency, Chuuk Public Utility Corporation (CPUC) will recruit all consultants and nongovernment organizations following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or staff instructions.

Procurement

All procurement of goods and materials will follow the ADB Procurement Policy (2017, as amended from time to time) and its associated staff instructions. Shopping will be used for all procurement of equipment and materials and individual contracts will not exceed $250,000. All equipment will be procured with a minimum three-year warranty, effective from the date of delivery to the Implementing Agency, Chuuk Public Utility Corporation (CPUC), for timely replacement and repair of defective parts (within 6 weeks of receipt of a defect report from CPUC). All software procured will be provided with software licenses for a minimum of 3 years effective from the date of installation on CPUC computer platforms.

Contact

Responsible ADB Officer

Blaik, Stephen

Responsible ADB Department

Sectors Group

Responsible ADB Division

Water and Urban Development Sector Office (SG-WUD)

Executing Agencies

Department of Finance and Administration

Timetable

Concept Clearance

26 Jul 2019

Fact Finding

04 Apr 2019 to 05 Apr 2019

MRM

30 Sep 2019

Approval

10 Dec 2019

Last Review Mission

-

Last PDS Update

23 Jan 2024

Funding

Grant 6026-FSM